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.

Business wholesale market costing sheets

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.

Packaging- Thought to floor fiscal planning

Packaging- Fiscal Planning

Okay, know you are getting a idea of inventory, costing, and now packaging. This includes tags, stickers, bags, shipping boxes and hangers. It is important to look around for your size tags, labels, and branded packaging. The range is so vast and I suggest getting strike offs from each vendor before finalizing a purchase.

Labeling on apparel must meet the government requirements. They are as follows

  • Fiber Content
  • Country of Origin
  • Identification of manufacturer, importer, or other
  • care

Here is a example of correct label

55% polyester
45% cotton
Size 10
Made in USA
RN 00001

The link below will offer more technical information provided by the government

The next labels for attachment are brand and size labels. Brand labels will be your most expensive tag on the garment. If you know your going to be in business for a long time then buy in bulk. This will cut down cost in long term. This also keeps product packaging streamlined.

Another tag that is costly to print is your outer hang tag. This is a good investment for companies using pigment dyes, glitter, beading, leather, fine materials such as lace. And special occasion garments. These can have disclaimers about returns or wearing, washing and treating garments in a special manner.

I suggest to have well designed tags with printing on either side. This is a green approach as well as cost and time saving.

Be sure to enter the cost of each label  on a unit cost sheet. For example if you ordered 5,000 labels at $750.00. The label itself would cost $0.15

Some helpful label companies I suggest are as follows…

http://www.texlabels.net/

http://www.labelmartla.com/

http://www.bcilabels.com/-

Once you have your care labels, size labels, country of origin, and brand labels they will be given to your sewing contractor for attachment.

Being that you are a small organization with only one store, I suggest you apply the price tags and any additional information. But if you wholesale or have two or more stores, you want to consider having the company apply the price tags and UPC codes before shipment. This allows all the work to be done at once and ensures proper tagging.

The last part of packaging is how you ship the goods. Most companies rely on what is called FLAT PACK. This is when goods are folded and shipped in a box. It is very cheap and eliminates wasteful packaging. However, you may rely on a hanging shipment if you have extremely tailored goods. Men’s Suit companies use a hang pack to deliver the suits to consumers or stores for quality maintainer. Otherwise this is a unnecessary form of packaging.

 

The next blog we will discuss the wholesale cost and retail cost.

Thought to the Floor- VI- Fiscal Planning and Inventories

INVENTORY
 

When starting a business, it is very important to consider your inventory. Many small start-ups begin with very little inventory. Especially if you are the only employee. However once you invest in a market or storefront the inventory needs more depth to allow for growth.  This post I will provide examples of size ratios, however this is for only small companies and maybe different based on fit, anthropomorphic index, and esthetic.

XS-XL – KNITS

I suggest that as a small start up you create some signature basics. This allows you to have a deeper inventory and you can sell the items year round. You will also begin to see what is to much or to little for unit production. Plan two or three year round basics. Manufacturers in many cases have a minimum of what they will produce.

Small Volumes – great for first attempt start-up. This selection allows  for a manufacture to break even on the cost vs labor to make your goods. Quick Fact: Garmentos of  the 1920’s-1980’s always purchased goods in 12 unit ratios. The practice in some cases is still used.  The example below is a 12 unit ratio

 

XS

S

M

L

XL

2

2

4

2

2

 

The ratio below is a good increase for a growing business, A good rule of thumb is to use this ratio for basics and the small ratio above for more seasonal styles you maybe introducing.  Example below is 18 units.

XS

S

M

L

XL

2

4

6

4

2

0-18- WOVENS- PANTS, DRESSES, BLAZERS, TAILORED GOODS

 

Below is a example of the full misses size range. Notice that some sizes may not be produced. This can change based on your customer and region. This ratio is good for items that maybe easily tailored.  Keep in mind that bottoms can be a risky investment, whereas skirts and dresses can sell a bit better for a initial increase in your inventory. Also, your pants really need to fit amazing for consumers to purchase over and over.

0

2

4

6

8

10

12

14

16

18

2

2

4

4

6

4

2

Another aspect of inventory will be a matter of ROI. You want to talk with various manufactures about what they are willing to produce and at what price. I suggest trying to find a manufacturer that will cut , bundle, sew, and finish your goods.  You also need to keep in mind any send outs and dye methods that may also be price or unit issues during production.

