2006
Setting wholesale prices & Order Minimums (Part 2)
Posted by: Fashion06 in Starting your own line |
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To price product with the same markup as a retailer the process is simple and works like this:
(If you don?t know what the markup margin refers to take a look at Part 1 of this article
Manufacturer cost (cost of goods sold) =$8
Wholesale price= $17.60 ($8xmarkup2.2)
Retail Price= $38.72 ($17.60×2.2)
Once you figure out what your garment will retail for, refer back to the research you did on your target market and competition in your marketplace. Is the price too high or too low? If you think it?s too high then lower your wholesale price by adjusting your markup if it?s still too high than your COGS is too high and you need to see where some adjusting can be made in your manufacturing process. This can be a headache, but if needed it must be done. Try thinking of ways you can cut cost without sacrificing what you wanted to accomplish with your line what goals did you have in mind (product design, quality, trendy). Once you determine your wholesale make sure it is sufficient enough to cover your utilities, indirect costs, salaries (if any), and any other costs you may have accrued.
The reason pricing is so important to an apparel business, is because in order to stay afloat from one season to the next you must leave a certain percentage of net profit after all your overhead and costs. As you increase your order volumes, pricing will become easier because your COGS should be less and you will have more control over the final price of your garments.
Setting minimums is not hard as it sounds. Just make sure you have your wholesale prices and COGS in hand when figuring out your ordering minimums. It?s almost as simple as setting your minimums so that you can meet your profit margins by selling volumes. Remember there is no set rule on setting YOUR minimum order if there is (I didn?t know!). If you know what your COGS you know what your manufacturers? minimums are and, therefore what it costs to lower your price per unit. Some lines set minimums in order to meet their minimums with a manufacturer which will lower their price per unit. Try to have certain goals for your product line and price accordingly within your market wisely.
Fashion06
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December 7th, 2006 at 3:31 pm
You speak of manufacturers minimums. Isn’t a manufacturers minimums tied in with fabric mills minimums and as such, they may use that as a guideline ?Another thought that occurred to me. Many brands like H+M for instance are discarding this X 2.2 formula and using a different ratio altogether.Who exactly set this this 2.2 formula? I do know many business schools that teach rudimentary manufacturing costing excercises have had to alter and adjust formulas, as retail prices in the past two years have shown this is going down.Brand cachet is one thing, but the consumer is getting wise to what it costs to make a pair of jeans or a t-shirt. Common sense is returning to certain degree and those $100.00 jeans are gettig harder to push at full pop when the consumer knows they cost 8.00 to produce overseas .Retail buying habits are changing as we speak. Do you agree ?
December 7th, 2006 at 6:20 pm
I definetly agree…consumers are more educated these days toward the process and final price of the garments they choose to wear…but are also still willing to pay a premium price for items they feel are worth the dollar whether the? reward for them is in personal like, psychological, or wanting to just be fashionable.As far as the 2.2 markup…yes it is was merely just to give you a markup margin and not solely meaning use 2.2, but for an example of how to set wholesale prices…you understand what im saying?…thats why my article says markup accordingly to fit withing your marketplace and to meet profit margins that you have set for your line.Nevertheless great response and keep them coming…those kind of responses induce learning!thanks for readingFashion Industry Ceo
May 2nd, 2008 at 11:54 am
Are you saying that by looking at your 2.2 and 2.8 pricing that Ed Hardy wholesales their garmnents for around $30-$50 each. I’m just talking T-shirts now, because their T-shirt prices range from $55-$164 depending on the embellishments used to create their garments.
I would think that their hoodies are quite a bit more as far as wholesale costs are concerned.
Affliction and Blac Label Prices are about the same……$64 and above for a T-shirt. I would think that their prices were high to begin with. You don’t want to start low and then raise prices…it’d never work. If anything, you can always lower prices.
So, if my target market is that same as Ed Hardy’s then I can arguably charge the retailer a wholesale cost of $40 and get away with it, as long as it’s something they are looking for and it doesn’t look like the competition. I could even charge a $30 wholesale cost and have no problems….that’s what I’m getting from this…..correct me if I’m wrong.
May 8th, 2008 at 10:46 pm
REALLY TO BE HONEST T-SHIRTS ARE ALL FROM OVER SEAS,, CHEAP MATERIAL .LIKE ED HARDY HE JUST TOOK HIS TATTOE’S DESIGNS AND THREW THEM ON TEE’S AND HAD FEW CELEB’S ROCKING IT FROM THE SAME CELEBS THAT GOT THEY TAT’S FROM HIS STORE AND THEN SLAP A HIGH PRICE ON IT,
SIMPLE
http://www.midstate-sport.com
May 8th, 2008 at 10:50 pm
like the retailers i deal with they knows about prices in the wholelsale game, like one retailer told me ,hey man you know i can sell this t-shirt for like x amount more then the retail price is suggested, you have given me and i said really well sell it this amount though so i can sell 20 of these tee’s in 3 days and reup quick and he said sure ok,and when i go it rolling my tee’s pay for his car note and store over head and he love my wholesale prices
May 8th, 2008 at 10:58 pm
I was not aware that Ed Hardy was made overseas. I could have sworn that his garments say “Made in the USA” on them. I know his hats are made in China. However, I was not aware that you can put “Made in the USA” on apparel if it wasn’t actually made in the USA. Brad Butter is also made in the USA. The reason I say this is the fact that I have been in the garment industry for years. I just haven’t been much on the retail side of things, until the last brand my partner and I brought out. Selling that brand was different, because we sell it exclusively to one store only.