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1.  Wholesale: Selling products to other retailers to sell. Lower profit margins. Wholesale market structure can provide larger consumer reach.

2.  Retail Brick/Mortar: The development of a store that sells only your product. This allows for better control over MSRP. Operating expenses are high for smaller companies.

3.  Online Sales: Selling product through internet via Etsy, Ebay, and etc. This allows for lower operating costs on retail profit margins.

!  Over 6 billion transactions will be done via internet by 2018 Criteo.com

!  MasterCard is researching new methods of turning the mobile smart phones into the actual financial device: December 2015 Mastercard.com

!  131.4 million users will have made 1 purchase via a mobile device by the end of 2016: Statista.com

!  Cloud Computing will become new mode of working on internet. Apple is already moving forward by negating headphone jacks & possibly usb drives.

!  Online Stores: Having a website with your own store.

!  Mobile Apps: Selling products via secure VPN apps is the future of creating a branded online shopping experience. Various large retailers are using apps already to ease the experience, and generate more secure financial transactions. (Spaceagetechnologies.com DEC 2015)

!  Lower operational costs.

!  Better control with MSRP: If your brand wants to have pricing control, the online price will designate what a wholesaler must enter at to remain competitive with brand direct website.

!  Profit Margins provide better growth potential.

!  Forecasting feedback is faster and more direct.

!  #1 reason for failure is accounting & finance-Forbes 2015

!  Market research !  Product relevancy: To late/ To early on release

against trends !  Poor Design: The 3 F’S - Fit, Fabric, and flow. !  Quality Control: Poor Sewing, Fit, and wash. !  Lack of business structure- Unorganized

planning can result in knee jerk business choices.

!  Costing will define your wholesalers price and retail price.

!  Correct costing will define line development budgets.

!  Allow for a profit margin that will allow for next season production.

!  Costing allows for better tax filing. For example, R+D tax ride offs.

!  Defines financial historical for annual growth.

!  Allows financial institutions to see financials for investments.

COSTING

Budget

Production Minimums

Textile/Trims Minimums

Defined Market of entry

Taxes Quality/ testing

COSTING

Budget

Design

Textile/Trims Minimums

Taxes

Quality/ testing

SMALL START UP EXISTING LARGE COMPANIES

!  Production & textiles should be selected first for budget and price structures. Usually the production facility and the textiles will have purchase minimums that must be considered.

!  Based on country of origin, tax must be considered under HTC codes.

!  Design around what company can afford based on production & textile minimums. Good design lines, with fabric selection can allow for best use of budget.

!  Allow production facility to develop patterns/ samples for best cost against approved quality, considering the 3 F’s.

!  Design/ trend/ and art work is considered first. The process is more costly and requires more people for development on all fronts.

!  Textiles, prints, and etc. will have minimums and taxes to consider for production. Once selections and pricing have been provided the design team narrows down best option for budgets.

!  Large companies have more ability to create new fabrics, and etc for growth.

!  Define Style: The more buttons, fabrics, and trims, graphics, added to a garment will allow for mins to be defined.

!  Type of production needs. Working with sewing, made product, and full package enterprises to define minimums & pricing.

!  Is production to small?

!  Quality Control

!  Quality of fabric: Inspect fabric for flaws. Is fabric correct for design?

!  Quality of sewing: Is stitch correct for fabric? Does stitch work look professional

!  Finishes & Washing !  Allow for loss of product, generally 10% will be

non-sellable based on issues with various parts of construction

!  Sizing: Does product meet defined specs? !  Is quality worth the selling price?

!  Do you know what government requires for certain apparel markets, washes, treatments and etc?

!  Is product application tested for the consumer safety?

!  Global export tests !  TSCA- Works with FTC,

EPA, OSHA, and other arms of government.

!  SDS Sheets: Required by TSCA

!  Quality of long term performance. Wash test, light test, and etc.

!  Sales Tax: Defined by state the item will sell in.

!  Duties for global exports & imports: Defined by HTC. FTC & Customs work to define these. Understand trade laws such as NAFTA, CAFDA, etc. Updated annually

!  Tax on income: Quarterly taxes reported. !  R+D budgets- Accountant that specializes in this

subject may be of use.

!  Quick Books

!  Excel

!  PDM/PLM Systems

!  Accountant

!  Cost Sheet: Individual sheets used for each style. Must set production values first for best costing practices.

!  BOM: Bill of Materials: For entire collection. This will incorporate multiple styles that use similar textiles, findings, trims, and sundries.

!  Cut tickets: Used for manufacturing costs

!  Additional paperwork from production facilities.

!  Cost Sheets are a form that will define each individual styles cost for everything.

!  Provide a historical for a style. Useful for reinvesting in a popular product seasons later.

!  Calculate production costs. A good cost sheet will include fabrics, interfacings, trims, tags, bags, hangers, delivery, and taxes.

!  All pricing will be defined by production. Important to define this first, before designing.

!  All design has limitations based on budget and cost. Define minimums will allow for more cohesive execution.

!  Start-ups should work at a slower pace to build supply chain, and work with production companies. This is important for quality control.

!  Define how many need to be produced by manufacturing company. Example 150 units.

!  Multiply all yardage, trims, and etc by this number. This will give ordering prices.

!  Divide price for production/ textiles, and etc by 150 UNITS.

!  500 yards of velour ordered @ 1.65 a yard. = $750.00. 750/150= $5.00 per dress.

!  Man hours for construction of one unit multiplied by 150 units. 1.25x150=187x15.00=$2805 / by 150units = $ 18.7 for construction.

!  Taxes. Total cost / tax rate= tax per piece

!  Understand what fabric weights work well together.

!  Understand stitchwork needed to make long lasting product that looks finished.

!  Define acceptable standards for sewing, with samples, techpacks, and etc.

!  Define acceptable specs via spec sheet found in tech pack

!  Look for stains from oil pans, cleanliness, and loose threads.

!  Check labels and inside garment for professional workmanship.

!  Quality control helps maintain branding image. However loss will happen.

!  Plan for 10% loss of product based on quality issues.

!  If a cut/sew facility is not delivering on goods in a timely fashion, discuss discounts. Also do not use a manufacture that has delivered poor quality. Get a contract.

!  Washability !  Colorfastness !  Tensile strength (active

markets) !  Flame Retardancy

(home décor, kids, outdoor event, electronically based wearable)

!  Formaldehyde !  Pigment dyes: lead !  Acetone levels !  Heat: graphics !  Review TSCA !  Review Prop 65:

California !  Understand

Classification of Apparel. This directs you to what law requires for testing.

!  Use made product like t-shirts to create direct branding with graphics or embroidery. Most inexpensive way to get your name worn. Make it relevant.

!  Accessories: Low cost margins & high mark-up depending on item.

!  Pop-up shops, or working in collective. !  Protect you business by ensuring no laws are

infringed upon. Patent laws, testing for safety, contracts, copyrights on branding, and etc.

Thank you for taking the time to learn about how costing works. If you have more questions

please contact KS Apparel Design. !  Katy@ksappareldesign.com !  www.ksappareldesign.com