I Almost Went Out of Business Over Product Pricing—Here’s the Fix

It was two days before my boutique’s grand opening. Every single item in the shop had been designed by me and manufactured in small sewing factories in Chicago. I was thrilled. I was terrified. And honestly? I had no clue what I was doing when it came to product pricing.

I never set out to run a retail store. I loved designing. I loved selling. But product pricing? Pricing strategy? That part was a mystery wrapped in an enigma, dipped in panic.

The whole thing started because of a conversation with my friend Marcos from F.I.T. He ran a women’s clothing line in New York and casually said, “Jane, if you really want to make a business and have a life, open a small store. Design whatever you want in the back. Skip wholesale. It’s easier.”

He had me at “easier.”

So I did it. I opened a boutique at 25 years old, armed with talent, ambition, and absolutely no clue about pricing models, fixed costs, or profit margin. I just thought, “If I wouldn’t pay $250 for a dress, why would anyone else?”

 

Spoiler: that is not how effective pricing strategy works.

 

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Click here to check out my Costing and Pricing Course where you will get templates, spreadsheets, and a proven method to make sure your profit margins are where they need to be to have a successful business. No BS. Just the best practices for product pricing whether you are a new business or need to better optimize your profits. 

 

There were definite advantages to starting my business at 25:

• I lived cheap—like, a dingy studio apartment with a view of a police parking lot (which was loud. All. The. Time.)
• I had nothing to lose. Worst case, I’d go back to waitressing.
• Friends showed up to help paint my boutique walls in exchange for beer and pizza. Done.
• I thought like a 25-year-old—which, in some ways, was great. I was bold, scrappy, and willing to try new things.

Of course, the downside of being 25…

• I had zero real experience, so every mistake cost me money.
• I couldn’t get a loan—no collateral, no clue.
• And yeah… I thought my pricing strategy was “what I would pay”—which was a huge red flag.
• That last one? That mindset nearly tanked everything.

 

Here’s the deal. When I was figuring out my product pricing, I based it entirely on my wallet. If I wouldn’t pay $250 for a dress—and my friends wouldn’t either—I assumed no one else would.

Classic rookie move.

I made the mistake of projecting my personal values onto my customers. And it’s one of the most common mindset traps I see creative entrepreneurs fall into. I meet with hundreds of designers in my mentoring programs, and this exact thing still trips people up all the time.

Your pricing strategy can’t be based on what you’d pay. It has to be based on what it’s actually worth—and what your business needs to survive.

At the time, I didn’t have the deep, unshakable confidence in my product yet. So instead of charging what I should’ve, I priced things to “give people a deal.” A ‘deal’ that would’ve sunk my business if I hadn’t fixed it in time.

So let’s talk about the internal monologue that messes with all of us at some point—especially when we’re still building confidence in our product pricing.

Is my product really worth it?
Why would someone pay this when they could buy from [insert big brand here]?
Maybe I’ll just price low now and raise it later…

Sound familiar?

This head game is real—and it’s one of the main reasons I see entrepreneurs undercharge. We convince ourselves that we need to prove ourselves first. That we can’t use value based pricing until we’ve “earned it.”

But here’s the truth: if you don’t believe in the value of what you’re selling, your customers won’t either.

And that brings me to my “holy crap” moment…

Two days before my grand opening, a fashion industry insider—someone I now consider a mentor—stopped by the store.

She looked at my tags and didn’t sugarcoat it:

“Jane, you’re selling these things at wholesale prices. You’ll be out of business in 6 months.”

What the whaaaaa?! I was stunned.

I’d priced my entire line using what I thought was a fair, generous strategy—aka “a good deal” for customers. But what I didn’t realize at the time was this; a good deal that doesn’t allow you to stay in business is not a pricing strategy. It’s sabotage.

Cue the spiral. Full-blown panic. There were tears (duh). But once I pulled myself together, I realized she was right.

And I had a decision to make.

I wanted this business to succeed so badly. But when it came to product pricing, I was buckling. I kept telling myself, “Just price it low to get sales and raise it later.”

But that doesn’t work.

You don’t get “proof of concept” when your prices are too low to sustain the business.

