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How we price Tesoro products

Pricing products is a constant battle of balance. There are so many factors that go into the pricing of each product. Not to mention the importance of being competitive with other handbag companies. 

The three deciding factors revolve around variable costs, fixed costs, and profit margins. 

Our variable prices include things like the cost of our raw materials (leather is measured by the square foot, so I calculate how many square feet of leather per bag to find the cost), hardware costs, the amount of time each bag takes to make times how much I should be paying myself for the time, and other costs like shipping for the raw materials. 

The second big factor is fixed costs. For me, these costs include the rent at my store, utilities, the cost of running my website, any apps I use to market/advertise my products, and packaging materials. 

And last but not least, we add profit margin. This is the smallest percentage added to the cost of the goods. Each margin is different for each product. For example, my profit margins on The Nora a little high because the price point is higher, whereas they are a bit lower on the Chelsea and Audrey. 

One of my biggest challenges truly is making a profit off of each bag. I think it's incredibly important for my bags to be somewhat affordable for the average women in the USA. Although my prices do seem high to some people, it's important to remember some of the practices I believe in that actually lower my profit margins. For example, I purchase my leather in the USA, which means my raw materials are more expensive because those tannery owners pay their employees fairly, which in turn means they have to raise their costs. I also believe in fair wages and great conditions for those people making my products. While most of the time I am making them myself, I do sometimes get help, and in that case I have to wrap my payments to them into the costs of goods. 

This is a lot to digest, trust me, I know. But it's so important for you all to understand where my prices come from. So check out the images of each bag below to see how I break the costs down on three of my bags! 

The Nora Pricing 

Raw Materials Cost -

  • Leather - about $125
  • Straps - $34
  • Zipper for bag - $8
  • Zipper for Pocket - $4
  • Snaps - $0.20

Labor Costs - $110 + $10 shipping = $120

Fixed Costs - $75

Total- $366.20

Profit- $228.80

The Audrey Pricing

Raw Materials Cost -

  • Leather - $50
  • Strap - $9.95
  • Snaps - $0.20

Labor Costs - $55

Fixed Costs - $45

Total - $160.14

Profit- $64.85

The Chelsea Pricing 

Raw Materials Cost -

  • Leather - about  $70
  • Short Strap - $15
  • Cross body Strap - $ 10.99
  • Zipper for Pocket - $4
  • Hardware - $ 20

Labor Costs - $65 + $10 shipping = $120

Fixed Costs - $45

Total- $284.99

Profit- $65.01

-Brit


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