Pricing Merch For Sales And Profit

While pricing merch competitively is important, it’s just one piece of the puzzle. There are a number of other factors to consider if you want your merch to be really profitable.

For many musicians – especially those who are heavy into gigging and touring – merch can bring in a good chunk of income. But as lucrative as merch can be, if the pricing isn’t carefully thought out, you could be limiting your potential.

A lot of times when bands are pricing merch, they just model theirs after what other musicians are selling for. While pricing competitively is important, it’s just one piece of the puzzle, and there are a lot of other factors to consider if you want merch to be really profitable.

Use this process to determine the prices for new merch items you produce, and to reassess your current merch strategy.

The factors that determine merch cost

Let’s go through a few elements that affect how much merch will cost to make. Understanding these things will help you with everything else we’re going to talk about in this post.

The number of ink colors you use in your shirt designs can have a big effect on the cost. Generally, the more colors used in a design, the more it will cost you to print. On the same note, printing a design on both the front and the back of a shirt will almost always cost more than a single-sided design.

Most companies will charge you a lower price per unit if you order a large amount at a time (this goes for shirts, posters, pins, buttons, stickers, etc.). If you know you will sell through it, ordering a higher quantity will get you a lower price.

And finally, there’s the quality of the item. It goes without saying that a higher-quality shirt will cost you more than a cheap shirt that will fall apart in a few washes. Quality probably isn’t something you should skimp on, even if you’re trying to cut costs.

Pricing basics and your return on investment

The best way to figure out what price your merch should be is to figure out what kind of return on investment (ROI) you want. In short, you’re deciding how much profit you want to make from each item sold and adding that to the cost to purchase it.

I know it feels like a lot of extra effort (and math), so let’s take a look at an example so you can see why this is important.

Remember: the kind of merch you’re ordering, the quantity you’re ordering, and the quality of the item will factor into the price per unit of whatever you’re producing. So, let’s say you’ve determined you want to make a $15 profit on t-shirts.

If you order 50 shirts with a design that has a lot of different colors (we used six for this example), your costs will be much higher. On Merchly, this design will cost you around $11.09 per shirt. If you want to make $15 profit you will need to charge $26.

If, however, you order 500 black and white shirts (one ink color), you’ll be able to get them made much cheaper. On Merch.ly, this kind of design will cost you around $5.13 per shirt. If you want to make a $15 profit you will need to charge $20.

As you can see, if you just picked a number out of thin air based on what other people were selling for, you’d likely end up making a much smaller profit on your full-color shirt. Now, that’s totally fine if you’re willing to make less money for a cool design, but just make sure it’s a conscious decision.

Competitive pricing

After you’ve done your ROI calculations, you can look at what other musicians are charging. Think of it as a way to double-check your prices.

Fans will start questioning you if you’re selling shirts for $35 when the indie band next to you is selling them for $20 (unless they’re exclusive, like limited edition hand-screen printed or something). If your prices are way out there, it may be worth rethinking your design to cut some costs or reevaluating the amount of profit you can reasonably make on an item.

Offer merch at multiple price points

Different fans have different budgets, and each will have a different capacity to support you and your music. If all you have is a $20 shirt, you’re not giving fans with a lower budget a chance to support you, and you’re not providing your superfans (and those who can spend more) the opportunity to support you at their full capacity.

You’ll be better off, and will make more money, if you have a bunch of different items ranging from, say, $3 to $40, $50, or even $100 than you will be with 10 different t-shirt designs.

On the low end, stickers and buttons are good options. They can go anywhere from $1 to $5 depending on the size and quality. You could offer enamel pins for anywhere from $5-15.

In the mid-range, CDs are a must-have merch item at around $10-15. You can sell hats, or posters, and t-shirts for anywhere between $20 and $30.

Hoodies are a great option as a higher-priced item. Signed merch, limited runs, and exclusives are also great ways to create higher-end merch items.

Bundling merch

Now I know if you’re just starting out, it can be hard to hit all those different price points, and that’s where bundling comes in.

Typically you would offer each item individually and then some things bundled together at a bit of a discount. So if one shirt is $20, two shirts would be $30. This is a great way to get people who may have come with a group or a friend to buy more than one shirt.

Another option is to bundle two different items together. So if one shirt is $20 and one CD is $10, they could get them together for $25. This is a great way to up the average purchase amount. In their mind it’s only $5 so it’s a good deal. But for you, that’s an extra $5 they wouldn’t have spent otherwise.

Of course, you need to take per-item pricing into account and figure out your profit before getting carried away with discounted bundle pricing. I know, more math, but it’s part of being in the music business!

Dave Kusek is the founder of New Artist Model and Berklee Online. Over the years he’s worked with tens of thousands of musicians around the world across every genre imaginable and in many different markets. New Artist Model is an online music business school designed especially for indie musicians. Learn how to turn your music into a career, understand the business, and start thinking like a musical entrepreneur.

Pricing merch for sales and profit