When launching a line, defining your brand identity is paramount.
Defining your brand identity includes your not only your look, your target customer, your retail price point, knowing your competitors (as well as what brands sit well alongside your brand), and what makes you unique, but also- are you selling wholesale or retail?
Until you answer these questions, you truly can’t get started on your collection in a strategic way.
When creating your path, whether it is calendar planning or brand planning, it is generally helpful to start with the end goal and work backward. This will help you get an idea of cost, (which is how much money you have to put into your fabric), CMT, packaging, etc.
The next step is to determine your markup. The markup is the amount by which the cost is increased on a product to arrive at the selling price. The garment industry standard for boutiques is to double (or triple) the cost of the wholesale price to arrive at the final retail price. Often retailers multiply their cost by 2.3 (a 130% markup).
As a brand, it is a good idea to decide on a markup percentage that you consistently follow as often as possible. It is also a good idea to check your gross margin against your markup after your product is finalized to ensure you are profitable.
Let’s take a look at an example of a $100.00 retail item and work backward:
If you are working on selling retail, your path looks like this:
Final retail price point= $100
Markup of 100%
Final product costs= $50
Within that cost, you will be balancing your materials, cut/make/trim (CMT), shipping of material, final shipping of goods, packaging, etc.
Costs x Markup % = Final Retail Price
If you are working on selling wholesale, your path looks like this:
Final retail price point= $100
Retail markup of 100%
Final product price= $50
Wholesale cost markup of 100%
Final product cost- $25
Within that cost, you will be including all of our costs to make, as listed above.
Costs x Wholesale Cost Markup % = Final Product Price x Retail Markup %= Final Retail Price
To learn more about what to include in costing your product (and to receive our easy-to-use costing worksheet) book a consultation today! We will be happy to answer and clear up any specific questions you may have as well, as help you with timing, sourcing, planning, and creating a path unique to your product development needs.