Topics covered: Business practices of Australian Fashion businesses Business considerations for manufacturing and selling off shore Role of designer Costing

Topics covered:Business practices of Australian Fashion businesses

Business considerations for manufacturing and selling off shore

Role of designerCosting garments

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Introduction to costing

• Apparel industry can be profitable• Business plan in place• Revenues & profitRetail price

Wholesale pric

e

Cost

price

Production cost

Design kit quote

Feasibility study


What is your price rangeT-Shirts

• The $10-$15 price range – Lower price point• The $16-$24 price range – Average price• The $25-$30 price range – Higher quality• The $31-$60 price range – Luxury quality


Factors to keep in mind

1. Check your competitors, do they match up?2. Are they lower or higher?3. Is the quality similar?4. Is your pricing in the same range as your

niche market?5. Will your target market pay this price?


How do you get the retail price?

How do you get the retail price?

Wholesale price x 2 x 10% GST = retail price

Now we understand how we get the retail price, yes?


Wholesale price to retail priceItem Wholesale

priceMark up (%)

Mark up ($) Price so far equation:

Price so far GST GST$ Sale price equation

Sale price

jeans 100.00 100% $100 $100 + $100= $200 10% $20 $200 + $20= $220.00

T-shirt $30.00

dress $250.00


How do we get the wholesale price?

How do you get the wholesale price?

• Cost price + 25% x 2.2 = wholesale price

25% = Freight charges, duty, tax, packaging 2.2 = mark up + GST cost

How do you get the cost price?


Cost price to wholesale price

Item Cost price Add 25% for tax,freight etc..

Add $ Mark up %

Mark up ($)

Price so far equation:

Price so far

GST % GST $ Wholesale price

jeans 10.00 25% 12.50 100% $12.50 10+2.50+12.50=

$25.00 10% $2.50 $27.50

T-shirt

dress


Cost price

How do you get the cost price?

• Fabric cost + labour cost = cost price

Simple really?


Really simple?There are typically 2 main ways to achieve the cost pricea) Usage cost sheetb) Fixed price

Both of the above methods of costing will calculate the following to gain the cost price:

1.Fabric cost per garment (usage)

2.Raw materials per garment (usage)

3.Labor cost per garment (typically minutes to make)

4.Packaging cost per garment

5.Printing tags, labels per garment

6.Hanger per garment


Usage cost sheet

When would we use this kind of cost sheet?What are the benefits to using this kind of cost

sheet?What kind of materials and data information do

we need?How do we collect the data required to make

informed costing decisions?


Fixed cost

When would you use this kind of fixed cost?

How would you negotiate the price?

Can I change raw materials to achieve my target cost?

Quotes from 3 manufacturers.


3 parts to costing.

• Internal costing procedures are broken down into 3 parts

a) Feasibility studyb) Design kit costingc) Production final costing


First stage of the costing process

• Season Planner – feasibility study or quick costing Style/ shape / Usage Fabric cost – knowing your main fabric cost vs. usage Lingerie is based on Galloon US$1.50 p/m = approx: RRP $69.95

Accessories cost (straps / underwire, etc) Labour cost 25% duty, freight, packaging (fixed cost) Feasibility study estimated GP% SEE ATTACHED. Is this a commercial product at the correct RRP?

Examples of FOB Bra US$8.00 – US$12.00 / RRP $69.95 - $119.95Women's Jeans US$9.00 - $12.00 / RRP $79.95 - $165.95Women's tee’s US$6.00 – US$9.00 / RRP $49.95 – 79.95


10 minute activity

• Write down 5 benefits of doing a feasibility study for each style you develop

• Lets do it together!


Costing process• Design timeline – quotes on costing Design kit Based on main fabrics & raw materials Counter sample approved Is this price commercial for RRP What is included Exchange rate evaluate Is there room to negotiate

• Production timeline – confirmed costing Based on approval of counter sample Approved main fabric & raw materials Quantities per style / colour Bulk PO placed Contract or Purchase order raised Quantity is confirmed Lead Time is confirmed Raw materials WIP is confirmed

Always check finial shipping documents to confirm correct priced used.