• You get burnout.
• You get stuck.
• And worse—you get customers who expect those low prices forever.

So I did the scariest thing I’ve ever done in my business…

I doubled the prices on everything.
The night before I opened.

Yep. DOUBLED.

At that point, I had $432 in the bank and zero backup plan. But I held my breath and launched anyway.

And guess what? People bought.

Huge sigh of relief. Huge.

Even writing this still gives me flashbacks.

It was terrifying. But doubling my prices was the best decision I ever made.

If you’re struggling with product pricing, here’s what I wish someone had told me back then:

• Use a real cost sheet. Trust the math—not your emotions.
• Do your market research. Know who else is out there, what they charge, and why. Make a grid. List the competitors, what makes them stand out (or not), and how your product compares.
• Have a pricing strategy. “I’ll start low and raise later” is not a plan. If your price doesn’t give you a profit from day one, you’re just creating more work for future-you.
• Some people use a cost plus pricing model. Some go with value based pricing. Whatever you choose, just promise me this—you’ll pick a strategy that allows you to actually make money. Because this business of yours? It deserves to be sustainable.

Thank goodness for people who tell it to us straight.

I still think about my mentor and how she totally saved my butt… and I can save yours! Learn from my mistakes when it came to profit margins and lower prices. 

Real Talk: These Pricing Mistakes Are Still Happening

After working with hundreds of designers and small business owners through Fashion Brain Academy, I can tell you with 100% certainty that these same mistakes are still happening every day.

And it’s not just startups.

I’ve worked with entrepreneurs who’ve been in business for years—they have customers, they have sales, but they’re still struggling to pay themselves. And when we dig in? Nine times out of ten, it comes down to one thing: their product pricing structure is broken.

I want to be the mentor that saves your business, just like my mentor saved mine.

Top Product Pricing Mistakes I See (And How to Fix Them)

 

Mistake #1: Using a “Bad” Cost Sheet

Just because your cost sheet has formulas doesn’t mean it’s actually giving you the truth.

One client I worked with had been a top wholesale sales rep for a major apparel brand. When she launched her own line, she used the same cost sheet and margins from her old company. She had a great financial advisor. She sold over $200K in her first season.

And yet… she almost went out of business.

Why? Because the cost sheet she used was based on a volume pricing strategy that works for massive brands. When you’re not producing thousands of units, you need a cost plus pricing strategy that reflects your numbers. Not theirs. Apples and oranges.

 

Mistake #2: Believing Internet Gurus About Markup

If you’re using the old “COGS x 3 = retail price” formula, you might be in trouble. That rule of thumb doesn’t work when you want:

• Money to run ads
• Room to offer discounts
• Budget for shipping, returns, or customer engagement tools

Your desired profit margin needs to reflect your actual business model—not a Pinterest quote.

 

Mistake #3: Fudging the Numbers on Your Cost Sheet

Been there. Done that. Didn’t want to see the truth.

Maybe you guess on quantities. Maybe you skip over the freight charges. Maybe you “forget” to include labor costs or raw materials. But here’s the thing:

If your cost sheet isn’t brutally honest, your pricing strategy will never work.

“As someone who’s worked with Jane personally, I can say her pricing strategy saved my business.

I used to leave my hand-sewing labor off my cost sheet because I’d do it while watching Netflix. “It’s no big deal,” I told myself.

But as my business grew, I got overwhelmed. I had to start paying someone else to do that work—and suddenly, those “free hours” weren’t so free. Jane’s system helped me build a pricing model that actually accounted for the real cost of my time.

If you think you’re just being scrappy, check yourself…” – Erika Owner & designer of Rare Dirndl

 

Mistake #4: Starting Low with Plans to Raise Prices Later

Sounds reasonable, right?

“Once I get more customers, I’ll increase my prices.”

But here’s what really happens: You build a customer base that expects lower prices. When you finally adjust to the appropriate pricing strategy, your sales drop and you have to start over with new buyers who are willing to pay what you’re actually worth. Not a good long term plan.

 

Mistake #5: Ignoring Freight From Vendor in Unit Costs

Freight isn’t the same as shipping.

