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E-Commerce Pricing Teardown: How Everlane Created a $40 Million Company with its Pricing Strategy

Everlane is a clothing company with a strong focus on ethically sourced and produced clothes. Their mantra, “we can all make a difference” runs through their entire company. They cite their clothes as being an exceptional quality from ethical factories with radical transparency.

Everlane doesn’t want you to buy a T-shirt that’ll become worn just a few times before it starts to look old and tattered. They want you to buy their pieces and have them for years. It all leads back to their focus and ideals of being an ethical company sourcing only the finest materials.

So what can we attribute Everlane’s success to? Having only started in 2010, Everlane is making waves within the direct to consumer world (DTC) is often cited as a company worth $40 million. 

In this post, we’re going to take a peek at Everlane’s pricing strategy to see how they’ve used it to aid their success. 

We’ll cover:

  1. Why choosing a deliberate price encourages people to see the worth of the product
  2. How a ‘new arrivals’ section allows you to increase your prices
  3. How Everlane created a sense of urgency, FOMO and scarcity with their future products feature
  4. Why Everlane’s “choose what you pay” feature is great for building a brand, and not just a company 
  5. Why harnessing customer loyalty from day one is crucial.

Let’s go

Specific pricing

One thing that’s clear about Everlane’s pricing strategy is that the prices feel very deliberate. If you look in the image below, you’ll see that products are priced at figures ending in 8. 

Spesific Pricing Everlane

We’ve already spoken about the power of 9 and how reducing your price to 9 on the digit furthest right is an effective way to generate more sales as it appears to be cheaper for the customer, even though it’s not. For example, 4.99 feels closer to 4.00 than it does 5.00.

But Everlane hasn’t done this in this case, they’ve kept consistent pricing by using figure 8 to end each price, but each price feels like it was set that way for a reason.

Consumers aren’t stupid. They understand that you need to make a profit on the things you sell, otherwise you wouldn’t have a business. However, consumers do appreciate when it feels as though you’ve thought carefully about the prices you’ll pick instead of just plucking them out of the air at random. 

When it comes to your own pricing strategy, whatever pricing method you opt for, make sure you have deliberate thought put into each. If you think your customers will be hesitant at your price then it’s because your prices seem unfair or you haven’t accurately shown the value your store offers. 

Using “new arrivals” to sell at a higher price

If you use the navigation on Everlane’s site, you’ll notice that some prices appear cheaper than others and some are more expensive. 

For example, when you’re browsing the general category pages, you’re more than likely to see products ranging from $38 to $78, but when you go on the ‘new arrivals section, you’ll notice that they’re consistently high.

New Arrivals Section Everlane

As a pricing strategy, increasing your prices for your newest products is a great way to increase your overall revenue per product item early on. 

Think about it, if you launch a new store at a rock bottom price, you’ll struggle to increase those prices at a later date without facing pushback from your customers who will most likely become frustrated with the new pricing.

When something is new, it has an air of freshness about it. Think about Apple’s pricing strategy for example. When a new iPhone or mac comes out, the price is always super high. Even though people complain about how expensive it’s becoming, they still purchase it and in just a few short months, they forget about how expensive it was because it’s gone down in value and the newest phone will be on the way.

If you often launch new products, you’ll find that keeping your initial prices high is a great way to test the market, generate more revenue and establish the new products as something exciting for customers to crave.

Creating a sense of scarcity with future products

Following on from creating a sense of excitement, is creating a sense of scarcity. If you’re selling an expensive product it needs to be one of two things:

  1. Premium
  2. Something people cannot get elsewhere

Everlane ticks both of these boxes and creates a sense of urgency through their waitlist “future products” idea.

Future Products Section Everlane

It works by drumming up excitement for future products where customers can buy it before it’s even out. 

This is a great pricing strategy if you want to test product ideas without having to commit to buying a whole bulk order before knowing if it’s something your customers want.

Everlane is able to do this, though, because they know that their customers value their products and love the style.

Because when you really think about it, why would you join a waiting list to buy a pair of shoes if you could buy the same or similar elsewhere?

The answer: Everlane’s customers don’t think you can buy anything of the same quality from the same type of brand elsewhere.

That’s why their waiting list pricing strategy works so well to put revenue in their pockets before the products have even been shipped out. 

Building a brand with “choose what you pay”

It’s not a new concept but is fairly unique for the world of e-commerce and that is the “choose what you pay” feature.  Everlane has opted for this nifty pricing strategy and it works so well for a number of reasons. First, though, let’s look at how it works.

Choose What You Pay Everlane

Everlane reduces the number of its products. When you go to the “choose what to pay” you can pick your item of choice and select the different variables you’d like.

Then when it comes to a price, you get to decide what you want to pay. They also explain that whatever price you choose covers the cost of development and where the extra will go to.

The first reason why it works is that it distills transparency and honesty. They don’t try and pretend like the money goes somewhere it doesn’t. They also don’t try and force you to pay more than you want. If you really wanted to pay the lowest price, you’re well within your right and Everlane would still value you as a customer. But because of this level of honesty and transparency, you’d be safe to assume that many of Everlane’s customers would opt for one of the higher price points in an effort to give back to the brands they love.

The second is brand building. We’ve just touched upon honesty and transparency, but beyond warranting a higher price point, buying from an honesty company turns them from simply an e-commerce store to a brand.

Third, it still leaves Everlane in control. You see, even though it seems like a crazy concept (pay what you like), it’s not all that crazy when you look further into it. The product above has already been reduced from $145. Now on a normal store, customers would just see the lowest price $87 and would have to pay that.

But in this scenario, Everlane has offered two higher price points for their customers to consider and there’s a super high chance they will.

Harnessing customer loyalty from day one with free shipping

Everlane is great at building a brand and have a range of great things available for their customers to make use of, but before someone becomes a loyal customer, they need to become a customer in the first place.

Everlane Free Shipping Offer

Some e-commerce stores opt for free shipping over a certain amount of money spent, but Everlane takes a different approach. They offer free shipping on any first order. This works well because it means that customers who are interested in trying the products don’t feel put off by the shipping costs.

So although Everlane will take a slight hit with having to cover the shipping costs themselves, they’ll recoup that revenue by showing their new customers what it’s like to be a part of the Everlane family.

Final thoughts

Everlane is truly becoming a powerhouse in the fashion DTC world and we’re excited to see what new pricing strategies and ideas they’ll pioneer in the future. 

If there’s a store or a niche you’d like us to reverse engineer to better understand the pricing, strategy, leave a comment below. 

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