Print on demand pricing: How to price print on demand products

In the print on demand market, selecting the right price isn't just a way to stay competitive—it’s crucial to your business's survival. Knowing your niche and finding your unique selling proposition can help you avoid a margin-destroying race to the lowest price. Still, you can't let your store become untethered from the market average, either.

This article will guide you through setting print on demand pricing that attracts customers and keeps your business's profit margins high. We'll look into crucial factors like calculating costs, researching competitor pricing, and determining the desired profit margin. With strategic guidance on using different pricing models, you'll be equipped to navigate the complexities of the print on demand landscape.

• Understanding costs, including design, production, shipping, platform, and marketing, is crucial for setting profitable print on demand pricing.

• Researching competitor pricing helps maintain market alignment and avoid undervaluing your products.

• Setting a desired profit margin creates a strategic balance between competitiveness and profitability.

• Testing and adjusting pricing strategies based on market response can enhance sales and identify optimal price points.

Let's outline the process to help you achieve the ideal balance between competitive pricing and healthy profit margins.

1. Calculate all costs involved

When running a print on demand business, there are many costs to be accounted for. Carefully managing these expenses is essential to optimizing your profit margin, allowing you to pocket more of what you make or keep your retail prices low. 

Here are some of the most common costs to calculate:

Design costs

It's easy to overlook product design costs, but this is a crucial component of establishing your average price base for your products. By understanding these costs upfront, you can set a realistic pricing strategy that aligns with your brand value:

• Design software costs: Developing your ideas into polished, print-ready designs typically requires specialized software. While traditional sketching remains cost-free, digital design programs often involve subscription fees. Tools like Gelato's Design Maker offer a cost-effective approach by providing a platform to visualize designs using extensive digital mock-ups. Don't overlook hardware like digital drawing pads and styluses, which might incur additional costs but are necessary for professional results.

• Design services: Outsourcing designs or hiring professionals can elevate a product's appeal. Estimating the costs here involves deciding whether to pay flat project fees or hourly rates. If you're handling your own design work, be sure to account for your time as a business expense, considering your expertise and effort as valuable assets to the final product price.

Production costs

The production cost includes all the expenses related to creating items through your chosen supplier. Choosing reliable and efficient print on demand services helps control these costs. Here’s how you can calculate your production costs effectively for your print on demand service: 

• Item cost: Check the base price for each item from your supplier. This is the cost before any customization or shipping is added.

• Customization fees: Factor in any additional fees for custom features or designs on the product. This might include printing costs for specific materials or colors.

• Minimum order requirements: Some suppliers offer discounts for bulk orders. If you plan to buy in larger quantities, consider this when calculating your per-unit cost.

• Quality control: Allocate a budget for quality checks. Ensuring your products like t-shirts or phone cases meet a specific standard can save money in returns and refunds later.

Shipping costs

Shipping costs can be tricky to navigate, but strategic planning can improve your customer experience while maintaining profitability.

• Let your customers pay the shipping cost: This method allows customers to choose their preferred shipping speed, each with corresponding fees. Be sure to communicate costs and fees to avoid surprises during checkout, which can lead to abandoned carts.

• Absorb the shipping cost: Free shiping is an attractive feature, encouraging purchases through perceived value. However, to avoid financial strain, you must carefully incorporate these costs into product pricing or absorb them from your profit margins.

• Set a threshold for free shipping: Offering free shipping after a minimum purchase threshold strikes a balance between absorbing costs and encouraging higher order values. This method helps offset the shipping expense while aligning your prices competitively.

Partnering with a print on demand provider like Gelato can greatly optimize your shipping strategy. Gelato’s hyper-local production and delivery model minimizes shipping distances, reducing costs while supporting faster and more environmentally friendly delivery. This production model means most products are manufactured close to the customer's location, reducing shipping time and carbon footprint.

Platform fees

Choosing the right platform can make or break your print on demand business. Be ready to encounter some form of platform fee no matter your choice, but being informed can help you optimize these costs: 

• Ecommerce marketplaces: Online marketplaces like Amazon, eBay, or Etsy offer access to many potential customers. Their pricing structures often include costs for listing, payment processing, and transactions. To calculate these costs, track each fee and categorize it based on the volume of items sold, sales transactions, and any additional charges to form a comprehensive fee schedule. Ensure these costs align with your revenue to maintain profitability.

• Ecommerce platforms: Platforms like Shopify require a subscription fee, which is offset by no listing fees and flexible customization options for your store. Calculate your fixed monthly subscription and any variable payment processing fees to determine its economic impact on your business.

