In Subscription School’s next 60-second sesh, Jesse tackles the process behind pricing your subscription box. Learn about COGS, product cost, fulfillment costs, and how to use these metrics to decide on a price for your business.
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Transcript: How to Price Your Subscription Box
Hi everyone. My name is Jesse, and you’re watching Subscription School’s next 60 second sesh. Today we’re talking about how to Price Your Subscription Box.
When it comes to pricing your subscription, it’s best to start with an understanding of what it will cost YOU to actually bring your product to market. This involves the core metric of COGS (cost of goods sold), which is made up of product and fulfillment cost.
Product costs include the cost of the products inside your box, the cost of the box itself, tissue paper, and any other custom inserts – all the goods you use to curate the product experience for customers.
Fulfillment costs are the cost associated with packing and shipping the product to your customers doorsteps. This includes the cost of a packing labor as well as the cost of postage and labels.
When we add product cost and fulfillment cost together, we end up with our COGS – which means we’re almost ready to price our subscription box.
Generally, you want to be working with a 40-45% gross profit margin after COGS. This is the money you use to pay for operation and services, as well as any other labor and employee salaries. Using your calculations from before, apply this formula. Look at the result and round up to the nearest $0.95 or “rounder” number for people’s minds. What are you left with?
Questions? Learn more about pricing your subscription and find the official Cratejoy Subscription Box Calculator at SubscriptionSchool.com. And don’t forget to follow us on Facebook & YouTube for our most recent videos.