One of the first questions we ask our new development clients at the beginning stages of creating a clothing line is “what is your budget for the project?” Most new designers and entrepreneurs have no idea. We know that creating a budget can be overwhelming when you’re first starting out, so we decided to outline a few important budget components that we share with all of our clients.
Here are five steps for putting together a budget for your new clothing line.
1. How much can you spend in total?
It might seem elementary, but the first step to devising a budget for your project is to look at your finances and determine how much you can spend in total. Lots of new clients will say they do not have a budget, and that they are willing to spend whatever it takes to get their clothing brand up and running.
But, let’s be honest, most of us do not have an unlimited pile of cash to funnel into a new business. So sit down and take a look at your finances to see just how much money you are willing to invest in your new brand. Once you have your total budget, you can then decide where to allocate your funds and how to utilize your resources best.
2. How much do you want to spend on product development?
Once you have an overall budget, the next step is to split it up into a handful of different buckets, including product development, manufacturing, and marketing. With international production and larger orders, these buckets get more complex, but we will assume you are starting small and your clothing line will be USA-made.
As for what to budget for product development, you can use our in-house Product Development Program as a guide. For fabric sourcing, trim sourcing, pattern making, and cut and sew for your samples, clients typically spend between $1,500 to $2,000 per sample. We recommend that you devote at least $2,000 to each sample to create a quality product that will be successful in the marketplace.
3. Decide on your target price per unit for manufacturing
Once you have allocated funds to product development, calculate how much you can spend on manufacturing by focusing on the cost per unit to produce in bulk. To determine your target price per unit, start by learning the industry standard retail prices for similar products and work backward. Find out who your competitors are and what they are charging for their products. Their prices will allow you to hone in on a target retail price and get closer to how much you could reasonably make off of the sale of each unit to earn a profit. From there, you can determine the target price per unit.
4. Choose your method of distribution
How will you be selling your product? Will you be selling your clothing to stores or will you be selling on your e-commerce site? Many new businesses start out with a Shopify site to keep web development costs down, but some hire a web developer to design an e-commerce site for them. Decide how you want to sell your product and figure out how much you will need to spend to make distribution happen.
5. What is your marketing strategy?
For a startup clothing brand, we recommend allocating a significant amount of time and resources to marketing your product. Clothing moves when there’s buzz. If funds are tight, we recommend utilizing free social media marketing tools such as Hootsuite and Buffer to get started.
If you have extra budget for advertising, Facebook and Instagram ads are a great way to jumpstart your company’s social media audience and promote your brand name. Alternatively, PR is also possible with little to no budget if you are willing to come up with angles yourself and do the legwork of finding and contacting writers; and influencer marketing on Instagram is a marketing channel that many budding designers have used with success.
We hope these steps get you started on your clothing line budget. Is there something you think we should add to the list? What unexpected costs derailed your budget? Leave us a comment below with any questions or comments. We love feedback.