What Is Garment Costing?
Garment costing is the process of calculating the total cost to produce a single unit of a garment. It includes material costs (fabric, trims, labels), manufacturing labor (cut, make, trim), overhead, sampling amortization, shipping, and duties. Accurate garment costing is essential for pricing your products profitably and understanding your margins at different sales volumes.
Components of Garment Cost
A complete garment cost includes:
- Fabric cost: Consumption (yards per garment) × price per yard
- Trim cost: Thread, labels, buttons, zippers, hang tags, packaging
- CMT (Cut, Make, Trim): Manufacturing labor cost per unit
- Washing/finishing: Any post-production treatments
- Sampling: Amortized across expected production volume
- Shipping: Freight cost per unit from factory to warehouse
- Duties/tariffs: Import taxes based on product category and origin country
- Overhead: Design tools, quality control, insurance, admin
Calculating Material Cost
Start with your BOM. For each material, calculate consumption per unit and multiply by unit cost. Fabric consumption depends on garment size, marker efficiency, and fabric width. Your manufacturer can provide exact consumption figures, or estimate using industry averages.
From Cost to Price
Common pricing approaches:
- Direct-to-consumer: 4-5× markup from landed cost
- Wholesale: 2-2.5× markup from cost (retailers then mark up 2-2.5× to retail)
- Keystone pricing: 2× markup at each step in the supply chain
- Value-based pricing: Set price based on perceived customer value, then ensure your costs support that price
Frequently Asked Questions
What margin should I target for a clothing brand?
Direct-to-consumer brands typically target 60-80% gross margin (4-5× markup from cost). Wholesale brands target 50-60% gross margin (2-2.5× markup). These margins need to cover marketing, operations, returns, and profit.
How do I reduce garment cost?
The biggest levers are fabric selection (lower-cost materials), manufacturing location (overseas vs domestic), order volume (higher quantities reduce per-unit cost), and design simplification (fewer operations reduce CMT cost).
Should I include design costs in garment costing?
Yes. Amortize design and tech pack creation costs across your expected production volume. AI tools like Skema3D significantly reduce design costs compared to traditional methods, improving your per-unit economics.
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