If you are a wholesale brand then you want to consider what your target B2B buyer will purchase and then produce to those ratios. In many cases this is better and easier. However you want the customer to already be committed to the product.  For example a wholesale brand may create several samples and take them to market. During market the wholesaler may receive several orders on goods. Once you tabulate order and work with a manufacturer on price, you may find that some styles are not fiscally worth producing.  However you may be able to work with clients and see if they will buy into the more successful styles at a lower rate. This will allow you to increase units and lower production cost. Inventory is very much a key player in your fiscal success and future growth. Always be judicious about how you spend the money in this area.

 

If you would like assistance with figuring out what a good inventory mix for your brand might be, please visit http://www.katherineschildmeyer.comand leave a message in the comment board. I also have a cost sheet inventory program that I have written specifically for small organizations. This will allow you to figure out a cost and unit mix that will benefit you.

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.

  1. Designs
  2. Inventories
  3. Packaging
  4. Retail price
  5. Wholesale cost
  6. Location  & On-line selling- logistic, lease, web hosting, etc.
  7. Employees
  8. Marketing
  9. General overhead- phones, computers, housing, trash, water, electrical.
  10. Taxes

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.

From thought to the floor Market Research-Some resources

Now you have defined the following for yourself.

prolific or ordinary company

design direction & season

color choices

The next element is market. Caitlin is a example of my chosen target market.

Some websites I use for market research are…

It is very important to be aware of the global and local economy. The employment rates and taxes. The ability to understand economic trends will help you make correct and planful decisions for your business and consumers. Some news resources I read are Wall Street Journal, Women’s Wear Daily, California Apparel News, local papers, twitter feeds for WWD, STYLESIGHT, WGSN and any relevant resource for your business. I use LinkedIn to connect me with manufacturers, and user groups.

Also get out into the mall or shopping areas and people watch. Listen in on conversations. Get out and go to events that your market likes. Generally people are ready and willing to tell you what they love and hate. If you want to cater to a niche market, insert yourself into events. For example, a record store would be without character and customers if they didn’t post flyers for local events or coming attractions. As well as new releases that were relevant to consumers.

Say you are a on-line apparel business. Using ETSY , Ebay, etc. To just have a store on these pages is not enough. You need a hook to drive traffic. The Blog is a way of creating community of similar interest, education, and information to the consumer. Then link this to your store. This is form of marketing will monetize your websites. To find resources, I usually go direct to the website and look on-line for trend analysis reports for three years.

Research the community, know your numbers, and make yourself known. Remember that you are creating a business that will need to be financially stable. Sustainability and flexibility will also need to be planned into your market research.

Market research effects the following…

  • location
  • financial planning
  • consumer trends
  • pricing
  • realistic product to fit consumer
  • Writing a business plan
  • getting a loan

Happy researching!!

From Thought to Floor V- Demographic, psychographic, and general marketing data

I have chosen Portland Oregon as my headquarters. This was based on tax incentives for small business ownership and demographic structure.

         The first image will show the largest market segment for age and sex within age.

Largest segment 30-34 yrs of age.

Largest segment 30-34 yrs of age.

The chart above shows, the largest age market is 30-34. This is great. The product we are creating fits the market if women between the ages of 25-40 years of age. This brings me to the next breakdown. The largest anatomical sex  market within the age segments.

Largest segment of 50-59 year old women.

Largest segment of 50-59 year old women.

As you can see the largest two segment of women are between the ages of 50-59 years of age. This may be a issue where you may have to add in products that capture this market as well.  However, we are still looking at the overall state and not the metropolitan area of Portland. The next chart will be a breakout of age and sex for Portland.

Female ages

Female ages

The chart above shows us that the largest market in the Portland metro county is 25-29 years  of age. The second largest is 30-34 years of age. This tells me that the target market I have is more metropolitan. As well as that the older market that is largest for the state actually live outside of the city. Possibly more of a suburban setting.

The next chart will show the income levels in Multinomah county( Portland Or.)

