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Creating A Pricing Strategy For Leather Products

Leather products are always in demand in the market. People of all ages and occupations use leather-made products. Whether it be leather bags, wallets, shoes, etc. leather products are always a classic in every fashion season.

How a pricing strategy is created for leather goods can be a common thought question by the buyers of leather-made goods.

Creating a pricing strategy for any product is an intricate part of the business organization. It can determine and establish several important aspects of the business. To create a pricing strategy for products, several directions are often followed.

However, it can vary in the case of the pricing strategy for leather products. Leather products can be high-end items, medium-range, or budget-friendly too.

How To Create A Pricing Strategy For Leather Products?

To create the pricing strategy for leather products, several key factors need to be considered first. These key factors focus on what value the leather products are supposed to provide to the buyers. At the same time, the fundamental aspects of selling leather products should be clear.

The fundamental features that manufacturers of leather goods should be clear about before pricing their products include whether they are looking for basing the price on the production cost, the value that the product is offering to the buyers, or, the prevailing competition in the market. 

According to these features, three major pricing strategies can be followed:

1. Cost-Based Pricing Strategy

Cost-based pricing strategy is the type of strategy used in pricing for a material based on the cost that is acquired during its production. So, the production cost acts as the basis for the final price of the product. A predetermined profit level is added to the production cost to get the product price. Many companies that mass-produce leather goods use this pricing strategy.

There are many benefits to using cost-based pricing strategies. One of the major advantages that come with using a cost-based pricing strategy is that the calculations that are required to do for pricing the leather goods become very easy and simple. Moreover, this pricing strategy ensures a guaranteed profit for the business. It also takes the unknowns into account.

One of the risks that come along with a cost-based pricing strategy is that it does not account for the market demand or competition. The effect on customer demands does not match with the cost-based pricing strategy. It is best to set the price for your leather products after considering the whole market scenario and the customer demand for the product that you are offering.

2. Value-Based Pricing Strategy

Value-based pricing strategy can prove to be an effective way to create a pricing strategy for your leather products. This strategy is also known as a customer-based pricing strategy because out of all the other strategies this one focuses the most on what the customers want. In this pricing concept, the price is set according to the benefit the product provides.

This pricing strategy focuses on what the customers are willing to pay for the leather goods based on their provided value or benefits. There are several perks to using it. For starters, this strategy works towards building trust and admiration for the products and the company among the customers. This helps increase product sales. It attracts new customers as well.

A challenge that comes with a value-based pricing strategy for your leather goods is that while basing the prices according to the product’s value, the production costs may get ignored. It might also exclude the existing market competition. Value-based pricing strategies may often need higher selling techniques. So, careful consideration is needed to use this strategy for leather products.

3. Competition-Based Pricing Strategy

Competition-based pricing strategies are highly helpful to sustain in a highly-competitive market. It is the type of pricing strategy that places the price on its products after analyzing what the existing competitors are charging in the market. So, when similar businesses are filled up in a market, this pricing strategy proves to be very significant to acquire profit.

For setting the price of leather products, this strategy can come in very handy if there are already a large number of leather goods sellers in the market. Because, when the price is set by keeping the market competitiveness in mind, certain advantages can be achieved. Price-sensitive customers will be attracted. Simultaneously, existing or emerging rivals can be tackled.

It is important to keep several important aspects in consideration while using the competition-based pricing strategy to price your leather products. There may be a risk of losing profits if the production cost is not met up while trying to tackle the rivals in the market. So, careful calculations should be done to price the leather products while using this pricing strategy.

Important Factors For Setting The Price Of Leather Products

There are many alternative options to choose from to create a pricing strategy for leather products. However, there are important key factors that should be carefully considered while implementing those pricing strategies. This is because these key factors can leave a major impact on the selling and gaining stable profits from the provided leather products.

1. Production Costs

For producing leather products, three basic elements contribute to its production and thus, the production cost of the leather product. These are raw material costs, labor costs, and production time.

To calculate the production cost of the leather materials it is vital to keep these three fundamental elements in check. The elements that contribute to the production cost of leather materials may vary from one manufacturer to the other. At the most basic level, these three elements contribute to the production cost. So, they should be carefully calculated.

2. Analyzing The Numbers

It is crucial to calculate and analyze the pricing numbers before they are set for the leather products. For different leather products, different pricing strategies may be necessary. At the same time, the pricing may vary depending on whether they are sold in retail or wholesale.

The simple calculation that is used for determining the prices of wholesale or retail prices are:

Wholesale Price = (Material Cost + Labor Cost) X 2

Retail Price = Wholesale X 2


Leather products are an important part of our day-to-day life. We use them everywhere including apparel, upholstery, or different accessories.

By knowing how the pricing strategy for leather products is set, you can easily get the leather products of your choice. Contact us to get a variety of leather products of the best quality within the most affordable price range.