Garment Costing and Pricing: All You Need to Know

June 1, 2020

The key to making it in the increasingly competitive world of fashion is to establish the value of your products in the eyes and mind of your customers. With fast fashion and now resale fashion eclipsing the clothing market in such an unprecedented way, it’s crucial to know and market the value of your products astutely. The process starts with carefully determining both the costing and the pricing for your garments.

Here’s what you need to know about these two financial modeling fundamentals.

Garment Costing

In purely economic terms, cost is defined as the monetary value of resources consumed to manufacture/create a product. It begins with estimating then followed by determining the total monetary value required to produce a garment. These typically include purchasing raw materials, labor,printing, dyeing, sewing, knitting, logistics, packaging, trimming and accessory costs, overheads, banking charges, general business operating costs, etc.


Fabric accounts for the bulk of the total cost of producing a garment. For most basic-styled garments, fabric accounts for 60, even 70percent of the total cost. Factors that affect the cost of fabric include:

·        Fabric type:woven/knitted, automatic loom/power loom, type of dye/finish, yarn type, fiber of fabric (silk, cotton, polyester, wool, etc.)

·        Unit of measurement (UOM): The measurement standard for fabric.

·        Fabric Minimum Order Quantity (MOQ): This is the lowest quantity of a particular product that a manufacturer is willing to supply.

·        Quantity of Order: The cost depends on the quantity of product you order from the manufacturer.


Trims are all the materials applied to the garment save for the fabric itself. These include buttons, threads, labels, zippers, elastics, lace,rivets, Velcro, and other miscellaneous items. The quality, quantity, and labor required to apply the trims, all affect their cost.

Cost of Making

The in-house cost of making a garment is determined by multiplying the total cost per hour and the number of hours taken to make the design/style and dividing it by the number of units that are produced.

Clothes Line

Garment Pricing

Garment pricing includes the total cost of production and your profit margin. It also varies depending on how you retail your products:direct-to-customer vs. wholesale to retailers.

Here are some of the commonly used ways to determine pricing.

Backwards Pricing

As the name suggests, this method involves determining price by working backwards from an estimated average retail price. More than simply setting an initial price on a product, it also determines whether production is even viable.

Keystone Markup

The most common of all pricing methods, this involves determining your total cost and multiplying it by 2 to get a wholesale price.Then multiplying your wholesale price by 2 to 2.5 to get a fair retail price.

Absorption Pricing

Absorption pricing involves totaling up manufacturing costs for each of your products, the overhead expenses and costs, and a profit margin on each product. Your wholesale price typically includes cost, overheads, and profit margin. Your retail price is determined by multiplying your wholesale price by 2 to 2.5.

If you’re an aspiring fashion designer,dressmaker, retailer, it’s absolutely crucial you know the ins and outs of garment costing and pricing to get a leg up on your competition. This process is made a lot easier if you work with an experienced garment manufacturer.

As a premium and industry-leading garment production company in Los Angeles,we at Lefty Production Co. are committed to providing our clients with outstanding clothing development services including fabric sourcing, designing,and sample making. We have worked with numerous fashion brands, retailers, studios, and designers allover the world.

Visit our website to learn more about our services or call us at +1(323)515-9266.

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