• For your website: Your costs will be domain registration and hosting. Determine your annual hosting cost and divide by the number of months, adding any prorated costs for additional services such as security upgrades.

For your print on demand venture, begin by listing all recurring fees associated with your platform, including subscription, transaction, and payment processing charges. Compare these costs with your sales volume and revenue to assess value. Watch for additional fees like currency conversion, a transaction fee, or international transaction charges, especially if you sell globally. Documenting these expenses will help anchor your pricing strategy, adjusting as necessary to maintain desired profit margins. 

Marketing costs

Effective marketing is crucial but often comes with substantial costs. Consider multiple marketing avenues to promote your products: 

• Google Ads and PPC: Calculate cost-per-click and monitor your daily ad spend. Tracking tools assess the cost of converting a visitor into a customer, ensuring this does not exceed the product's profit margin.

• Social media promotion: Estimate costs based on influencer fees and promotion budgets. Evaluate the customer acquisition cost by dividing the total campaign spend by the number of new customers.

• Content marketing: Evaluate content creation costs, such as hiring a writer or producing blog content. Calculate the return on investment by measuring increased traffic or sales attributed to content efforts.

Always keep your marketing spend relative to the returns you're seeing; adjust strategies that aren't performing and focus more on methods that deliver the best cost-to-benefit ratio. 

Taxes

Taxes are an unavoidable part of running a business, and understanding these obligations can save you from surprise liabilities at year-end.

• Income tax: Estimate by projecting annual profits and applying the federal income tax rate. Keep detailed records of all transactions and seek professional advice to accurately forecast your tax obligations.

• Self-employment Tax: Calculate this using the self-employment tax rate on taxable income, factoring it into the pricing model to safeguard against net losses.

• Sales tax: Utilize sales tax calculators or integrate tax automation tools to update sales tax expectations based on different regions. These should be reflected in your pricing structure to ensure compliance and proper collection.

While these taxes impact your final take-home pay, they must be integrated into your pricing model to ensure you're not losing profits by undercharging customers. 

2. Research competitor pricing

Knowing what your competitors charge for their products can give you a solid foundation to establish your pricing strategy. 

Start by identifying direct competitors offering similar products. Once you've mapped out the landscape, dig deep into their pricing models and product offerings. Note any promotions or bundles they provide and how frequently they are offered. This can reveal opportunities for you to position your pricing more attractively. 

Competitive pricing is not just about matching competitor prices—it's about setting your prices in a way that highlights your unique selling points while staying responsive to market trends. To make this easier, compile a pricing map that outlines the average selling price of products in your niche. 

3. Set your desired profit margin

Start by considering the expenses associated with your business, including design, production, shipping, platform fees, and marketing. Your profit margin should be sufficient to cover these costs while allowing for a comfortable return on each product sold.

A common starting point is a 20-30% margin, which can be adjusted based on your brand's positioning, competition, and market trends. To remain competitive, keep an eye on competitor pricing and market conditions.

Factor in any seasonal demands or special promotions requiring temporary margin adjustments. By balancing these elements, your pricing strategy will remain profitable and flexible so you can adapt to changes in the market while maintaining a healthy bottom line. 

4. Test pricing for market response

Once you've settled on your pricing strategy, test it to see how the market responds. Consider starting with a small group of products or running a limited-time pilot to gather insights without risk. 

Monitor customer behavior closely: Are they more inclined to purchase at specific price points? Do they abandon their carts when shipping fees are added? Leverage A/B testing, where you offer two different price points for the same product, to see which one resonates better with your audience. 

Pay attention to key metrics like conversion rates and average order value, as these can offer valuable clues about how price changes impact your business. Don't forget to gather direct customer feedback—it can yield insights you hadn't considered. 

5. Adjust for promotions or sales

Pricing adjusted for sales and promotions must also be factored into your profit margins. First, define the purpose of your promotion—are you looking to introduce a new product, increase sales volumes, or clear outdated stock? Knowing your goal helps you select the right promotion type. 

Consider options like percentage-off sales, buy-one-get-one-free offers, or limited-time discounts. When setting the discounted price, ensure it still covers your costs and aligns with your brand’s perceived value. 

Use customer data to time your promotions effectively, concentrating efforts during high-demand periods such as holidays or back-to-school seasons. Consider using promotional events to gather customer data or social media followers, further benefiting your business in the long run. 

6. Review and adjust your pricing strategy regularly

Regularly reviewing your prices ensures that they reflect your fixed cost changes and shifts in market demand and competitor actions. 

