Setting Prices for Your Clothes and Designs
Setting prices is always difficult. Many people get involved in the fashion industry partly because they think they can undercut the price of clothes already available, but often it's difficult for a small business to compete at this level. What's more, selling your work too cheaply can, paradoxically, lead to selling less!
When you're initially working out what to charge, there are a few basic things you should consider:-
- What do similar garments usually cost? If you charge too much more than this you are likely to lose out to your competitors, but if you charge too much less, customers will assume that your clothes are inferior in quality - this can also generate bad word of mouth.
- How much do your other designs cost? Customers like consistency when they're buying from the same company. If some of your garments cost a lot more to make than others of the same general type (e.g.: dresses or coats), raise the price of the cheaper item.
- How much have your materials cost you? Don't forget to include smaller items like buttons and thread as well as the fabric itself. If you bought some of your fabric at a discount but intend to make more of the same sort of garment in the future, use an estimated normal cost.
- How long did it take you to make each garment? You should try to charge a reasonable amount for your time. The national minimum wage is a good place to start, though often when you're starting out in business you'll earn less than this. Make sure that you can earn enough to live on and to keep your motivation up.
- What is the cost per garment of your general business overheads? Work out how many garments you produce in a day, then calculate the running costs of your business for a day and divide the second number by the first. If you're also paying for things which you don't use on non-business days (e.g.: if you take weekends off but still have to pay for your website then), add a fraction of this cost to the price of each item as well.
These factors will help you to determine the basic price you can afford to sell at. When you've established this, make sure that you add a profit margin so that you can save money to improve and expand your business. Take account of the amount of tax you will have to pay on profits.
Remember that when you sell clothes through a shop, the shop will add on a profit margin of its own. This can be as high as fifty percent. Your clothes will have to remain attractive to customers at the final retail price.
Market PressuresDuring times of economic hardship, when people don't have as much money to spend on clothes, it can be difficult to sell successfully at the price you'd like. It's important to be able to adjust your profit margin to take account of factors like this. Savings made when times are better can help to get you through, but as a small business you should resist the temptation to sell below cost price in order to hang onto customers. Big companies with much more money behind them will always be better at this than you. If the market shifts so that your reasonably priced clothes become expensive, you'll have to concentrate on innovation and quality in order to maintain the loyalty of your customer base.
Exclusive ItemsTo a certain extent, pricing in the fashion industry is ruled by fashion itself. High fashion is all about exclusivity - and to exclude people, you have to make things too expensive for them to afford. This is one of the reasons why some high fashion items cost a lot more than they appear to be worth. A genuine Prada beaded bag may feature better workmanship than a River Island copy made from the same materials, but it doesn't feature a hundred pounds' worth of better workmanship. What matters is its exclusivity.
As a newcomer to the fashion industry, you won't have the advantage of an established name, but the luxury goods market is still open to you, largely by way of boutiques which specialise in strong design. If you have genuinely strong ideas and an instinct for the next big thing in fashion, don't sell yourself short - sometimes charging more can make your work seem a great deal more desirable.