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What should I charge for personalized products?

If you talk to shop owners that are selling personalized products, one thing you'll hear from them is confusion over how to price their personalized products.  There are not many best practices.  Most shop owners just set their pricing without having sound reasoning behind their choices.  I've talked to many of these shop owners and here's what I've learned.

Pricing personalization is more art than science as the are number of factors to consider.

The Low and High Water Marks for Pricing

When thinking about how price your personalization, its good to establish the boundaries of the pricing to consider.  The lowest price for your personalization should cover the cost of the personalization effort.  Most of that cost will come from the labor to do the personalization work.  

To determine the maximum that can be charged, one must look at the value of the personalization to the consumer.  While value can be hard to determine, you can get a feel for it by asking potential customers questions like, 'What is the most that you spend to get this customized?' or 'Would you spend $_____ to get this personalized?'

In general, consumers put a lot of value on personalized gifts and on products that reflect their own personal brand.

Factors to Consider

There are a number of factors to consider when determining the value of personalization including:

  • The consumer's design experience.
  • The level of control the consumer has.  Can they select, artwork, fonts, colors, etc?
  • The quality of the personalization.  Etched glassware feels like it is of higher quality than words printed on plastic.
  • The size and display of the personalization.
  • The intended use of the product.

Industry Examples

 The table below shows the actual pricing from webstores that are offering personalized products.  The stores and products are a random sampling.  The right most column, labelled %, is the percentage increase in the base price for the personalization. 

As you can see, the price of personalization as a percentage of the base price varies widely from 10% to 163%.  The average is 44% and the mean is 30%.

So a good starting benchmark for price increase would be 1/3.  Then you should adjust the price up or down as needed.

Personalized-Products-Pricing.png

Test Your Pricing

Once you determine the initial price that you want to charge for your personalzation, you need to test it to optimize the price.  Try moving the price up and down and see what impact that has on conversion for the product and conversion for personalization.  If you increase price and conversions stays flat, you can try increasing the price again.

Also test having the personalization being the default setting.  In general, setting personalization on by default improves the personalization conversion with no impact on the product's overall conversion.

Summary

 Start by pricing personalization as a 1/3 mark-up on the product's base price.  Then test the personalization by first moving it up and measuring the impact on conversion.  The goal is price personalization at the value that consumers see for it.


Like these tips?  Learn more about running an online store.

We've put together an eBook with our best tips and tricks on running an online store focused on those that sell personalized products.  Follow the link below to download your own free copy.

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Topics: Personalized Pricing