You have to define from the beginning what type of customer you want. Customers who spend the least tend to complain the most, and customers who spend the most tend to complain the least. I witnessed this firsthand at Unapologetic®️

We adopted this strategy one season by offering $10 tees. If my memory serves me correctly, we priced our one-color tees at $10, or at least a portion of them. I knew the model would work because I had seen it work elsewhere, and I knew that if we had enough upsells, we could win. And we did win, it went crazy. We had so many orders that it was hard to keep up with the demand.

My main focus was making sure we were pricing correctly so that we not only maintained cash flow but also secured a profit margin that allowed us to expand the business. We used that capital to level up better bags, better boxes, more computers, more desks, more shelves, more machines to print, and more staff.

But the other side of this? A lot of complaining customers—so much so that at times, it almost didn’t feel worth it. Another challenge was the difficulty of increasing prices after setting them too low. Once you try to inch up your prices, you risk losing those customers. In hindsight, though, that’s not necessarily a bad thing. You just have to be ready to take the hit—the loss of that constant cash flow.

If you’re just getting started and you’re reading this, I’d tell you to price your products where you want them to be now. Identify the people who can and want to pay for what you’re offering now. Think about it, if you price a tee at $35 instead of $10, you need far fewer customers to hit the same revenue goal. That’s 3.5 times the amount of a $10 tee, meaning you only need a third of the customers to reach the same financial target.

Pricing is everything. I didn’t want to go too deep in this post, but I’ll write more about pricing in the future because it directly affects every aspect of running a business. It’s a key component of the cost of sales.

I’ll do a part two on this soon, so stay tuned.

God Bless The Entrepreneur.