Start by scheduling quarterly pricing audits. Analyze sales data, costs, market conditions, and customer feedback to identify gaps or opportunities. Be prepared to adjust your strategies based on these insights.

If your competitor lowers their prices, you might need to reassess your value proposition or explore bundle offers. Pricing is not set in stone—it requires agility and responsiveness to maintain profitability while staying competitive. Always keep your finger on the pulse of market dynamics.

Understanding the key costs that affect your profit margin helps you choose the right pricing strategy—or a mix of strategies—to manage them effectively. While selecting a strategy is important, it's not permanent; experimenting with different pricing models is ideal. Here are the common pricing strategies for an ecommerce shop:

1. Cost-plus pricing

Also known as markup pricing, a cost-plus pricing strategy involves identifying the unit cost for each item and adding a fixed percentage to that amount. Unit cost is the total of all the production activities that went into creating that item.

One of the main advantages of this pricing system is its easy implementation: retail stores, grocery stores, and department stores commonly use this pricing model. It also lets you point to variable product costs if you raise your prices. Since the markup theoretically covers product costs and all your expenses, you can expect a consistent rate of return.

A key drawback to this model is the risk of selecting the wrong markup percentage. If you become untethered from the average market price, you’ll differentiate your store incorrectly for price-conscious customers. 

There’s also no guarantee your markup will cover your costs if you don’t hit your sales goals. This model can also stifle your urge to compare shops for lower service prices, which can hurt you in the long run.

2. Competition-oriented pricing

This retail price model is one of the most commonly used pricing models in the print on demand business, given the importance of price in this crowded space. It weighs competitors’ prices very heavily, sometimes ignoring items’ costs or market trends in demand.

Using this strategy, you might choose to price your goods slightly over or under your competition. If you charge more than your competitors, your unique selling point needs to be strong enough to justify your price.

3. Price bundling

When using a bundle pricing strategy, you offer two (or more) of your items at a single, reduced price, saving customers more money than if they had bought everything separately. For example, if your online store sells baby clothing, you might bundle certain pairs of socks and onesies together at a lower price. 

If implemented well, this strategy can set your store apart by adding more value for customers buying multiple items.

4. Dynamic pricing

Using dynamic pricing, you’ll adjust prices in response to customer demand and the average market price for your products. This pricing model is prevalent within the rideshare industry, where “surge pricing” can increase a trip's cost. In the travel and leisure industry, plane ticket and hotel room prices regularly rise and fall on the whims of travelers.

In the print on demand industry, you might temporarily lower your price based on seasonal demand or a relevant promotional event (perhaps with clever bundling). While this is a great model to help capitalize on recent market trends and opportunities, it can also cause friction with customers frustrated by your slippery price structure.

In addition, this pricing model can make it challenging for a print on demand seller to increase their prices. Can you really justify a “surge” in photo book demand among your customers? Keep this in mind when considering the dynamic pricing strategy for your business. 

5. Value-based pricing

With this approach, you can align your price with the unique benefits your product provides, making it particularly suitable for print on demand products with distinct or custom designs. A t-shirt featuring an exclusive design co-created with a famous artist may command a higher price because of the emotional or cultural value. 

To successfully adopt this strategy, conduct in-depth research on your customers' preferences and willingness to pay. Consider involving your customer base during the design process or using surveys to capture valuable insights. This data becomes an essential tool for highlighting the features that matter most to your product, creating a compelling value proposition.

6. Anchor pricing

Anchor pricing is a creative marketing strategy often used to influence customers’ perception of product value by displaying a higher comparative price alongside the actual selling price. This perceived discount can help justify the purchase, assessing the product as a bargain even if originally planned. 

Say your online store offers a custom mug priced at $20, presented alongside a higher ‘original’ price of $30. Customers see the $20 price tag as a great deal, which encourages them to buy the product without much thinking.

This pricing strategy plays on the psychology of savings, but it requires cautious implementation to maintain customer trust. It’s essential to base your anchor prices on reality, ensuring the original price is justifiable or was a previous selling price. 

7. Discount pricing

This strategy is often utilized during high-traffic sales events, such as Black Friday or during end-of-season sales, to clear inventory and boost sales volume. By marking down prices, you appeal to bargain-hunters and increase shopping urgency, potentially driving a spike in sales. 

However, this approach should be used sparingly to prevent your brand from appearing cheap or diminishing perceived value. Careful planning is essential—consider the discounts' timing, duration, and extent. Analyze past discount events to determine the most effective ones that led to actual profit growth rather than just a temporary surge in sales.

