Perhaps now more than ever, your profit margins as a decorated-apparel seller need to be as high as reasonably possible for your products and services. However, many owners are hesitant to raise prices on a regular basis, even though consumers tend to expect some form of yearly increases to the costs of goods and services.

The reason for this is usually that they’re anticipating negative comments to come their way and are convinced they’ll alienate long-time customers who’ll part ways, because they don’t want to pay more. Since charging the right amount for your services is crucial to the survival of your business, let’s take a look at why you should raise your prices annually — and how you can communicate your new rates in a way that won’t negatively affect your business. Before we dive into how you can raise your prices, let’s first talk about what you’ll need to find out to do so successfully.

The true cost of your product is more than just the cost of the item itself. You also need to know all the additional costs that go into decorating that garment. That includes your shop overhead, labor costs, decorating supplies and the like. Not knowing your exact cost means that you could possibly raise your prices — and still sell your decorated apparel below what it costs you to buy the blanks, imprint them and then ship the items out.

Next, you also need to understand why it’s important for your shop growth to raise your fees. This way, you can feel more comfortable with your new pricing structure, and in turn, you’ll be more confident communicating these increases to your customers.

Why You Should Raise Your Prices

1. The cost of blank goods and decorating supplies are going up, so you’ll need to cover those costs.

2. The cost of living goes up every year, meaning that wages (both yours and your employees’) need to increase as well to stay current with the economy. (This is why shop owners should regularly evaluate prices and do increases to reflect the cost of living in your state.)

3. There’s a possibility that the current minimum wage will be dramatically increased. This will impact your overall costs, so you’ll need to raise your prices to cover this, if it happens. If you don’t, you may need to downsize your staff or reduce hours, two things you don’t want to do.

4. You also want to raise prices before you have to do it. If you wait until it’s absolutely necessary to raise prices, then you could go weeks or months operating at a loss. You run the risk of going negative (or even staying negative) on your profit-and-loss sheet if you wait to raise your prices.

5. Many shops give away their time (which is money) without even realizing it. For example, lots of distributors and decorators don’t ask for a fee when they discuss logos or other design options at length with their customers. This is valuable consulting time that you could be putting into the business to make money. Instead, you’re focusing on a potential sale that may not actually happen. To compensate for this, you need to factor in giving away your expertise and advice for “free.”

Many shops have artwork or setup fees that can cover those costs. It doesn’t have to be a set fee, either, but can instead be on a sliding scale. This can include the cheapest fee option — setting up the artwork — to a slightly larger fee for tweaking the artwork file the client gives you. The most expensive fees can be reserved for those who want you to create new artwork from scratch. As decorated-apparel consultant Marshall Atkinson once pointed out, “There’s more value in being a problem-solver than being a commodity.”

To continue to grow your business and to keep your best employees, you must increase your prices on a regular basis. It’s easy to learn the best way to do this, so you get comfortable with the process and don’t have a huge “sticker shock” issue with customers.

How to Raise Your Prices

Now, let’s take a look at eight ways you can cleverly raise those apparel prices.

1. Before raising your prices, educate your staff. Let them know exactly what the actual costs are that you’re looking at for each item. The last thing you need is for your employees to think you’re just doing a “money grab” and that they aren’t getting anything out of it themselves. Or even worse, when the occasional customer mentions the price increase, you don’t want an employee mentioning where they can get their shirts for less money. Don’t let your staff undermine your success. Your price increases also help you keep up with their salaries without layoffs or cutting hours. So the price increases are as much for them as it is for your business.

2. Pull reports by category and then by item to see what your most popular products are. It’ll be easier to make price increases on these items. You may even consider if you should reduce your product offerings to only the items that have performed well. Remember the 80-20 rule: If 80% of sales come from just 20% of your products, just carry those items.

3. Consider Weber’s Law. When applied to marketing and pricing structures, it essentially stipulates that an approximate 10% increase is typically not noticed by consumers (or is noticed, but accepted). Basically, if you go up about 10%, then your increase isn’t likely to stir up many customer complaints or problems, but still will cover your extra costs or a portion of them.

4. Be open and honest about the price changes. Once you’ve determined your new prices, post that information everywhere — inside your shop, on your website, on social media and in a link at the end of your emails. Basically, get this out in every way that you communicate with customers. If you plan this out well enough ahead of time, you can give them a date at which prices will increase and encourage customers to buy now before the increase occurs.

5. There are ways to subtly increase your profit margin without causing major concerns. For instance, if you currently offer packaging services, then consider reducing what you include in these bundles, but keep the package at the same sale price. For example, Ugmonk does this well with its bundling packages. You can also increase the price while adding little extras that cost your shop very little, but may have a higher perceived value to the customer. This will help them “justify” the price increase in their minds.

6. Plan to handle complaints or threats of losing your best customers. If this happens, you may need to evaluate your new prices to see if they’re too high for the market. Or if you’re the highest price among your competition, reevaluate how you’re marketing your value to prospects and customers. You can offer long-time and really good customers limited-time or special discounts to show your appreciation for their continued business. This could work to your advantage with referrals from these happy customers to new clients. Business expert Bo Bennett has said, “In sales, a referral is the key to the door of resistance,” and it’s certainly true.

7. Take the potential customer loss as a sign that you need to target a new customer base. If you’ve been underpricing your products and attracting customers that shop on price, then a change in marketing and targeting of your new ideal customer is in order. Marketing guru Seth Godin has pointed out the importance of this: “Companies that market on the lowest price usually have nothing interesting to say.”

8. Finally, consider using “price anchoring” to give your customers a way to see the value of the items with higher prices. Place your most inexpensive item next to the premium product so the customer has a choice and can see for themselves the better value in terms of quality.

If you’re finding yourself facing losses on your sales ledger, it’s probably a good time to look at adjusting your prices. It’s an even better idea to regularly assess your profit margins to determine if you’re charging the appropriate price for your products, so that you don’t end up losing out in the long-run. So if you feel like you haven’t had a moment to take a deep dive into your pricing structure, set aside some time in the calendar for yourself to see if your current prices are really working for you.

James Andres is the content manager for Top 40 supplier S&S Activewear (asi/84358). Contact: jandres@ssactivewear.com.

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