How to Price Your First Drop

Price your first drop from the bottom up. Work out what one finished garment costs you all in, decide the margin the brand needs to survive, and set the price from that. Then check it against what the garment says in the hand. Most founders do it the other way round: they look at what similar brands charge, pick a number, and find out the margin later.

This is the method. There are no prices in it, because your numbers depend on the garment, the decoration and the quantity, and we quote every job on what you actually want to make. What follows is how to turn that quote into a retail price that works.

Your quote is the start of the cost, not the whole of it. For each style, add up everything it takes to put one sellable garment in a customer’s hands:

• The garment. The biggest single line, and weight moves it most: a 155gsm tee and a 500gsm hood sit at opposite ends of the ranges we supply.
• Decoration, priced per position per garment. A front print and a back print are two positions.
• Set-ups, spread over the run. A screen print set-up below 100 per design, embroidery digitising, any vector redraw. Divide each one by the garments it covers.
• Labels and swing tickets. They run at 100 per design, so on a first run of 25 you pay for 100. Decide whether to charge them all to this run or spread them over the next ones as well, and be consistent.
• Finishing: relabelling, swing ticket application and bagging, charged per garment.
• Your samples, which are chargeable and are not credited against the order.
• Everything after the garment leaves us: mailers, postage you do not pass on, payment and marketplace fees, and the garments you give away to be photographed or worn.
• An allowance for returns and faults. Some garments come back. Put a small figure in now rather than find out later.

That total, divided by the number of garments you can actually sell, is your all-in unit cost. Work it out per style, not as an average across the drop.

Margin and markup are the two words most likely to catch a founder out, because they sound like the same thing and are not.

• Markup is what you add to the cost, as a share of the cost. Cost 40, price 100: a markup of 150%.
• Margin is what you keep from the price, as a share of the price. Cost 40, price 100: a margin of 60%.
• Doubling your cost is a 100% markup but only a 50% margin. Half of every sale is still the cost of the garment.

Price from the margin you need. Your margin has to pay for everything the unit cost does not: photography, the website, advertising, your time, and the money for the next order. A margin that looks healthy on paper can disappear once those come out of it.

If you are VAT registered, the price a UK customer pays includes VAT, charged at the standard rate of 20% on adult clothing. On a price of 60 including VAT, 10 is VAT and 50 is yours. Work your margin out on the price without VAT, or the numbers will flatter you. Whether and when you need to register is a question for an accountant.

If you hope to sell through shops, the shop takes its own margin out of the retail price, and you sell to it at a wholesale price below that. If your retail price only works when you sell direct, a stockist will not fit later without raising the price or cutting your margin. Decide now whether wholesale is part of the plan, and ask the shops you have in mind how they work.

Then hold the garment and ask whether the price is believable. Weight is what a customer judges first. Below 180gsm a tee reads as a giveaway, above 240gsm it reads as considered, and above 280gsm it reads as streetwear. Your own woven label in the neck, a care label and a swing ticket are what make a garment read as retail rather than merchandise. If the price says premium and the garment says promotional, the garment wins.

Price for the first drop, but do not let the first drop alone fix the price for good. A reorder does not pay again for labels you already hold, artwork that is already approved or embroidery that is already digitised, and a deeper run brings the garment line down, because the price per garment falls as quantity rises. At 100 or more per design, the screen print set-up is included as well. The margin on your second order should be better than on your first, and that is part of the plan rather than a bonus. The detail is in why your second order is cheaper.

• Pricing from a competitor’s website without knowing their costs or their volumes.
• Leaving postage, fees and samples out of the unit cost.
• Dividing 100 labels by 25 garments and deciding the brand cannot work, when 75 of those labels are for the next order.
• Setting a launch discount before the full price has ever been tested.
• Pricing every style the same, when a 350gsm hoodie and a 180gsm tee cost very different amounts to make.

What drives each line of a quote is on the pricing page, and the costs of a whole launch, beyond the garments, are in how much it costs to start a clothing brand. For the weights behind the price, see what GSM actually means and the t-shirts. When you have the products in mind, get your first drop quoted and you will have real numbers to price from.