Whenever you sell each garment, make sure it brings you some profit. Not only it brings you the capital continue running your fashion business, it also proves that your business is in the right track. Controlling the cost is the first step.

Here I'm going to share with you about the cost breakdown at different stages.

1. Factory Price

This is the garment making cost. It is consisted of

Raw Material cost

Raw Material cost depends on the unit price of the material you used, and also the consumption

Material cost = Material Unit Price x Consumption
Material Unit Price
  • The better the quality, the more expensive the price
  • The more you buy, the more bargaining power you have in the price. However, if you are small-order customers, you may need to buy ready-made material from the retail market, which is more expensive. Even you find a supplier who is willing to sell you 100 yards (for 100 pc of garment as the shell fabric), they will charge you the minimum order surcharge, which is more or less the same as buying it in retail market)
  • Suppliers will charge you the logistics cost from their mills to your factory. Even they said they are selling you at CIF (Cost, Insurance, Freight), that doesn't mean they provide you the logistic costs for free! They just merge the logistics cost into the unit price you buy the material, which makes the cost breakdown simpler! You still have to pay for it!
  • The more specific on the material, the more expensive the cost. If you need to print your brand name on the material, it contributed to a cost!

Consumption

  • The word itself is somehow misleading. It tells how much fabric & trim you use on the garment. However, when you mention about the cost, it represents how much you have to 'pay'.
  • If your design has pattern on the fabric, matching the pattern will cause more consumption. It is because you have to buy more fabric in order to ensure you can cut the fabric with the same pattern (so check pattern has a bigger consumption than stripe, and strip has more than plain)
  • On trim, there may not have pattern. However, you need to buy more than you need. We call it "wastage". Think about you need 500 pieces of button for 100 pieces of garment (1 garment need 5 button). Do you really believe that the 500 buttons are completely fine? Reserve 2-3% of wastage (either someone loss it during the sewing process, or it is broken during the delivery). When you need 500 piece, you should buy 510 to 515 pieces! For bigger orders (> 5000 garment, it can be reduced down to 1-1.5%). Someone may suggest that you should ask the suppliers to get you a new button if this is not properly. Well, if you think you should stop the production line, let the sewer to wait for that button, pls go ahead! Factory will only suggest you to get refund from suppliers, but never get a replacement from supplier if the qty is small.

This passage is already too long. I will continue with other cost below in next blog!

2. Landed Price - The delivery cost

3. The Wholesales price

4. The retail price