Implementing Price Tiering

August 2018

Hello Pricers!

There sure are a lot of dates to remember this month:

Since you're undoubtedly clearing space off your busy calendars to make room for root beer floats, potatoes, and chop suey, wouldn't it make sense to reserve a bit of time to think about your corporate path to increased profitability?

Pricing Question from a Reader

I really like the idea of good, better, best pricing. I think it makes sense, but I don't know how to apply it to my products. How can I use it for T-shirts?

Price tiering is a great weapon in a pricer's arsenal, but it can be tricky to get right.

When most people think about differentiation in t-shirts, they probably think about sizing: small, medium, or large.

While it's true that some companies charge more for larger sizes, doing so almost always winds up being a mistake. Not only do such vendors risk facing a ton of bad press, but the tactic doesn't follow the good, better, best paradigm.

It's not as if a given customer decides he wants a shirt and then looks at the vendor's pricing to determine whether the small, medium, or large is the best value for his needs.

Tiering in the t-shirt realm needs to be a bit more clever.

I've listed a number of potential methods by which you can price tier. Which one is most appropriate for you will depend upon the nature of your customers and the niche in which you operate.

  1. Cloth quality - Some customers will be willing to spend more money for higher thread counts or superior weaving techniques.
  2. Cloth features - Some customers will spend more for cloth that wicks away sweat, contains safety reflectors, or glows in the dark.
  3. Environmental responsibility - Eco-conscious consumers will spend more for shirts that are created with a minimum of pollution or are biodegradable.
  4. Shirt cuts - Certain physical styles are more desirable to certain groups than others. For instance, long sleeve shirts and bicycle jerseys often command higher prices than standard short sleeve cuts. Tank tops command even lower prices.
  5. Design - Some artwork and patterns entice shoppers to pay more. Artwork that demonstrates support for a cause, humorous perspectives, or beautiful designs are but three examples.
  6. Quantity of artwork - Larger sizes of artwork, or multiple locations of artwork (on sleeves or backs of shirts) will typically entice buyers to spend more.
  7. Control - Selling a random shirt for a relatively low price, but guaranteeing a specific shirt for higher payment can, and does, provide higher pricing power.
  8. Bundling - Creating packages that contain additional upsells that are related to the shirts being sold can yield higher profits. Posters, socks, handkerchiefs, and hats are a few such ideas.
  9. Shipping time - An old favorite is to increase shipping and handling fees for faster service.
  10. Print quality - Higher quality transfer techniques and superior color selections provide buyers with shirts that will look new even after many more washing cycles.
  11. Customizability - Allowing customers to add their names, logos, or simply select features will tend to provide increasing levels of pricing power.
  12. Colors - Shirts that are not white typically command higher prices. Some colors are more desirable than others, both for intrinsic qualities and links to a particular cause, topic, or event.
  13. Quantity limitations - Publicly limiting the number of shirts produced for each design will tend to make them more valuable to consumers.

The above list contains just a small number of ideas. I'm sure you can think of others.

As you consider your tiering strategy, please keep the following in mind:

  • Don't just select the first method that occurs to you. You need to understand your customers and what they care about most.
  • Don't make your tiers overly complicated for customers to understand. Overloading shoppers with too many options is more likely to result in fewer purchases, rather than higher profits.

Questions come from readers like you. If you'd like your questions answered, send them my way.

♫This Q&A and many others are now available on the Pricing After Dark podcast.

Pricing in the News

From the Blog Archives

Notable Pricing Quote

"People want economy and they will pay any price to get it." -- Lee Iacocca

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