When you have reached this far in your project to start a sportswear brand it is time for a reality check. In our article Piggy Bank Check. Get on the numbers, we talked about estimating the cost for your sportswear apparel brand. At this point you have gathered a lot more information and concrete costs. You know which garments your collection is based on, you know the price for fabrics, trims, and production including prototypes. With this new information that you didn’t possess when you started out, you can remake a more accurate budget. When making the business plan you thought of the price level you wanted to place your clothing brand at. So let’s see if that is realistic.
How do you calculate the retail price? Let’s start by going over some terms:
CMT -Cut Make & Trim
Cut -the supplier cuts the fabric and then bundle by style, size, and color
Make -the different sewing steps
Trim -the finished products are trimmed and packed for shipment.
CMT doesn’t include fabrics, accessories and transport.
FOB -Free On Board
FOB includes all charges for making the garment and the transportation to the shipping port. It does’t include the shipping, duty, or other costs from that point on. FOB includes fabrics, accessories and in some cases product development.
COGS -Cost of Goods Sold
includes all expenses related to producing the sportswear garment. This include construction, materials, grading, and shipping.
The price your retailer is buying your garment for. Since it is a business to business transaction it is mentioned without VAT.
The final price that the end customer buys the product for. This is including VAT
The markup depends on your negotiation skills and also on the type of apparel you are making. But a typical industry example looks like this: the wholesale price is twice the production cost, and the retail price is twice the wholesale price.
Do the numbers add up for you? Does the retail price match the quality of your garment? Do the garments look the price? Go back and see if there are any costs you need and can affect in order for ends to meet. See that the price matches the product quality and that you make a profit in order to reinvest in your project. You are doing something you love so make sure your business is sustainable.