Thought to floor part VI- Financial Planning
Hopefully, your demographic research has paid off and the location & target market is correct for the business you wan to create. If not you may need to change up your ideas to meet your market category.
On to the dollars and the sense portion of developing your business. This portion is the true road map to all your decisions. The following is a list of areas the fiscal plan will effect.
- Retail price
- Wholesale cost
- Location & On-line selling- logistic, lease, web hosting, etc.
- General overhead- phones, computers, housing, trash, water, electrical.
Designs & Costing
Designs are your cash cow. Depending on the complexity of your garments, the cost will increase or decrease. For example, you may have designed a great dress, expensive fabric , many pattern pieces, and unique interlinings for support. However the cost maybe upwards $130.00 The dress will retail roughly around $700.00. Here is how the break down works.
Cost: 128.23 @ %50=$256.45
wholesale: $256.45@ %400= 512.90
Retail price: $510.00- decreased mark up to meet a round number and needs of the consumer.
As you can see the mark ups are added in particularly if you are selling to retail stores. One trick I use is to monetize my own goods on a website. For example, I have created a brand and start to sell it on my own site or through a avenue such as Etsy. This approach allows you to slowly build your business, and cut out the middle man costs. I can take my cost and simple do a mark up of %200. I can sell the dress for $256.00- $320.00 depending on the fees to run my website and what my overhead cost average are match up against the inventory I carry…. I will break it down in the end of this part. I promise it is simple once you break it down.
A great brand that focuses on the consumers need for better pricing is http://www.gothamsmith.com/. Gotham Smith has a focus on cutting out the middle man and delivering a solid, well-made product to the consumer… check it out.
COST TO DESIGN– Video about Design.