5 Common Costing Mistakes + How to Avoid Them

One of the very first steps we take with any of our clients is to go through a costing exercise. We know this is not the most glamorous or fun part of the design process, but it is what turns your fashion idea into a successful business! If your product isn’t costed correctly then you may just be pricing yourself out of business.

We have helped dozens of clients take a realistic approach to costing their products. Through this experience, we have come up with the following list of the most common mistakes we see when our clients are in the beginning steps of costing.


1. Not starting with a pre-cost.

Here’s the solution: Do a pre-cost! Take your ideal retail price point and work backwards. For a very rough example, if your ideal retail price point is $100, then you need to wholesale your product for $50 and have your cost of goods plus manufacturing be no higher than $25. This will give you a better idea of what you can spend on fabrics, cut and sew, packaging, etc.  Always keep your target customer in mind when thinking about your ideal retail price point and what they would be willing to spend along with the perceived value of your product.


2. Not treating each style as its own costing project.

Each style, product, or item, will need its own separate costing. Even if you are using the same fabric for multiple styles, the amount of fabric may vary, which will affect the overall cost for each item. To save time, make a copy of your spreadsheet and update it with the new information for each style.

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3. Missing key elements of the product.

Fabric and cut and sew are obvious items to include but don’t forget about things like care or size labels, hang tags, poly bags, etc. Also, think about the interior of your product. Is there interfacing or a stabilizer needed to hold shapes or in a button placket? It is essential to include every tiny item into your costing because when you are multiplying things by 4 to get your retail price, an extra dollar or two can really add up!


4. Not taking shipping into consideration.

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.

5. Not updating the numbers.

Your costing sheets are living, working documents that you should update as you finalize decisions on fabrics, trims and manufacturers. You may also need to adjust your wholesale to retail markup, as some retail stores may use anywhere from 2 to 2.5 as their multiplier. Your initial cost sheets can be modified throughout the process to make sure you are still on track for your ideal retail price point. One area to specifically keep an eye on when updating is your yields for each fabric. Yields can make or break a cost sheet, so double check that your yields are accurate once your patterns are finalized and approved.

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These are the mistakes we see when we are working with startups and their costing, but there are workable solutions to all of them! Are there any other areas where you may need assistance with costing your products for success?

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