Wholesale Costing vs. Retail 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.
Simple enough. However the biggest mistakes a designer can make, occur in costing. Sometimes it is helpful to focus on the price point of your demographic. Then use the retail ceiling of your demographic to price. Then use costing as a way to source materials and manufacturers for your garments.
For example, the demographic of a junior market may be willing to buy a t-shirt for 7.00-10.00 vs. the missy demographic of women age 25-65 that will spend $20.00-$35.00 on a t-shirt.
The junior t-shirt should cost out at $3.50 for production and materials.
The missy t-shirt should cost out at 8.50-10.00.
To effectively cost you must also have a idea of inventory needed for production. Basic items will usually be lower, because you can have a higher production yield. But unique items will always have some aspect of profit loss due to the nature of trend and consumer response. I have developed a inventory workbook for costing and inventory, please contact me for information on this product.
In the next post I will discuss T&A Calendar and planning.