8. Penetration pricing

Penetration pricing makes a splash in the market by setting low prices to draw in customers quickly. This strategy works wonders when your shop is new or you are introducing a fresh product line. Lower initial prices can attract price-sensitive customers and help build a strong customer base rapidly. But use caution—while offering enticing prices initially can boost sales volume, it's crucial to keep an eye on your costs to ensure you're not operating at a loss. 

It's a strategy best suited for markets where there are many competitors and customers who might prefer a less expensive option. Once you've established your foothold, you should gradually increase your prices to a sustainable level to maintain profitability.

Setting the right price for your print on demand products can be challenging. So, as an example, let's break down the pricing process for a t-shirt created using Gelato:

1. Find the product cost

First things first: you need to know how much you are paying for the t-shirt itself. In this example, the base price for a premium unisex crewneck t-shirt is $10.12. This is what you’ll pay Gelato just to produce the t-shirt before any other fees are added.

2. Factor in the shipping cost

Next, you need to account for shipping. Gelato charges different shipping rates depending on where your customer is located. For example, shipping to a customer in the USA is $4.66. Be sure to check the shipping rates for the regions where most of your customers are located, as they can vary.

3. Calculate the total cost

Now, let’s add it all up. The total cost to produce and ship one t-shirt is the sum of the base product cost and the shipping cost:

Total cost = Base product price ($10.12) + Shipping cost ($4.66)

So, for each t-shirt, you’re paying $14.78 to cover both production and shipping.

4. Set a retail price

Once you know your total cost, it’s time to decide how much you’re going to sell the t-shirt for. Your retail price should not only cover the cost of the t-shirt and shipping, but also leave you with a decent profit. We suggest setting the price for this particular t-shirt at $29.56, which includes the cost of production and shipping while leaving you a 50% profit margin.

You don’t have to follow our suggestion exactly, but aim for a price that leaves enough room for profit after covering all your costs.

5. Figure out your profit per sale

To see how much profit you’ll actually make, subtract your total cost from the retail price:

Profit = Retail price ($29.56) - Total cost ($14.78)

That means you’ll earn $14.78 for every t-shirt you sell at this price, which is a 50% margin.

6. Estimate your monthly earnings

To get an idea of how much you can earn, think about how many t-shirts you expect to sell each month. For example, if you sell 30 t-shirts per month, your monthly profit will be:

Monthly profit = Profit per t-shirt (14.78) * Number of sales (30)

So, with 30 sales, you’d make $443.40 in profit for the month.

Effective pricing strategies are the backbone of any successful print on demand business, balancing profitability with competitive market positioning. From calculating every cost detail to selecting the right pricing model, each step is pivotal in maximizing profit margins and business sustainability. 

Gelato stands out as a reliable partner in this journey, offering a leading global print on demand solution that streamlines your operations. With our platform, you can benefit from local production facilities in over 32 countries that reduce shipping times and costs, a wide range of customizable product options, and a transparent pricing model that helps you maintain healthy profit levels. 

Our platform is a one-stop solution for cost-cutting with design tools and effective logistics management that ensure your business runs smarter and greener. Ready to take your online store to the next level?

Sign up for Gelato today!

Is print on demand still profitable?

Yes, print on demand is still profitable, especially with effective marketing and niche targeting. Print on demand eliminates the need for upfront inventory, lowering risks for entrepreneurs. As ecommerce and personalized products remain popular, print on demand remains a viable business model for those who can differentiate their offerings and effectively manage costs. 

What is a good profit margin for print on demand?

A good profit margin for print on demand typically ranges between 15% and 25%. Since production and shipping costs are usually handled by third-party providers, setting a competitive price is crucial. The product type, platform fees, and marketing efforts can influence profit margins. To maximize profitability, optimizing pricing, reducing overhead where possible, and focusing on generating consistent sales volume is essential. 

How much does the average person make with print on demand?

Some sellers make a few hundred dollars each month, while others generate thousands. Beginners may earn modestly as they build their brand, while experienced sellers with a strong following can see more substantial returns. Success depends on factors such as product selection, effective promotion, and tapping into the right audience for consistent sales.

How fast can you make money with print on demand?

How quickly you make money with print on demand depends on several factors, including your marketing efforts, product uniqueness, and audience reach. Some sellers see their first sales within a few weeks, while others may take months to build traction. However, social media marketing, SEO optimization, and ads can speed up the process.