Price your brand to sell

Price your brand to sell

A Simple Guide to Product Pricing for DTC Founders


Direct-to-consumer (DTC) businesses are revolutionizing the retail industry by cutting out the middlemen and offering their products directly to consumers. One crucial aspect of running a successful DTC business is setting the right prices for your products. In this blog post, we will discuss the essential factors DTC founders should consider when determining their product prices.

  1. Cost of Goods Sold (COGS)

Understanding the cost of goods sold (COGS) is the first step in setting your product prices. COGS includes all the direct costs associated with producing a product, such as raw materials, labor, and manufacturing. Calculate your COGS for each product, and use it as a baseline for your pricing strategy.

  1. Desired Profit Margin

Profit margin is the percentage difference between your product's selling price and its COGS. To ensure your business remains profitable, determine the desired profit margin for each product. Consider your overall business objectives, target market, and industry benchmarks when deciding on your profit margin.

  1. Competitor Pricing

Analyze your competitors' pricing strategies to understand the market landscape and identify opportunities. Determine whether you want to position your brand as a premium, value, or budget option compared to your competitors. Adjust your pricing accordingly, but remember not to engage in price wars, as this can lead to diminishing returns.

  1. Perceived Value

Perceived value is the worth a customer assigns to your product based on their expectations, experiences, and comparisons with other products. To maximize your profits, your product prices should align with the perceived value in the eyes of your target audience. Enhance the perceived value by focusing on product quality, unique features, and effective branding.

  1. Market Demand

Consider the market demand for your products, as it can significantly impact your pricing strategy. If there's high demand and limited supply, you may be able to charge premium prices. However, in a saturated market, competitive pricing may be necessary to attract customers. Regularly assess market demand to adjust your pricing as needed.

  1. Price Elasticity

Price elasticity refers to how sensitive consumer demand is to changes in price. Understanding price elasticity for your products can help you determine how much you can increase or decrease prices without significantly impacting sales volume. For products with high elasticity, small price changes can lead to significant changes in demand, while products with low elasticity are less affected by price fluctuations.

  1. Discounts and Promotions

Incorporate discounts and promotions into your pricing strategy to encourage customer loyalty, increase sales, and clear out excess inventory. Plan your discounts strategically and ensure they do not erode your profit margins over time.


Setting the right price for your DTC products is crucial for attracting customers, staying competitive, and maintaining profitability. By considering factors such as COGS, desired profit margin, competitor pricing, perceived value, market demand, price elasticity, and discounts, DTC founders can develop a robust pricing strategy that supports their business goals. Remember to regularly review and adjust your pricing strategy to keep up with market trends and your evolving business needs.