Price is Right

As we continue along the fashion road, we come to a place where one has to tell the marketplace a number. Today we are are going to talk about price: how to price your dream you just turned into a reality and how to know what you’re worth

Price is the biggest signal you send to the market telling them what you think of yourself.

Price shapes how people understand your product long before they experience it, so today we’re walking through a few of the lessons we learned thinking about where a brand sits, how the numbers work, and how to protect value over time.

If you’re in a hurry, jump straight to the Tools, Tactics and Takeaways section.

And if someone you know is building, selling, or thinking about pricing right now, feel free to share this with them with your link where you’ll get a reward for sharing it.

⏳️ Estimated Read Time: 7 minutes

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Pricing Strategy

Price is your expectation setter.

Pricing tells the customer a lot about your product.

Before they understand your story, before they know your features, before they even try the product, the price is already speaking for you and setting their bar,

It tells them where you sit.

It’s the perceived value of your product through price. And once that signal is sent, it’s very hard to undo.

So pricing isn’t just a finance decision. It’s one of the earliest brand decisions a founder makes. We always wanted our price to show that we were a premium product, but give enough room for the customer to feel they got value.

The first place to begin is understanding the market you are stepping into.

Every category has a range. Customers already have a mental model of what something should cost, even if they can’t articulate it.

If you were starting a burrito company tomorrow, you would immediately look at the spectrum.

• Taco Bell
• Chipotle
• Javier’s

This is a good place to start understanding what the market is demanding for the product you will be selling. From there you can understand the range in which you’re working.

Once you understand the category, the next step is working through the mechanics.

There are a handful of forces that always show up in pricing decisions:

• Your production inputs
• Your marketing budget
• Your growth expectations
• Your distribution strategy

A simple example.

If you plan to spend $100,000 on marketing this year and you expect to sell 100,000 units, your marketing cost is roughly one dollar per unit.

That one dollar now has to live somewhere inside the price.

And once you have a rough number, you step back and ask a different question entirely.

Can the brand defend this price? Will customers pay the price you’re demanding.

When we were building SAXX, the product was always meant to sit in the premium range. Not luxury.

But right at the edge of it. At the time, many men were buying underwear for three dollars a pair. We were asking them to pay basically 10x.

Changing a buying habit by that much is not easy, so the value has to be clear. Comfort. Performance. Longevity. Once someone experienced the difference, the price started to make sense. We also defended that these pairs will last you 10x long.

Pricing becomes more complicated the moment retailers enter the picture.

Early on, the typical structure looks something like this:

• Retailer keeps around 60%
• Brand keeps around 40%

And that’s before you start negotiating payment terms, which might stretch to 120 days. You can negotiate on each point based on your business (maybe take more days payable but a better margin).

Price leads directly into margin.
Margin leads into terms.
Terms shape the entire financial structure of the business.

Discounting is another area where brands can get themselves into trouble.

At SAXX, we rarely ran traditional discounts. Instead, we leaned toward volume incentives, so that the consumer immediately knew why they were getting a discount, they were paying more upfront for a better unit cost.

Fashion also runs on cycles. Styles disappear for a while, then return twenty years later.

Velour tracksuits. Denim silhouettes. Flares to tapers.

When that cycle hits, two audiences show up at the same time:

• The people who remember it with nostalgia
• The next generation discovering it for the first time

That overlap creates momentum.

Another opportunity comes from recognizing a category that simply hasn’t evolved in years.

That was the case with boxer briefs.

The product had barely changed for decades, which meant there was room to rethink it. Sometimes the opportunity isn’t creating something new. Sometimes it’s refreshing something familiar.

More on Pricing

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