10 minute activity

• In a group name some of the crucial elements in the costing process


Total costing process togetherItem cost

priceAdd 25% tax duty

Add $

Mark up 100%

Mark up $

W/S price

Mark up 100%

Mark up $

GST % GST $ RRP RRP + GST

RRP price

jeans 10.00

T-shirt

dress



COST SHEET - SAMPLE ONLY

Style No. FNW003

Garment Description DRESS

Colour RED

Fabric Article number Fabric Qty Cost/mts/yrd Total cost

mtv00013 Fabric 1. 0.5 $ 6.00 $ 3.00

abc23456 Fabric 2. 0.1 $ 8.00 $ 0.08

xyz4567 Fabric 3. 1 $ 4.00 $ 4.00

Access. Article number Accessories Qty Cost/each Total Cost

bu567 Button 5 $ 0.20 $ 1.00

tr987 Trim 0.6 $ 1.20 $ 0.72

ykk007 Zipper 1 $ 1.50 $ 1.50

th345 thread 0.33 $ 4.00 $ 1.32

lab0009 label 1 $ 0.30 $ 0.30

lo890 Logo/pip 1 $ 0.45 $ 0.45

mis4567 Miscellaneous 5 $ 0.05 $ 0.25

Total materials $ 13.34

Detailed Manufacturing

machine operation thread colour total minutes

single needle sew front to back black 0.5

THIS WOULD BE WORKED OUT BY AN OUTSOURCED MAKER IF NOT IN-HOUSE

Total labour cost $ 3.70

Cost of garment $ 17.04

Fixed cost

duty, freight etc… add approx 25% cost price of garment $ 21.30

wholesale price $ 47.48

retail price $ 86.32

Retail price GST incl $ 94.95

Gross profit % 55.13%


Roles within the industry

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Roles within the industry• Designers• Assistant designers• Pattern Maker• Sample Maker• Cutter• Machinist• Production • Visual Merchandiser• Fabrics & Textiles• Brand Manager• Illustrator• Model

• Fashion Journalist• Buyer• Self – Employed• Retail• Sales• Marketing• PR• Business Manager• Product Developer• Textiles Designer• Graphic Artist• Stylist• Digital Marketing Coordinator (NEW)

There are 48,000 people employed in the TCF industry in Australia with an estimated industry worth of $2.8billion if you combine the TCF & Retail industries it is worth $7.5billion with employment around 160,000.


Designers role within a company


Designer’s Role in fashion business

• A designers role has emerged from only looking after patterns, grading, textiles and trends to also looking after the business concerns of the company.

• Designers are now accountable for all ranges within their brand.

• Head of design is also head of business within a company.


Why take on a role not as a designer?

• If you are lucky enough to come out of college and land a design role you are doing very well.

• The benefits of taking on roles like Production assistant, pattern maker or sales / marketing assistant gives you additional skills that will enable you to be a better designer.

• The whole picture – team effort in every aspect of Fashion.


Design to sell-in – it takes a team.

designproductionsalesdistribution

Sell thru into retail

Handover of delivery Details, stock quantities, photo Samples, travellers

samples, Advertising samples etc..

Delivery into store on-time,Communicate with stores,

Booking freight time.

Handover of tech sheets, production notes, fabric

information, colour approval, Manufacturing

notes etc..

Handover of store orders andDelivery conformation, orders

Entered into computer, stock allocationConfirmed, stock quantities updated.


Company structures

GENERAL MANAGER / SELF EMPLOYED

ACCOUNTS / FINANCIALS

HR

DESIGNSAMPLE ROOM

PRODUCTION

SALES

CUSTOMER SERVICE

WAREHOUSE

MARKETING


Job descriptions

• Accounts / financials– Budgets– Profit & loss– Forecasting– Accounts payable / receivable– Monthly reconciliations

• HR– Internal policy & procedures– Staff job descriptions– Staff contracts– OH&S– Hire, manage and exit staff

• Design– Concept– Manage process– Assistant designers– Patternmakers– Machinist– Costing– Forecasting– Budgets /financials

• Production– Production Assistant– R&D– Sourcing– Local / offshore manufacturing– Costing– Logistics– Warehouse

• Sales– Targets– New business– Existing business– Range showings– Product knowledge

• Marketing– PR / Advertising– In-house– Point of sale


Questions?

Documents

Topics covered: Business practices of Australian Fashion businesses Business considerations for manufacturing and selling off shore Role of designer Costing