!One of the benefits of having a private label line is that you can set the retail price for your products without having to consider the competition. We came up with a list of ways to help salon owners decide how to go about pricing their private label line. It has to be the right choice for the owner and their salon. These four thought processes contradict each other because there are different ways to look at pricing products. The “right” thought process is different for everyone! Each of these points include different ideas to consider on how to determine retail price when pricing your product:
1. Price your products at a minimum of 2 1/2 times your cost. When buying from manufacturers, the traditional markup is 2 times the cost. Currently, most retailers are marking up private label products at a minimum of 3 times the cost. At this markup, you are still offering a premium alternative at a lower price point.
2. What gap do you have in your retail offering that you are looking to fill ? Retailers always offer an opening price point, a middle level price point and a luxury price point. In the salon world that will vary from salon to salon . Here is a stake in the ground: Opening price point at $15-17, Mid-level at $18-$20, and Luxury price point at $21 and above (the fastest growing price point of hair care products is between $13-$22). Again, this will vary. An “A” level salon may start their opening price point at the $18-$20 price point. I do not recommend having multiple offerings in a single price point. This confuses the stylist and client. The client does not want to shop you. The client wants you to search out the premier products within a price point and make that recommendation to them.
3. Make sure if you put your name on a product that you price it in keeping with your brand and level of salon in the market. If you are an “A” salon or luxury experience and you are putting your name on a product, then that product should have a luxury price point. For example, think of Kohl’s, Macy’s and Nordstrom. Nordstrom would not put their name on a private label product and price it at a Kohl’s consumer price point…neither should you. However, Kohl’s would put their name on a product and sell it at an opening price point because that is their brand; affordable luxury.
4. This next point is not for the weak of heart. For the the “A” level salons I recommend your private label be priced at your luxury price point. If you carry another product at a higher price point than your private label product, you are ultimately telling your client that you place higher value on the higher priced product. This tells your client that you sell your private label product for less because you do not believe in or value your private label product as much as the higher priced product. Your private label line then becomes less appealing to clients because they want to know that you put your name on something you are proud of and that you wouldn’t sell it to them if you didn’t believe in it 100%.
Each of the above points have merit. Pick the one that works best for you and discover how to determine your retail price !