How to Calculate Garment Cost for Your Clothing Brand
How to calculate garment cost — covering material costs, labor, overhead, shipping, and duty to determine your landed cost per unit.
Components of garment cost
Garment cost is more than the price your manufacturer charges. To calculate your true cost per unit, you need to account for every expense from design through delivery.
Garment cost breakdown
| Component | What it includes | Typical % of total |
|---|---|---|
| Materials | Fabric, trims, labels, packaging | 40-60% |
| Labor (CMT) | Cut, make, trim — the manufacturing cost | 20-35% |
| Shipping | Factory to warehouse freight | 5-15% |
| Duty/tariffs | Import taxes based on HS code and origin | 0-25% |
| Sampling | Amortized sample costs across production run | 2-5% |
| Overhead | Design tools, admin, quality control | 5-10% |
Calculating material cost
Material cost starts with your BOM. For each component, calculate the consumption (how much material is needed per garment) and multiply by the unit cost.
Fabric consumption depends on garment size, marker efficiency, and fabric width. A basic t-shirt uses approximately 1.2-1.5 yards of 60-inch wide fabric. A hoodie uses 2-3 yards. Your manufacturer can provide exact consumption figures.
Understanding CMT pricing
CMT (Cut, Make, Trim) is the manufacturing labor cost. It varies by garment complexity, manufacturing location, and order volume. Simple garments like t-shirts have lower CMT than complex garments like jackets.
CMT pricing decreases with volume. A manufacturer might charge $8 CMT for 200 t-shirts but $5 CMT for 2,000 of the same style.
From cost to retail price
A common pricing formula for direct-to-consumer brands is a 4-5x markup from landed cost to retail price. If your landed cost is $12, your retail price would be $48-60. This margin covers marketing, operations, returns, and profit.
Wholesale pricing typically uses a 2-2.5x markup from cost, and retailers then mark up 2-2.5x from wholesale to retail. Plan your cost structure to support your intended sales channels.