Portland Income Segmentation

Portland Income Segmentation

The target incomes are between 20,000 to 50,000 dollars. The income levels help me when I will need to price my garments and hire help. This also seems low. But as I get into the living arrangements , marriage, family, student, levels this may also help me to better understand the population.

households

Households & Family

The chart above shows that 141,000 people are living in non-family households. And there are 163,00 family households. With a average size of 3 people per home. Over 82,000 homes with a minor. Between the income and household data, I can estimate that majority of people that are single maybe living in a roommate situation. This would help my customers live a more realistic lifestyle with a lower income.

I will be drilling down to the neighborhood where I will locate. This is a gentrified area in North East Portland. The zipcode is 97211. Below is additional data that I pulled from Prizms by Claritas.

Household 97211

Household 97211

The neighborhood that I chose to locate myself in has a healthy income level over the city average.  The age ranges are within the target market I have chosen. The next chart will show types of households as well.

97211 Family Chart

97211 Family Chart

The chart above shows that many homes May have newly married couples, gay partnerships, and room mates.

The next charts are  psychographic data collected by Prizm. These are snapshot or general shared interests. The more detailed information will have a fee they charge. I will show other ways of getting to know the target market.

American Dreamers

American Dreamers

Close In Couples

Close In Couples

Money & Brains

Money & Brains

Multi-Cultral

Multicultural

Cosmopolitans

Cosmopolitans

This area has a broad mix of people who live in the same community. They shop at retail stores from Old Navy to Nordstrom. Many are educated and like to be informed about the products, politics, and community round them. Some other methods I use for gathering information is the local newspaper and new stations. They will post information on entertainment, restaurants, and other stores. The newspaper and news stations also cover a wide variety of issues facing the city and state. Knowing the economic climate of a location is equally as important as knowing the customer.

I want to stress the habit of always being connected to your consumer and being a participant in the city as well. The ability to remain relevant is a big challenge for many small buisnesses.

From thought to floor IV- Are you a trend setter or ordinary!

Okay kids, so far I have addressed the creative process for research and development on  a dime. The next step is really what will define your brand. I always suggest doing some market research to figure out what your consumer demographic, pyschographics, and sizes will be. If you have the money to spend you can subscribe to Prizms by Claritas. If you have no budget for this I use the U.S. census and read news for the related areas.

For example, if you are developing a artistic line in L.A., you may want to consider how many stores or brands are just like yours? Do you already have consumers that will buy once the product hits the floor? How will you get people to pay attention to what your creating? What is the annual income of your consumer? How often do they shop for clothes? What do they do for a living? How many kids do they have? If they are teens, who is paying?  Are your plans realistic?

I find that majority of fashion companies are very ordinary. Not many could be considered prolific. One issue that I see is copycat design. Many markets have people who competitive shop. Taking pictures and images of other labels clothing. The company will  tweek the garment to fit what there market may want. This does explain creative similarities between lines and competition. However I see this a a detriment to the longevity of fashion as art. For example, you can erode a profit margin by trying to get the best possible price for the consumer. In order to sustain this, companies move our jobs to overseas markets. They copy more to pay for less designers. Less work in the U.S. and poor communities.

The highly creative designer that makes works of art vs. fashion for masses will usually stay pretty small. These designers have more control, smaller market segments . But these designers have loyal consumers. I fall into this category. I want my clothing to be high quality, custom, and artistic. This takes some planning! I create less designs and smaller amounts are produced. It is not readily available at any store or mall U.S.A. I believe so much in my work and my name that I want to produce the best of me.  I do not want to be a millionaire. I just want to make clothing that inspires people to be who they are from the inside out.

I challenge people to really define what they want the end goal to be. This will help them in design, market research, cost structures and distribution.  Are you trend setting and out of the box? Or are you a follower?

Some Prolific Designers

manish2

http://www.manisharora.ws/spring-summer-13.html

Alexander McQueen- Father of "The new Tailor"!

Alexander McQueen- Father of “The new Tailor”!

Thought to floor- Part III- Pattern & Silhouette

Pattern & Silhouette

After the attitude & color mood boards are created, the next step is pattern & silhouette. If you are starting your collection, the step is just as important as if you had your brand for a while. The next step is to research textiles & style lines from the past 3 spring seasons. This is important to know when trends start, peak, and die. For example the hi-lo hem showed up in 2011, but hit big in 2012. Generally, I will anticipate a two year turn for trends that are not standard.  The great part about this type of research is you have concrete historical data for popular trends and dog trends.

