How to calculate selling price for your products
It’s daunting when calculating selling price and finding that sweet spot. This article will help you tackle this challenge and find the best pricing strategy for your manufacturing business.
Want to start selling directly to consumers? Learn all about the direct-to-consumer (D2C or DTC) business model and how to manage it as a modern-day manufacturer.
In 2025, it is predicted that online sales will reach around $7.4 trillion — that’s a lot of bread.
Traditionally, manufacturers make their wares and sell or store them with a retailer to sell on their behalf. However, with customers doing most of their shopping online nowadays, many manufacturers have picked up on the potential money to make by having an online presence. Some have gone even further to cut out the middleman completely.
In this article, we will explore the art of selling directly to consumers as a manufacturer.
Direct-to-consumer (DTC or D2C) selling are business models where brands are selling products directly to consumers, bypassing retailers.
This allows brands to have greater control over their:
DTC brands have been rising recently as customers increasingly shop online and are more open to buying from new and lesser-known brands.
Many DTC brands start with an online store but eventually open physical stores — known as omnichannel retail selling.
Some successful examples of DTC brands include:
These brands have built strong relationships with their customers by being transparent about their pricing, manufacturing, and business practices.
They also offer high-quality products and great services for building customer relationships.
If you’re considering selling DTC, it’s important to ensure that your brand can connect with customers and create a strong emotional connection. You’ll also need robust e-commerce platforms and fulfillment infrastructure in place. Finally, it’s important to be prepared for the challenges of running a DTC business, such as managing returns and dealing with shipping logistics.
Wholesaling and direct-to-consumer model (DTC) are great options for expanding your business.
But what’s the difference between them?
Wholesalers sell products in bulk to retailers, who are selling products to clients. This means that wholesalers don’t directly sell to customers. On the other hand, DTC businesses sell their products directly to customers. There’s no middleman involved.
There are pros and cons to both approaches. Wholesaling can be a great way to reach clients through retailers. But it also means that you have less control over how your products are sold and marketed.
DTC selling gives you more control over your brand and how your products are presented to customers. But it can be harder to reach a wide audience without going through retailers.
Ultimately, the best approach for your business will depend on your products, goals, and audience.
Consider all of your options before making a decision.
There are several reasons why brands are increasingly going direct-to-consumer (DTC).
Perhaps the most important one is that it allows them to control their brand and customer relationships. When brands sell through third-party retailers, they give up a certain degree of control over how their products are presented and marketed. They also have less visibility into their customers and what they want.
DTC allows brands to build a more intimate customer relationships. They can collect data directly from them and use it to improve their products and operations. And because they’re not relying on middlemen, they can offer lower prices.
Going DTC is also a way for brands to stand out in a crowded marketplace.
In recent years, there has been an explosion of new brands and products. Many of these are sold through online marketplaces like Amazon, making it difficult for customers to find what they’re looking for. By going DTC, brands can create their own unique space and build a direct connection with their customers.
This is especially important for young brands that are still establishing themselves.
Of course, not every brand is suited for a DTC model. Building a direct-sales operation requires a significant investment of time and money. And some brands simply don’t have the kind of product that would work well in a DTC setting.
But for many brands, going DTC is a way to stay relevant and competitive in the modern marketplace.
It’s a way to take control of their destiny and build a more sustainable business.
In recent years, there has been a trend of manufacturers selling directly to consumers.
This is often done to form better customer relationships and increase brand awareness. Here are seven examples of businesses that have executed innovative and a unique marketing strategy to sell directly to customers:
Warby Parker is a glasses company that sells its products through an online store and in physical stores. The company offers a “Home Try-On” program, where customers can order five frames to try on at home for free. Customers then have five days to decide which frame they want to keep before returning the others.
Everlane is a clothing company that sells its products online. The company offers a “Choose What You Pay” program for some of its items, where customers can choose to pay either the true cost, which is the cost of the item minus the markup, or the standard price.
Bonobos is a clothing company that sells its products online and in physical stores. They offer customers free shipping and returns on all of their orders. Customers can also schedule an appointment to visit a “Guideshop” to try on clothes before ordering them.
Dollar Shave Club is a subscription service that delivers razor blades to customers’ homes. The company offers a “try before you buy” program, where customers can sign up for a free trial and receive razors, blades, and shaving cream. After the trial, they can continue their subscription or cancel it.
Birchbox is a subscription service that delivers beauty products to customers’ homes. Customers can receive either a monthly box of five samples or a quarterly box of full-size products. The company also offers a loyalty program, where customers can earn points to redeem for future purchases.
NatureBox is a subscription service that delivers healthy snacks to customers’ homes. Customers can choose from various plans, including a monthly plan, a quarterly plan, or a yearly plan. The company also offers a “try before you buy” program, where customers can sign up for a free trial and receive five snack boxes.
Trunk Club is a clothing company that sells its products online and in physical stores. Customers can schedule an appointment to visit a “Clubhouse” to try on clothes before ordering them. The company also offers a styling service, where customers can provide their preferences and must hand-pick stylish items for them.
If you’re not already selling directly to consumers through an online store, you’re missing out on a huge opportunity.
Here are three key advantages of direct selling online that you should know about:
When you sell online, you’re not limited by geography.
You can reach customers worldwide with the click of a button. There are several reasons why a manufacturer needs to reach a wider audience:
All of these factors can help a manufacturer succeed in the marketplace.
