The true cost of a piece (landed cost)

The factory price is not your cost. The true cost is everything you pay until the piece reaches your storage ready to sell.

The parts of the cost

• Fabric, trims and manufacturing labor.
• Samples, patterns and revisions.
• Inspection and quality control.
• Shipping and insurance.
• Customs duties and taxes, which differ from country to country, so check them.
• Packaging and labels.
• Bank transfer fees and customs broker charges.

An illustrative example with assumed numbers

• Fabric 6 + manufacturing 4 + trims 1.5 + packaging and labels 0.5 = 12 dollars factory price.
• Shipping per piece: 1.5. Duties at an assumed 5% on 13.5 = about 0.7.
• Inspection and miscellaneous transfer fees: 0.8.
• True cost per piece = 12 + 1.5 + 0.7 + 0.8 = 15 dollars.

Notice that the true cost is a quarter higher than the factory price. Whoever prices on 12 loses their margin without noticing.

Exercise

Fill in the cost and pricing sheet from the toolkit for every piece in your collection. Leave blank the lines you do not know yet, and fill them in when the quotes arrive.