We have been talking with a lot of our clients lately about the importance of pricing + costing. We know this is not the most glamorous or fun part of the design process but it is what turns your fashion idea into a successful business. If your product isn’t costed correctly then you may just be pricing yourself out of business.
Here are some things to remember when thinking about costing your product line:
1. Do a pre-cost! Take your ideal retail price point and work backwards. For a very rough example, if your ideal retail price point is $100, then you need to wholesale it for $50 and have your cost of goods be no higher than $25. This will give you a better idea of what you can spend on fabrics, cut and sew, packaging, etc. Always keep your target customer in mind when thinking about your ideal retail price point and what they would be willing to spend.
2. Each style, product or item will need it’s own separate costing. Even if you are using the same fabric for multiple styles, the amount of fabric may be different which will affect the overall cost for each item. To save time you can make a copy of your spreadsheet and update with the new information for each style.
3. Make sure you include every little detail into your costing worksheet. Fabric and cut and sew are obvious items to include but don’t forget about things like labels, hang tags, poly bags, shipping, thread, etc. It is essential to include every tiny cost into your costing, because when you are multiplying things by 4 to get to your retail price, an extra dollar or two can really add up!
4. Remember that your costing sheets are living, working documents that you should update as you finalize decisions on fabrics, trims and manufacturers. You may also need to adjust your wholesale to retail mark up, as some retail stores may use anywhere from 2 to 2.5 as their multiplier. Your pre-cost sheets can be modified throughout the process to make sure you are still on track for your ideal retail price point.
5. Check your formulas! This is a small detail but if your formulas in your worksheet are not multiplying or adding up correctly this can throw everything off. Sometimes when documents are downloaded or uploaded the formulas get a little wonky, so just give them a quick once over to make sure everything is still correct.
If you need help with costing feel free to reach out to schedule a complimentary discovery session to review how we can help! We also sell an easy to follow online costing + budgeting workshop for you DIY business owners out there! Click here for more info!