A Deeper Dive into Development Costs: Part 2 of the Budget & Pricing Mini-Course
This is part 2 of a 4 part mini-course on budgeting and pricing for designers working on their first clothing line. Sign up here to be emailed the remaining 2 parts and we’ll also give you access to the costing template we use for all of our customers! Read part 1 here.
Let’s dive into the development costs that will go into your development and production budget. It is crucial from the get go to learn how to manage cost of your garment. These 7 important factors will help you understand sample and production costs as well as your eventual pricing.
Development Costs 1: Fabrication
60% of your garment cost comes from the fabric chosen. When designing and planning pieces, the most important element is the fabric price point per yard. As an example, if it takes 2 yards per shirt and fabric is $8/yard, the cost for fabrics is $16 per shirt.
The trims are another important factor. Being aware of the price added by each buckle, bow, and binding placed on the garment will help you control costs from the start. For example, if you’re making a button-down shirt, you will need:
Each of these items will have a specific price per unit that will need to be added to the overall cost of each garment.
Development Costs 2: Additional product elements
Fabric, cut, and sew are obvious items to include but don’t forget about things like care or size labels, hang tags, and poly bags. Also, think about the interior of your product. Is there interfacing or a stabilizer needed to hold shapes or a button placket? Make sure to include every tiny item into your costing!
Development Costs 3: Construction
Taking into account the finishes, specialty stitches, and amount of seams within a style will help to control your price point.There will be times that the more seams you add to a piece the price will increase (in labor cost), and sometimes the lack of a seam will cause a higher price (in fabric consumption). Adding in French seams, baby merrow stitches, 5 needle flat locks, all take specialty machines. These types of construction, also dictate where your line is produced.
When it comes to construction, it’s likely you’ll need to work with a professional pattern maker with experience in creating production ready garments. The pattern maker should have access to work directly with the sample team to ensure that pattern specifications will be executed correctly. For example, you could budget $15/hour for easy cost calculation and start by allocating 40 hours to create the first pattern and first fit sample. If you have ten styles, multiply the cost of of the pattern and sample by 10.
Development Costs 4: Location
Fully lined garments with inner support construction, and hand work will most certainly be produced in a different factory location than a 4-way stretch legging with 5-needle flatlock seaming. Identifying a factory that specializes in shirt making, for example, before you hire a technical designer or pattern maker is good business practice. It is not uncommon for sewing factories to not have every kind of machines and skilled labor. The more efficiently the factory can make a shirt, the better pricing they can offer your brand in production.
Alternately, you can partner with a full-service production and manufacturing house to help you source pattern makers and manufacturers. The price may not be higher than doing the legwork yourself since the business will have in-house employees and established relationships with specialty manufacturers. They may be able to offer some of the benefits of scale that you as new designer lack.
Development Costs 5: Quantity
The amount of items that you are purchasing from a contractor will always affect the price of that garment. The higher the quantity, the less the price. Learning how to produce apparel with your intended aesthetic, fit, finishes, and market level, while simultaneously staying within your price point, are invaluable to a designer’s success.
Development Costs 6: Packaging
Are you selling directly to the consumer, through resale channels, or both? If you’re selling direct, you’ll need to account for packaging costs. Whether it be a hanger or polybag for an apparel item, custom boxes, tissue paper, ribbon, brand information inserts, or luxury mailing containers, there is a cost. There will be fewer packaging costs if you’re going through resale channels, but of course the middle retailer will also take a cut of your profit margin.
Development Costs 7: Shipping
This industry is global, so your fabrics and trims could be coming from Japan, Italy, India, or any number of places. Without knowing the exact price of shipping, you can always take the total cost of your materials and multiply it by 10%. This estimate will work initially. When you get your final invoices from the vendors you can update the price per yard or piece with the actual amount, including shipping.
Once you understand these 7 items, you’ll be able to start putting together a cost for your sample – and look into cost-saving alternatives. Next comes the equation for pricing your garment. Sign up here to be emailed the next two blog posts in this budget & pricing mini course. Plus, we’ll give you access to the costing template we use for all of our customers! Read part 1 here.