How to Price Your Clothing Products (Without Guessing)

Price from your true landed cost per unit, apply a wholesale and a retail multiple, then check the result against your market. Landed cost is everything it takes to get one finished unit to you: manufacturing, trims, freight and duty, plus labels, packaging and sampling, which a manufacturing quote can leave out. In this guide's illustrative example, which is arithmetic rather than a quote, a mid-weight organic cotton tee at 300 pieces lands at $9.00 DDP, but labels, hangtag and polybag add $0.60 and one sample round spread across the run adds $0.40, so the real figure is $10.00. From there, a common frame is wholesale at about 2x landed cost, or $20, and retail at about 2 to 2.5x wholesale, or $40 to $50. Cost-plus is only the floor: a considered brand with organic fabric and a real story can charge more than a generic blank. Then leave room for discounts, returns, fees and a margin healthy enough to reorder.

Aim for a gross margin of 50 to 70% at retail, the common working range, but what counts as good depends on whether you sell to stockists or direct. In this guide's illustrative example, a tee that lands at $10.00 and wholesales at $20.00 carries a 50% gross margin on every stockist order, while selling it direct at $45 gives about 78% before tax and selling costs. Neither figure is profit, and the direct one has more to pay for. Payment processing takes roughly 2 to 3% of each direct sale, returns run high in apparel and are rarely resold at full price, and storage, picking and packing cost money on every order. Discounting is the cost most brands underestimate, because nearly every season ends with stock to move. Plan the sale you expect before launch and check the margin left after it, not the one on your spreadsheet. The test is whether what is left still pays for the reorder.

A common starting frame is about 2x from landed cost to wholesale, then about 2 to 2.5x from wholesale to retail, which puts retail at roughly 4 to 5x landed cost. Apply the multiple to the right number. Mark up the $9.00 manufacturing figure in this guide's illustrative example and you miss $0.60 of labels and packaging and $0.40 of sampling; mark up the true $10.00 instead. Positioning moves the multiple: premium brands can hold a higher one because the price itself signals quality, while value brands run thinner margins on higher volume. Selling only direct, you keep the whole markup but pay to win every customer yourself. If a 4x markup still leaves you unprofitable, the problem is usually upstream in the product cost or the order size, and fabric choice moves that cost more than anything else, so fix it there rather than in the formula. Treat it as a starting frame rather than a rule.

Price your first run at the market rate you intend to keep, and accept a thinner margin on it rather than pricing high to protect the margin. Short runs cost more per unit, because a small first order, from 150 pieces per style and colour, spreads its fixed set-up costs across fewer pieces than a larger run does. That tempts new brands into two mistakes: pricing high enough to hold the margin and stalling, or pricing at market and quietly losing money on every sale. Neither is necessary if you are honest about what the first run is for. It is research: its job is to prove people will buy the product and to hand you a sealed sample and a pattern you can scale. A thinner margin is fine; a loss on every unit is not. Price breaks at larger quantities, often around 500 or 1,000 pieces, are what restore the margin. Never launch at a price you cannot afford to hold.

Show one clear final price for each item, usually printed on the hang tag or a price sticker beside the barcode, and in the UK and EU that price must include VAT and any other taxes. The UK Price Marking Order 2004 requires a trader selling to consumers to indicate the selling price, which it defines as the final price including VAT and all other taxes, and the EU price indication rules set the same principle. Decide early who prices the garment. If you sell direct, have your retail price printed on the tag at the factory, which saves handling later. If you sell through stockists, ask whether they want a recommended retail price printed or prefer to add their own sticker, because many retailers set their own price. Keep the price consistent across tags, your website and any shop display, and make sure it is legible and clearly linked to the product it belongs to.

Landed cost is everything you pay to get one finished garment into your hands, worked out per unit: the factory price plus trims, labels, packaging, sampling, freight, insurance, duty and any import tax you cannot reclaim. It is the number to price from, not the manufacturing quote. The gap between the two is easy to miss. Labels, a hang tag and a polybag add a little to every unit, one sample round spread across the run adds a little more, and brands that price from the factory figure lose that difference on every sale. Under a DDP quote, freight, duty and customs clearance are already inside the factory price, so the landed cost is close to the quote plus your own trims and sampling. Under FOB, freight, duty, import VAT or GST and brokerage arrive later as separate invoices. A VAT-registered business normally reclaims import VAT, so it affects cash flow rather than the landed cost itself.

Keystone pricing means doubling a cost to set the next price, most often doubling the wholesale price to get retail. In clothing, a common starting frame is wholesale at about two times landed cost, and retail at about two to two and a half times wholesale, where a straight two times is the keystone. Taken together, that puts retail at roughly four to five times landed cost. Keystone is a convention, not a rule. Premium brands with a real story, such as organic fabric or transparent production, can hold a higher multiple because the price itself signals quality, while value brands run thinner margins on higher volume. Two cautions apply. Apply the multiple to your true landed cost, not to the bare manufacturing price, or you lose the cost of labels, packaging and sampling on every unit. And check the result against your market, because cost-plus pricing is the floor, not the answer.

Because a DDP quote, delivered duty paid, folds freight, customs clearance and duty into one number, so your landed cost is known before production starts. With an FOB quote, the price stops at the port in Bangladesh, and sea freight, insurance, import duty, import VAT or GST, brokerage and inland delivery arrive afterwards as separate invoices, often weeks later and after the goods are already yours. That makes FOB quotes look cheaper than they are, and it is a common reason first-time brands set retail prices too low. To price accurately from an FOB quote, add a realistic estimate for each of those lines first. With DDP you still add your own labels, packaging and amortised sampling if they are not inside the quote, and check whether import VAT or GST is included, since some DDP quotes are duty paid but tax excluded. Collective Studio quotes DDP for this reason, so you price from one landed figure.