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As a subscription-box company, understanding the value of your brand is key to long-term success.  Evaluating and re-evaluating your products ensures that your customers receive the best value and most appropriate items.  Translation: repeat customers!

When it comes to the Curated Kitchen Box, I’m constantly searching for exciting products, innovative items, baked goods and the latest in kitchen gadgets.  Budgets fluctuate because each season I include different items in the box.  But, the cost to my customer never changes.  It can be stressful on my end because I have to make sure I deliver a buzz-worthy product that excites everyone, but that I keep the cost within a certain limit so that I can offer it to my customers for a set price.  

So, how do I determine a price to attract, and ultimately keep, customers while making the maximum profit? 

As you know, my subscription box goes out four times a year and not monthly like some other brands, so the price appears higher than some other brands.  But, that’s just optics.  In reality, my quarterly box contains enough products to cover off an entire season versus the boxes that cover just one month.  There’s also no filler items in my box.  

I source products that are seasonal and that will update your pantry and kitchen for a few months at a time: for example, the Spring box contains baking items, seasonings and wellness items that are ideal for April through June.  The Summer box is perfect for balmy weather, BBQs and picnics.  And, the Fall and Winter boxes are packed full of unique items that are either new to market or often looked over on store shelves because customers aren’t sure how to use them.

When you subscribe to the Curated Kitchen Box, there’s no hidden shipping costs and you end up paying less than the store shelf prices for all of the items.  

I definitely play a numbers game when I try to figure out how to price them.  But, for me, this is a passion project.

If you’re trying to determine pricing metrics, there are some specific numbers to take into account for your own success:

Subscription Box Pricing Metrics for Success

  1. Customer Acquisition Cost (CAC) – This is how much it costs to get a single customer.  To determine this number, you need to add up your total marketing costs (PR, social media marketing, advertising) and divide it by the number of new customers you signed up that month.  So, if your marketing expenses are $5000/month and you signed up 100 customers, your CAC = $50.  You want this number to be low (ideally).
     
  2. Customer Churn Rate – This is the speed at which you lose customers through subscription cancellations. You can calculate your churn rate either on a monthly, quarterly or yearly basis.  To calculate this rate, you need to see how many customers you lose in a set period (how many you had in January 2020 versus January 2021).
  3. Customer Lifetime Value – This is the total dollar value of all purchases by a customer from the time they sign up to the time they cancel.
  4. Profit Margin –Divide your profit by your selling price.

To work out the price of a subscription box that will bring in the most revenue, you need to estimate the values of these metrics.

Other Things to Consider When Pricing Your Subscription Box:

Fulfillment Costs

When starting a new subscription box business, make sure you calculate the costs of logistics.  This includes the cost of packing, labor, and/or fulfillment fees and the cost of shipping.  Will you pack the boxes yourself?  Will your use local couriers?  Do you plan to do International shipping or just national?

Operational Costs

All fees can add up and eat into your profits.  Make sure you account for all of the operational costs: factor in card processing fees, accounting, marketing, gas etc.

Perceived Quality and Brand Pricing Strategy

Determining a price-strategy is one of the first steps you will need to make as an entrepreneur. Do you plan to price low with the hope of selling higher volume?  This positions your brand as more of a budget-friendly company.

Or, do you plan to price high with the perception of being a more luxury-based brand?

With the Curated Kitchen Box, I selected higher end products and hope that my customers see the value in the brands I select: most are organic, fair-trade, or local.  I try to find other entrepreneurs and partner with companies that share my values in food and nutrition.

This was part of my brand-building strategy from the onset. Many of my products are difficult to find except in select specialty stores.

Overall, pricing your subscription box takes time.  It’s part of the branding decision and shouldn’t be taken lightly.  There’s a lot of thought that goes into it and hopefully customers see the value in what’s trying to be accomplished.

Candra Mae Wife of a Grocer

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