Freight is what it costs to get your materials from point A to point B before you even produce the item. Think: fabric from a supplier, skins to a leather factory, hardware from your vendor.

Example: One of my clients produces leather bags. She ships raw materials from Philadelphia to a factory in South Carolina. Then finished bags ship back to Philly. THEN she ships DTC.

That freight? That’s part of your cost of goods sold. If you’re not building it into your pricing structure, you’re losing money.

 

Mistake #6: Not Knowing What Belongs on a Cost Sheet

Quick rundown of what should be on your cost sheet:

• Raw materials
• Freight (as described above)
• Labor
• Packaging
• Labels, tags, hangers
• Overhead costs (portion of rent, admin, software, etc.)
• Cost of production
• Sampling and development costs (yes, really!)

The list may vary depending on your product and company structure, but you get the idea.

 

Mistake #7: Only Doing Costing Once

This is a big one. Your cost sheet isn’t a one-and-done. It should be reviewed at three key stages:

1. Design Phase – Start with a target price and design with production in mind.
2. Pre-Production – After you get a quote from your manufacturer.
3. Post-Production – Once you know actual costs, update your sheet to reflect what really happened.

Doing this helps you track pricing changes over time, spot issues with gross margin or net profit margin, and fine-tune your pricing model with confidence.

 

What Makes an Effective Pricing Strategy?

An effective pricing strategy accounts for:

• Your target market and their willingness to pay
• Competitor based pricing and perceived value
• Total costs, including hidden ones like freight
• The final price you need to hit for a healthy profit margin

Different pricing strategies work for different business goals. Some use value based pricing, others lean into market oriented pricing, penetration pricing, or price skimming. The trick is picking one that works for your product or service.

If you don’t have a process to regularly review pricing data, track competitor pricing, and optimize profitability, then pricing experiments can be risky.

But with the right system? Pricing gets easier, faster, and way more profitable.

Ready to Set the Right Prices for Your Business?

You don’t have to guess.
You don’t have to cross your fingers.
And you definitely don’t have to use big-brand strategies that don’t work for small businesses.

The Costing + Pricing Workshop is your complete system to finally:

• Understand common pricing strategies
• Create models that fit your unique business goals
• Learn what price points work for your customer base
• Track gross profit margin, analyze customer data, and adjust prices confidently

You’ll get a plug-and-play cost sheet template, video tutorials, and real-life examples to help you:

• Set the perfect price
• Increase your net profit margin
• Attract customers who see your product’s value

👉 Click here to join the Costing + Pricing Workshop

This workshop is for business owners who are DONE letting product pricing mess with their income. Whether you’re launching a new business or trying to make a profitable shift after years of undercharging, this training is your roadmap.

 

Prefer to Listen? We’ve Got You

Are you more of an audio learner? We’ve got a podcast for that > CLICK HERE

In this episode, you’ll learn the top costing and product pricing mistakes so many fashion designers make—and yep, I’ve made every single one of them.

We dig into:

• Undercharging because of pricing fear
• Misconceptions about what customers are actually willing to pay
• The myth of the “just 3x your COGS” pricing model (thanks, bro marketers)
• Why so many entrepreneurs don’t understand what a proper profit margin looks like
• And how your production location, MOQ, and market conditions can impact your final pricing decisions

We even talk about how the manufacturing world is shifting—and why that might be great news for small brands.

 

Still Thinking About Your Pricing Model?

Here’s the truth: many different pricing strategies exist for a reason. What works for a SaaS company won’t necessarily work for a small handmade brand.

Whether you’re dealing with subscription pricing, dynamic pricing, or just trying to figure out what your customers are willing to pay—you need a product pricing method tailored to your business goals, production costs, and customer base.

There’s no shame in adjusting your pricing decisions as you grow. The market changes. Your target customer evolves. You get better at tracking variable costs and forecasting sales revenue. Your pricing should evolve too.

Don’t let pricing be the thing that holds you back.

Set the price. Make the sale. Grow the business.

You got this.

– Jane

P.S. One of my past clients said this workshop helped her better understand profit margins and literally saved her business. (Erika, cheers to 15 years!)

P.P.S. If this post hit home for you, drop a comment and let me know. I love hearing from you.