# Pricing and Product Differentiation



## shermancrabb (Aug 31, 2011)

It is not enough to be successful; one should help others along the way (I think.) These forums are an excellent community for providing and receiving that help, so I wanted to post something here that I emailed to a new salesman. I want to say that I have a recent business degree and graduated Summa Cum Laude so this might actually be good advice.


On figuring out what we should charge customers: 

When you think about pricing the tee-shirts, think of the different prices you see in the market. 

The basic marketing idea is:

At one extreme you have price leadership (that is offering the lowest price in the market). Generally this strategy is used when you sell the exact same thing as a lot of other people.
At the other extreme is having a unique product that you are the only supplier of. (This is called product differentiation). The more product differentiation we have the higher price we can set relative to the market.
Think of the graphics on the tee-shirt and, fabric and ink quality as differentiating the product, not the fact that there are a lot of people selling tee-shirts.

We will have to find a balance between cost leadership and product differentiation.

In Entrepreneurship class they taught us that young businesses make the mistake of competing on the basis of cost leadership, this is very difficult because larger companies have lower costs per tee-shirt because they make many more tee-shirts –so they can sell the same shirts for less and make the same profit as a smaller business charging a higher price. Adequately differentiating your product early is necessary for survival.

_Where to start_: Split the general market into smaller markets. Do something inexpensive and creative like walking around the mall, go into boutiques and look at the kiosks. Record the prices you find in your phone or on paper (remember pencil and paper). Go to ‘flea markets’. Researching online is time-consuming (many websites) but the information is there. Go to competitors’ websites and look at prices (do not forget eBay), you might buy one or two tee-shirts from competitors and compare quality with your own product. Statistically speaking, sample sizes of 30 are good to drawing inferences from. So graph (in a spread sheet) a set of 30 to 50 prices, this will give you a good basis to work from.

I hope you can use this to make millions.
L8r,
Sherman


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## tonygraystone (May 1, 2008)

Hey Sherman

Thanks for sharing that quality nugget of wisdom. Its encouraging to hear that focus on unique aspects of your brand can lead to success. The temptation is strong to try and compete with established brands prices. This demon is even more so with when operating from one of the most remote developed countries (New Zealand) were everything just costs more :-S

Note to self: Keep doing your own thing!

Tony


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## shermancrabb (Aug 31, 2011)

Tony, 

Thanks for the positive reply. From the look of your website, you could teach everyone a lot.

You said: operating from one of the most remote developed countries (New Zealand) were everything just costs more

I understand what you mean and you are right. One thing to keep in mind is that the internet has diminished that ‘remoteness’. I am in Texas and you are in New Zealand and this conversation exists. That is powerful international access.

I want to mention that I have made lasting business contacts internationally through forums and email, so these forums are a real opportunity. A lot of us, here at these forums, are new to the industry, if not new to business; so you have to put in a little time, but these contacts will pay off.

Profits,

Sherman


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## DivineBling (Sep 14, 2010)

Very validating points! In my niche of rhinestoning, there are so many people who sell the same types of designs. I try to be as unique as I can making my designs a little more custom. I think that's helped my business grow to what it is now.


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## franckblack (Sep 5, 2011)

I'm French and i'm glad to read messages which learn for my job

Dear,
Tristan
Tshirt-spot.com


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## veedub3 (Mar 29, 2007)

Great advice for newbies getting into the t-shirt business.


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