How to set a wholesale price that holds your margin target

You earn a lower margin than you priced for

You set the wholesale price before production, as a multiple of the sewing quote and a planned material cost. Dyeing, trims, packaging and overheads stay outside that base, and the units already ordered keep their price. The gap shows only when the season's costs are in: a lower margin on every unit sold.

Wholesale prices are set on a planned cost, before the complete cost is known

A 100% markup sets the price at double the cost and leaves a 50% margin, but only when that cost is complete: materials, every process and every other cost of the unit. Brands price from a costing sheet filled in by hand before the first purchase. Production data does not reach the sheet, so it keeps the old cost when the recipe changes after sampling or a supplier raises a price. The price then rests on a cost lower than the one the brand pays.

Price each colourway from its complete cost, against one margin target

You see which colourways miss the target while you can still change their price, before the collection goes on sale. Go4 adds up the cost of each colourway from its recipe, production steps and other costs, updates it when a recipe or supplier price changes, and suggests the wholesale price that reaches the target. The suggested price is the lowest price that reaches your target; the final price is your decision.

Steps

1. 1Complete the material recipe of every colourway: consumption, waste and the supplier price of each material.
2. 2Price every step of the production path, not only sewing. A colourway with an unpriced step, such as dyeing, gets no margin in the collection costing.
3. 3Add the other costs of each colourway, such as packaging, testing and development, as an amount per unit or a percentage overhead.
4. 4Set the margin target of the collection, then take the suggested wholesale price or enter your own and read its margin against the target.

Each colourway then has a wholesale price with a known margin against the target.

Example

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