Selling online is often cheaper than traditional brick-and-mortar retail methods since you don’t have the overhead costs of physical storefronts.
There are many reasons why a manufacturer needs to lower costs. One of the most important reasons is that it can help increase profits. When costs are lowered, manufacturers can sell their products for less, which means more people will likely buy them.
Additionally, lowering costs can help a company compete more effectively against its rivals. If two companies sell similar products, the one with lower costs is likely to be more successful. Finally, lowering costs can help a company attract new customers and retain existing ones.
If customers know that a company can keep its prices low, they will be more likely to do business with that company.
There are many ways in which manufacturers can lower costs.
Some common methods include:
Additionally, manufacturers may lower costs by outsourcing some of their operations to countries where labor and other costs are lower. By lowering costs, manufacturers can improve their bottom line and become more successful businesses.
Customers appreciate the convenience of shopping for what they want when they want it.
And with today’s technology, it’s easier than ever to set up and maintain an online store. There are several reasons why a manufacturer needs to offer increased convenience to its customers:
In today’s competitive marketplace, any advantage that a company can offer its customers is worth pursuing. By making shopping more convenient, manufacturers can give their customers one more reason to choose them over the competition.
If you’re not using e-commerce platforms, these advantages should be enough to convince you to give it a try. With the right approach, selling directly to consumers can be a great way to grow your business.
However, there are some challenges with selling directly to consumers, and if you read on, we’ll look into a case study of a former poster child of direct selling. For now, here are the main three challenges to overcome:
The first challenge of selling directly to consumers is understanding what they want. This can be difficult, as customers’ needs and wants constantly change. Businesses must research and monitor consumer trends to stay ahead of the curve.
Another challenge of selling directly to consumers is reaching them where they are. With the vast array of channels now available, businesses need to identify which ones their target customers are using and ensure their marketing efforts are effective on those channels.
Finally, businesses need to be aware of the competition when selling directly to consumers. With more and more businesses entering the fray, it’s important to differentiate oneself in the marketplace. This can be done through pricing, product offerings, or the customer experience.
There are always ways to overcome it, no matter what challenges a business face when selling directly to consumers.
Businesses can succeed in this growing area by being aware of the challenges and taking steps to address them.
The company offers a “100-night risk-free trial”, where customers can try the mattress for 100 nights. If you’re unsatisfied with the mattress, you can return it for a full refund. Sounds like a nice and easy sales strategy.
So, how did Casper become a shining example of how not to sell directly to customers?
Here’s a quick breakdown of the issues that occurred in Casper:
However, the biggest issue with Caspar is in its product. They sell mattresses — something a customer heavily relies on seeing and getting a feel for before making a purchase, and then if they do, it’s going to be a one-off purchase. And their latest business models reflect this reality since 20% of their sales come from retail.
The moral of the story?
Don’t get hyped on industry buzzwords. Direct selling might work for one company, but it doesn’t mean it’ll work for your business.
If you’re considering launching a DTC model, you should keep a few things in mind. Here are eight tips for getting you started.
The first step is to find your niche. What kind of products are you going to sell? Who is your target market? Once you’ve answered these questions, you can build your brand around them.
Your DTC model will only be as successful as your brand allows it to be. Make sure you put the time and effort into developing a strong, recognizable brand that will resonate with your target market.
Content is key when it comes to DTC marketing. You need to create compelling content that will grab attention and convert leads into customers.
Social media is one of the most powerful tools you have at your disposal for promoting your DTC business. Make sure you invest time and resources to build a strong social media presence.
SEO is essential for any website, but it’s especially important for DTC model businesses. Make sure you’re doing everything possible to optimize your site for search engines so people can easily find you online and you’ll need e-commerce platforms to help you manage these orders.
Data is your friend when it comes to putting together a DTC marketing strategy. Use data to segment your audience, create targeted campaigns, and track your results.
The only way to know what works and what doesn’t is to test different ideas and see how they perform. Always be testing new things so you can optimize your DTC marketing strategy.
The DTC model is always changing, so it’s important to stay up-to-date on the latest trends and best practices. Make sure you’re constantly learning and evolving to keep your business ahead of the curve.
Spreadsheets can only carry you so far. Eventually you’ll need to consider implement software to help you manage your manufacturing operations and multiple sales channels to scale selling directly to consumers.
Following these tips for getting started, you’ll be well to launching a successful DTC business. Remember always to keep learning and evolving to stay ahead of the competition.
Katana is an all-in-one solution for direct-to-consumer selling that allows you to manage your order fulfillment, production scheduling, and floor-level management from one easy-to-navigate platform.
ERP software like Katana helps manufacturers cut out the middleman and increase their profits with:
Katana ERP software automatically takes available finished goods and raw materials. It allocates them to open sales and manufacturing orders, helping you understand your production capabilities briefly and fulfill orders even quicker.
Not only can you track finished goods, but with Katana, you get real-time updates on raw material consumption. Avoid stockouts by setting reorder points and tracking your items from supplier to production and customer with batch tracking.
When selling directly to consumers, it’s essential to use e-commerce and accounting software. Katana integrates with Shopify, WooCommerce, and other e-commerce channels so you can manage all your sales from one place. It’s even capable of integrating with accounting software such as QuickBooks too.
And there, now you have everything you need to start successfully selling directly to consumers.
Why not take Katana for a spin? Implement it for free and see how it can take your business to the next level. Try the 14-day free trial and start scaling your business today.