This transcript was generated from the episode audio and may contain minor errors.
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Does the world need more tote bags? Apparently the answer is maybe, possibly. The world might in fact need another brand of tote bags. Perhaps they are like yoga mats or journals, which are seemingly endless in design and variation. We keep hearing about so many different kinds.
And if you go on Amazon, you can find just, I don't know, kind of an endless supply of these items because people are buying them, at least, at least judging by the reviews and the sales. Today, we're gonna hear from a listener selling eco-friendly tote bags at local markets and online. And they're wondering about the right time to raise prices. Specifically, this caller is experiencing some challenges with pricing strategies, especially as costs fluctuate. And he wants to know how to balance covering his expenses while remaining competitive in the market.
So by the way, welcome to Side Hustle School. My name's Chris Guillebeau. This is a common dilemma with physical products. So if you're ever gonna be in that situation, what do you need to know? Let's talk it out, selling tote bags, but need to raise prices.
Detailed question coming up in just 30 seconds. [Music]
Hi, I'm Benjamin Wright from Indianapolis. And I started a side hustle designing and selling eco-friendly tote bags at local markets and online. I've had some success, but I'm having trouble figuring out the best pricing strategy to cover costs while remaining competitive. Recently, my costs went up and I wasn't sure what to do about it.
Like, should I have immediately raised my prices as well or just absorbed the increase and waited till later to raise the prices? How can I determine the optimal pricing for my products and communicate their value to customers? - Benjamin, thanks for reaching out with your question. And just for the record, I wasn't making fun of tote bags. You know, there are a lot of tote bags out in the world, but it seems like people keep buying them.
So, you know, good for you. Okay, so let's talk about pricing. Pricing can definitely be a challenge, especially when trying to balance costs and you don't have complete control over the costs. So let me give you a couple of tips here on determining the optimal pricing for these bags and how to communicate their value to your customers, which kind of, you know, ties in hand in hand. So first, kind of basic, but you want to make sure you're covering your costs.
So that includes materials. It also includes labor, any other expenses associated with producing the item. So, you know, calculate your total cost, divide it by the number of tote bags. Make sure you have that figure at hand at all times, your cost per unit, because you're going to make some decisions based off that. That's not the only vital information, but that is pretty basic and essential.
So next, you know, take a look around, look at your competition, perhaps see, you know, what are the price of other bags, the market price. Keep in mind, customers are often willing to pay more for, you know, really great design or for that eco-friendly feature. So don't be afraid to price a bit higher, but just make sure you know, you know, kind of like where you're trying to fit in in the market, make sure any difference in price is justified by that quality. Now, when your costs go up, like this is the thing, you know, you have to evaluate whether it's a temporary change or a long-term change. You know, if it's temporary, you might just absorb the cost.
If it's permanent though, like you can't just keep, you know, giving your product away for less than it costs to produce it. So you're going to have to adjust your prices accordingly. And I think we've seen that, you know, in the past couple of years with all sorts of things, all kinds of consumer products. So just, you know, be transparent with your customers about the reasons behind the increase. You could mention those rising material costs, but also just, you know, try to keep it positive and focus on how cool your bags are.
I think that's just as important as anything else. You know, focus on their unique selling points, whatever those points may be. And if you got some customer testimonials, you know, some pictures of shiny, happy people, positive reviews, that stuff can really go a long way in terms of building trust and generating more sales, which is what you want to do. Benjamin, I hope that helps. At least gives you a couple ideas.
Best of luck with the hustle. Listeners, if you have a question, www.sidehustleschool.com/questions. You know where to go. We'll continue to feature them each week in a new episode every single day. I'm so glad you're out there.
Take care of yourself. My name is Chris Guillebeau. This is "Side Hustle School." [Music]
from The Onward Project.
