Telfar to trial pricing model based on consumer demand
With a nod to auction houses where the highest bidder wins, Telfar, a New York-based ready-to-wear label best known for its handbags, is to launch a consumer-led pricing model.
To explain, for its latest collection dropping 27th March, Telfar will let consumer demand set pricing for its items, starting from wholesale up to retail. In an interview with Fast Company, founder Telfar Clemens said: “Many brands use price as a barrier to entry. I never wanted that for my brand.”
How it works
When the collection drops, instead of fixed pricing a dynamic pricing tool means best-sellers will be less expensive with prices rising over time. According to Fast Company this will rise at a rate between 10 and 20 dollars every week, with the sell-out price being the ‘forever price’.
The dynamic pricing tool will be in place on new collections that drop until late April, allowing the company to collect data and gain insights into how to price future items.
While most luxury brands have a mark-up of 500 percent, which equals the cost price times five, pricing strategies vary between what a garment or bag could ‘potentially’ sell for rather than what is a fair price for customers.
Telfar argues that if a hoodie could sell for either 100 dollars or 600 dollars, only wealthier clients could afford the latter.