In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask nine brand founders and executives: Have you changed your price points? If so, why did you change them, and how did you inform your customers?
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Annie Tevelin Founder, SkinOwl We are increasing our price point for the first time this holiday season. When I first launched, we were selling DTC. Six years later, with many brand ambassadors in play making commission and various wholesale accounts, the cost of goods isn't what it started off as, even with the same formulations and packaging.
In addition, I never imagined we would still be hand-labeling, hand-filling and hand-shipping everything in an effort to keep quality control at its highest. The price increase must happen as a result of this long term labor, which I think our customers will appreciate and understand.
- Mia Reddy Founder and Creative Director, Dehiya Beauty
Funny I’m answering this because we just changed a few of our prices. We are currently scaling, so operational costs are increasing and though we considered this when we initially set our pricing, there are always unknown variables. We wanted to do it before we moved into major retailers, but knew there could be a little pushback from current clients.
We decided to announce the price changes to our e-mail subscribers with a flash sale for 48 hours. Then, we announced it on our social media 24 hours later. We had a great reaction and felt a lot of support. I believe it was because we were completely transparent about why we were raising some prices and let them know when it was happening. We let our clients know there was no way we could grow like this without them and, to show our gratitude for their support, we wanted to offer them a last opportunity to stock up or try something new site wide.
- Natalie Wong Founder, Pep Soap Co.
We have adjusted pricing in both directions. Two years ago, we increased our wholesale price and, hence, suggested retail price. The reason: escalating ingredient costs. We use natural ingredients such as extra virgin olive oil and essential oils. Unpredictable events like drought and plant diseases and higher demands are contributing factors.
Our customers are independently-owned retail store owners and buyers. We sent an email to our stockists two months before the price increase. We then followed up with a couple reminders, giving them advance notice to plan and prepare. Many stocked up before the price adjustment. Tip: make sure you have enough inventory to fill the demand.
On the flip side, we recently lowered our U.S. prices. We are based in Canada. The adjustment brought the U.S. dollar pricing in line with the current currency exchange rate. It also saved us from maintaining a USD website. The response? For our online customers, as you can imagine, lower price = happy dance.
For our retailers who ordered in the last couple months and paid the old, higher price, we credited the difference to their accounts. That way, they are free to adjust their prices without hurting profit margins.
Price adjustment can be nerve-racking. The key is to be honest, transparent, and put ourselves in the shoes of our customers.
- Julie Longyear Herbal Chemist and Founder, Blissoma Holistic Skincare
We have changed our price points at least twice through the 10-year history of our skincare line, and it has always gone very well. When we first launched, we had designed our line for sale in natural foods stores where the overall price point expectation is just much lower. I had never sold skincare before and just did not understand how much we would have to spend in order to make sales, so our projections for our marketing budget were much smaller.
I have always been a very value-minded consumer myself, so I thought people would appreciate being able to get an amazing quality product at an aggressively affordable price point. Gradually, we received feedback that our price point was honestly giving a poor impression of the actual quality of the product. We also got a better picture of what it would take to actually survive and grow in the beauty space and knew we would need to build in more marketing on a continuous basis.
So, we made a significant price jump where we took items that had previously been priced at $17.99 and adjusted them to about $25.99, a 44% increase. We also made another significant price jump of about 15% in 2016 after moving into our new commercial building as we reappraised the overhead costs of our next phase of business growth.
At each step, we did a lot of explaining. We did not just leave our customers to wonder why it was happening, and we really let them into the behind-the-scenes on our decision. I think, when you have a really good group of customers, they are pretty willing to understand when the reasoning is sound.
The raises were all intimately tied to our survival and sustainability as a brand. Our fans really want us to be able to continue making our products, so they are willing to accommodate the adjustments. Even with the adjustments, we are still priced at about half of what many of our competitors charge, so they are still getting a premium product and I think they can sense that.
- Drea Gunness Groeschel Founder and CEO, Beautiac
I have changed price points at a past company (not Beautiac) on our leading product, but we changed it lower. The theory was that the product was slightly over $50 and that, if we could offer it under $50, at $48, it would sell through faster at boutiques due to the under $50 retail price being more acceptable to those purchasing an impulse or in need of a gift. It was a home décor item.
However, it didn’t work for us. What we began to realize was that the customer who loved the product and the stores that did well with the product, weren’t very price point-sensitive and had the disposable income to spend. Thus, they were willing to pay the over $50 price. People were happy that it was a couple dollars less, but I would say they weren’t over the moon because it didn’t matter so much to them.
Ultimately, we gave away a little margin, but didn’t gain an impactful boost in distribution as we had hoped. The above is about a wholesale strategy. However, online, the lower price point worked great! As people online search for a wider level for gifts under $50, it would provide us as a good option. So, it can be tricky. There are always specific price points in every product category that are most popular and a good pricing strategy will keep you from experimenting along the way.
- Tracy Brown CEO and Co-Founder, Priya Apotheca
On our full-size products, we have not changed our price point. We were very thoughtful when they were crafted. That said, we are realizing what a delicate dance it is when considering price with brand ethos as it relates to product placement and marketing. They have to be deeply aligned. We did shift our price point of our travel kit within two weeks of launch, however. Having local events and receiving feedback and witnessing consumer buying habits was invaluable to guiding us.
- Jean Baik Founder and Creative Chief Officer, Miss A
We are a $1 beauty and accessories site and, because of the tariff increases starting last year and overall increase in manufacturing costs, it has been extremely hard to not change our prices. It has impacted our margins, but we are still going to stay true to our original price point of $1 for as long as we can. We are in a special market of affordable beauty and want to keep it just like this.
- Ada Polla CEO, Alchimie Forever
Of course, year over year, our cost of goods increases due to higher cost of raw materials and higher shipping costs. However, I am proud to say we have not increased our retail prices in over five years, and we will not increase this coming January 2020. The feedback we get on our prices is excellent. People love how approachable and responsible we are, and I am working hard to keep it that way.
- Kethlyn White COO, Coil Beauty
Our price points remain consistent outside of our sales or our Coil Clock promotions. However, when we do make changes that impact the overall checkout price like the shipping policy updates mentioned above, we send out updates via our email list and, then, add announcement banners to the site to make sure customers see the good news.
If you have a question you’d like Beauty Independent to ask beauty entrepreneurs, please send it to editor@beautyindependent.com.
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