Fashion Marketing-Pricing

Price

• Value to Price Ratio: the relationship between the perceived quality and the expected satisfaction with the garment and the price

• Setting the Price:– Manufacturers to wholesalers to retailers– Wholesale: manufacturer’s price to the retailer– Retail: price final consumer pays for a

garment

Pricing Terms and Strategies

• Markdown: price reduction taken from the original retail price to speed up sales

• Markup: percentage added to the cost of the wholesale price to create a profit for the retailer and cover operating expenses

• Operating Expenses: salaries, advertising, building maintenance, cost to cover damage & stolen merchandise, cost of security

Pricing Terms and Strategies

• Margin/Gross Profit: difference between the selling price and the cost of the fashion item

• Net Profit: balance left after operating expenses are paid

• Formula: Selling Price-cost of items-operating expenses= net profit

Wholesale Price

Operating Expenses

Net Profit

Margin, GrossProfit, and

Markup

Retail Price

Pricing Terms and Strategies

• Markup: the amount added to the cost to cover the operating expenses and the desired profit

• Retail $-Cost $=Markup $

• Markup %=Retail $-Cost $

Retail $

Pricing Policies

• Competition: other businesses selling similar items

• Market Share: percentage of the total market represented by a customers in a target market

Pricing Categories

• Price Range: used to identify th equality of the fashions– Discount: low end price line represented by

high-volume sales items and close-outs (Ross)– Budget: below average prices (Wal-Mart)– Value-Priced: good quality, not high fashion– Moderate: middle-priced items– Better: middle to high prices, sold in specialty

shops or department stores

Pricing Categories• Bridge: low-price end of a designer line of

fashions (young designer, up & coming or special line designed for lower price like Polo)

• Designer: high-price end and carries a brand name with an image that allows the high price (established-Chanel, Gucci, Ralph Lauren)

• Couture: original, luxury items that are one of a kind and made of the top quality materials, hand-made (Chanel Couture)