Costing and pricing your fashion line can feel overwhelming and, well, just plain hard. It’s not exactly at the top of our list of fun things to do. The problem is that costing your line too low means you won’t make money and pricing too high means you cannot compete in the market.
I had a hard time costing and pricing my line when I first started out but as time went by I figured out a few things and learned some great tips along the way.
Here are 5 tips to help with costing and pricing your fashion line.
- You need a good cost sheet. You want one that will show you the costs as well as wholesale and retail prices. Even better if you can see different scenarios based on different mark-ups. You can get a template here.
- Calculate your costs as of today, not what you think your costs will be as soon as “you sell a little more volume”. I know I found it hard to look at the actual numbers and be honest with my cost sheet. I used to “cheat” and put in numbers that I knew were not accurate because it looked better. Well, the numbers may look better but that doesn’t mean you’ll have any extra cash in the bank!
- If you start your business selling direct to consumer, keep in mind how you’ll determine your retail prices. Many designers start with direct-to-consumer sales (D2C) and want to sell wholesale (B2B) in the future. If you don’t build in the margins with your initial pricing, you will not have the option to sell wholesale in the future because it won’t be profitable.
- Include packaging as part of your cost sheet. This includes hangers, poly bags, tissue paper, jewelry boxes, hang tags – all of it.
- When you’re a startup fashion business, it’s very difficult to include a percentage of overhead into your cost sheets. This is data you simply don’t have yet so don’t worry about it. Not everyone agrees with me on this, but my advice is to build in enough markup in your pricing and consider re-evaluating your cost sheets in a few seasons after you have some sales and expense history.
If you’re thinking, “I don’t want to know” when it comes to the numbers or even, “I just need a partner who will take care of all that”, you are kidding yourself.
I know because I used to say the same things to myself! Very rare indeed is the magical partner that will appear to do all the business side while you design. But the strange part is…when you dig in and work on the business aspects, you might find it rewarding!
Everything new seems hard at first. Costing and pricing is no different. Once you do it a few times it’s like a walk in the park.