Costing Your Product for Success: 5 Tips From Apparel Development Experts
Turning your fashion ideas into a successful business comes down to properly costing your product. While it may be the more unglamorous side of apparel design, it is quite essential. In fact, it is the very foundation on which your business will stand. If your product isn't costed correctly, then you could just be pricing yourself out of business.
Here are 5 tips that we have learned from years in the industry:
1. Pre-Cost
Costing your product can be overwhelming. Some people undervalue their work, and others want way too much.There are a lot of things to take into account, but what it really comes down to is what is most efficient for your business? Start with your ideal retail price point and work backwards. Costing formulas vary depending on your sales strategy, but for ease of math, use this example: If your ideal retail price point is $100, then wholesale would be for $50, while the cost for goods should not exceed $25. Working with an end price in mind will allow you to allocate costs wisely on fabrics, cut and sew, packaging and more. Furthermore, keep the target customer in mind when determining the ideal retail price point and what they would be willing to spend.
2. Separate Costing
When you have a large inventory it can be tempting to group together a style, product or item but each will need it’s own separate costing. It seems unnecessary, but grouping products together fails to account for the small details that will make a difference down the road. Even when using the same fabric for multiple styles, the amount of fabric could differ, which affects the overall cost for each item. Making constant edits can become tedious so save yourself time by making a copy of your spreadsheet and update it with the new information for each style.
3. Every Detail Counts
Even when it seems unnecessary, it is imperative that every detail, small or large, is included in your overall costing worksheet. Don't neglect things such as labels, hang tags, poly bags, shipping, thread, etc. Every minute cost must be included into your costing. When multiplying things by 4 to get your final retail price, an extra dollar or two can add up quickly.
4. Constantly Update Costing Sheets
The costing sheets are your working document to a successful line launch. Remember to keep the costing sheets updated as you finalize decisions on fabrics, trims and manufacturers. Being diligent in this process will also allow you to make necessary adjustments from your wholesale to retail mark up, as some retail stores may use anywhere from 2 to 2.5 as their multiplier. Pre-cost sheets can be modified through the process to ensure you are on track for your ideal retail price point.
5. Double Check Formulas
To finish off, we return to the basics. The simplest of problems can make the biggest mess. The quickest way to throw off your pricing sheet can stem from the tiniest mistake with your formulas. Keep a keen eye and double check that everything is multiplying or adding up correctly. Especially when uploading, downloading or updating, formulas can be thrown off. Give them a quick once over to make sure everything is still correct before things get beyond repair. Implementing these 5 tips in your business can make a tremendous difference. Remember, effectively costing your product is the foundation for a greater success!
Let's hear from you. What difficulties have you encountered when costing your product? Tell us in the comments!
For more on getting your business retail ready check out these resources:
Find & Manage Sales Reps Selling to Retail Stores Selling to Retailers Mastermind Group The 'Get Retail Ready' Guide and Workbook