Spring 2015 market is just around the corner, how is the sample making process going for you so far? Hopefully your collection is coming well and on time. A major next step for you is pricing your products right to make sure you are making a profit. So as you are getting your cost sheets ready and to help you avoid this bad experience here are 5 points to consider while costing and pricing your fashion line:
- Consider your target market – your product should be a perfect match (all around) for your target customer and market. Do your market research, study the pricing for your type of products from your competition and decide on your price position in your market. Too low will make your target customer suspicious about your product. Too high and they will stay with competition that they already know and trust.
- Consider your product’s value - If you are offering something that is not available in the market (service or product) – that is BIG VALUE = PRICE! Just like in that Master Card commercial – Value is priceless! If your product is going to save your customer time, money and frustration, solve them a problem or simply make their lives easier than it is very valuable for them! define that value and translate it into a $ amount! FYI – make sure to clearly communicate this value in your marketing!
Pay attention to your gross margins – Gross margins measure the profit of your fashion product in %. It tracks your business growth and keep an eye on the profitability of your product / business. So make sure to pay attention to it when costing your product. Need help understanding gross margins? Our costing workshop will help with that. Need help calculating your gross margins? Get our cost sheet here.
Cost your product for now – If this is your first season/s than most likely your big challenge is what quantity should you cost for production. The reality is that as a new start-up your margins in the first few seasons will not be high enough (mostly cause your production units are low), but that is NORMAL! What you need to do is create two cost sheets, one for today which is based on small runs and one for later stage which will cost your product for when you will be producing larger units in few seasons from now. It is fine if right now your margins are low but you can see when and how they will get better as units grow, BUT if your future cost sheet still doesn't look profitable enough than that's a red flag and you’ll need to adjust!
Think about the retailer – If you are looking to offer wholesale at any point (even if not right away), than calculate in your cost sheet and make sure that you building up enough mark-up for you to sell wholesale and still allow your retailers to apply their mark-up. Remember- wholesale price is when you sell from one business to another business – not direct to the customer, therefore when you sell from your own website to an end customer then you must sell in retail price, adding on the same mark up a retailer will add to your wholesale price. You can NOT compete in price with your retailers otherwise they will not buy from you.
If you need more help with costing and pricing your fashion product let us help. Take our costing workshop to find costing tips and price strategies or get our cost sheet template or if you need more specific help than book Boaz now for a consulting session.