This is how most luxury brands really make money.
If you are unsatisfied with your businesses profits and spend a lot of resources creating its products, then you might be pricing your product poorly.
Let's go to business school real quick.
What is ‘cost’?
Cost price is simply the total price of everything needed to make something. It ranges from the raw materials used to the labour required.
A list of things that could be considered 'costs':
Raw materials (e.g. fabric, thread etc)
Transportation
Labour (e.g. salary/wage)
Internet
Digital devices
Time
Any other resource that goes into the creation of your product/service
How do you put a price on time?
After you’ve added your physical costs up, choose a price you believe your time is worth (e.g. per half an hour) and build from there. The negatives of this is imposter syndrome so getting positive feedback from each client should serve as a catalyst to build on the cost of your time after each service offered.
Selling Price - Making PROFIT
The general formula in business school is: cost price x 2
However, assess your business objectives and decide if the answer to that formula financially benefits your fashion business. If it doesn’t, then you choose a higher margin.
A margin is literally a number. Choose a number above '2' to multiply your cost price by for a higher result.
The general formula for fashion businesses is:
Cost Price X 2 X 2.7
2.7 is a mark-up.
Prada's mark-up for a T-Shirt can go beyond x10 because that is their price position in the global market.
If you would like to maximise your profit while producing less in quantity as well as saving you time as a fashion entrepreneur, then let's talk fashion business!
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