Some tips and websites I use for research are listed below.

Tips

  • google: year, trend your following and popularity. Image Search
  • Google favorite designers and the year.Image Search
  • Use pintrest as a way to file images for year and category. It is free and also won’t tie up company data. Draws possible new consumers.
  • Download Picasa. Files can be created for images on your own computer. Only great if your company has open memory.

Websites

The board below is the history of patterns in textiles from 2011-2012. Since I am creating a category of clothing that fits the same market as Caitlin, I am looking up women’s contemporary .

andy-gilmore-2-590x680

Andy Gilmore print 2012- spring

The print from Andy Gilmore is similar to the mirrored imaged seen in Alexander McQueens work.

Mint Color trends. 2012 runway. 2013 RTW.

Mint Color trends. 2012 runway. 2013 RTW. Pattern People

Floral Prints hit big in 2011

Floral Prints hit big in 2011- Pattern People

Thought to floor Part II- Brainstorm

To recap our five words for spring are…

1. Green

2. Temperate

3. Rebirth

4. Transition

5. Season

I used the words and my thesaurus to see a bigger picture.  For example the attitude of the line can be young and blooming or  possibly edgy. Comes in like a lion and end like a sheep.

The following is the template I used to research 4 variables to the collection

1. Mood/ Attitude

2. Color

3. Print/ Textiles

4. Style lines/ Silhouettes

I am keeping in mind all the words used in exercise one. I use Google images to find my data.

Mapping Ideas

The mood board is a mix of magic, new beginnings. Nature being both inventive and edgy, while still being soft.

After looking over this page I arrive at a very colorful, feminine, and abstract collection. I was also able to start pulling color selections from the mood board. This in many cases can save you lots of money. Color forecasts and swatches from Pantone are not cheap. Trend forecast services may or may not offer them based on your particular subscription. For example the SS 14 color planner from Pantone is $750.00. So if your budget is much smaller, I suggest using the mod board to help create your color story. Below is a selection of colors for the collection. I will narrow this down based on cost of material and what is available. Some colors are more expensive than others to dye or produce. Just something to keep in mind.

Some of you dealing with colors may notice I didn’t label my colors with the code for production. I wanted to keep Pantones codes confidential. These colors are from the Pantone library. Typically you will want to put the code with each one and have multiple copies.

Okay, okay, we see how five words grew into more. It is, in my opinion the first organized step to creativity. I want to stress the work “ORGANIZED“. In this process and all future processes your company will need all images filed pictures labeled correctly.  You will reuse these images through 50% of the product development phase. A few tips on labeling…

1. Year(date)

2. Artist and work

3. Theme

The last reason to be organized is for the future. You will need to revisit the past in many cases to find your future. As you will begin to see in the next exercise on figuring out textiles and print as well as silhouettes.

Thought to the floor – Part I

Hello all! I am assuming some interest in building a brand or fashion start-up brought you here. This set of blogs will offer great tips, connections, databases and more that help in the process to get your product from the thought to the floor.

The first part of building an apparel product comes with an idea. We all have ideas, but how we convey, or map the thought out can effect the outcome of the actual product. Great ideas and organization help processes further down the line. These ideas will be carried through the entire process of “Though to Floor”.

Step 1:Get words that are indicative of the season.

I asked my Facebook Friends to share 5 words of Spring. Several people responded. I will be using inspiration from two people who are helping the creative process. Basically they are giving birth to the creative process as it applies to fashion.

Our first creative is Caitlin Foyt:

Caitlin describes what she does as watching. She believes that writing is the outcome of watching the world around her. She writes about many aspects of everyday life on her blog. You can read more about her world by visiting http://caitlinmfoyt.com/


Once I have the words I usually work with a trusty old-fashioned thesaurus. I begin to map my words to gain more depth to the overall concept.  I believe a professional creative is constantly brainstorming and always plugged into the thoughts of others. The following is a map of these words.

Now the verbal map is created, we can begin to define what images and ideas we will use to begin the design process.

Stay tuned for part II: How to create trends and mood boards for the product line!

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