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Introduction to costing

Topics covered: Business practices of Australian Fashion businesses Business considerations for manufacturing and selling off shore Role of designer Costing garments . Introduction to costing. Apparel industry can be profitable Business plan in place Revenues & profit.

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Introduction to costing

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  1. Topics covered:Business practices of Australian Fashion businessesBusiness considerations for manufacturing and selling off shoreRole of designerCosting garments
  2. Introduction to costing Apparel industry can be profitable Business plan in place Revenues & profit www.fashionnetwork.com.au
  3. What is your price rangeT-Shirts The $10-$15 price range – Lower price point The $16-$24 price range – Average price The $25-$30 price range – Higher quality The $31-$60 price range – Luxury quality www.fashionnetwork.com.au
  4. Factors to keep in mind Check your competitors, do they match up? Are they lower or higher? Is the quality similar? Is your pricing in the same range as your niche market? Will your target market pay this price? www.fashionnetwork.com.au
  5. How do you get the retail price? How do you get the retail price? Wholesale price x 2 x 10% GST = retail price Now we understand how we get the retail price, yes? www.fashionnetwork.com.au
  6. Wholesale price to retail price www.fashionnetwork.com.au
  7. How do we get the wholesale price? How do you get the wholesale price? Cost price + 25% x 2.2= wholesale price 25% = Freight charges, duty, tax, packaging 2.2= mark up + GST cost How do you get the cost price? www.fashionnetwork.com.au
  8. Cost price to wholesale price www.fashionnetwork.com.au
  9. Cost price How do you get the cost price? Fabric cost + labour cost = cost price Simple really? www.fashionnetwork.com.au
  10. Really simple? There are typically 2 main ways to achieve the cost price Usage cost sheet Fixed price Both of the above methods of costing will calculate the following to gain the cost price: Fabric cost per garment (usage) Raw materials per garment (usage) Labor cost per garment (typically minutes to make) Packaging cost per garment Printing tags, labels per garment Hanger per garment www.fashionnetwork.com.au
  11. Usage cost sheet When would we use this kind of cost sheet? What are the benefits to using this kind of cost sheet? What kind of materials and data information do we need? How do we collect the data required to make informed costing decisions? www.fashionnetwork.com.au
  12. Fixed cost When would you use this kind of fixed cost? How would you negotiate the price? Can I change raw materials to achieve my target cost? Quotes from 3 manufacturers. www.fashionnetwork.com.au
  13. 3 parts to costing. Internal costing procedures are broken down into 3 parts Feasibility study Design kit costing Production final costing www.fashionnetwork.com.au
  14. First stage of the costing process Season Planner – feasibility study or quick costing Style/ shape / Usage Fabric cost – knowing your main fabric cost vs. usage Lingerie is based on Galloon US$1.50 p/m = approx: RRP $69.95 Accessories cost (straps / underwire, etc) Labour cost 25% duty, freight, packaging (fixed cost) Feasibility study estimated GP% SEE ATTACHED. Is this a commercial product at the correct RRP? Examples of FOB Bra US$8.00 – US$12.00 / RRP $69.95 - $119.95 Women's Jeans US$9.00 - $12.00 / RRP $79.95 - $165.95 Women's tee’s US$6.00 – US$9.00 / RRP $49.95 – 79.95 www.fashionnetwork.com.au
  15. 10 minute activity Write down 5 benefits of doing a feasibility study for each style you develop Lets do it together! www.fashionnetwork.com.au
  16. Costing process Design timeline – quotes on costing Design kit Based on main fabrics & raw materials Counter sample approved Is this price commercial for RRP What is included Exchange rate evaluate Is there room to negotiate Production timeline – confirmed costing Based on approval of counter sample Approved main fabric & raw materials Quantities per style / colour Bulk PO placed Contract or Purchase order raised Quantity is confirmed Lead Time is confirmed Raw materials WIP is confirmed Always check finial shipping documents to confirm correct priced used. www.fashionnetwork.com.au
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  18. 10 minute activity In a group name some of the crucial elements in the costing process www.fashionnetwork.com.au
  19. Total costing processtogether www.fashionnetwork.com.au
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  22. Roles within the industry www.fashionnetwork.com.au
  23. Roles within the industry Designers Assistant designers Pattern Maker Sample Maker Cutter Machinist Production Visual Merchandiser Fabrics & Textiles Brand Manager Illustrator Model Fashion Journalist Buyer Self – Employed Retail Sales Marketing PR Business Manager Product Developer Textiles Designer Graphic Artist Stylist Digital Marketing Coordinator (NEW) There are 48,000 people employed in the TCF industry in Australia with an estimated industry worth of $2.8billion if you combine the TCF & Retail industries it is worth $7.5billion with employment around 160,000. www.fashionnetwork.com.au
  24. Designers role within a company www.fashionnetwork.com.au
  25. Designer’s Role in fashion business A designers role has emerged from only looking after patterns, grading, textiles and trends to also looking after the business concerns of the company. Designers are now accountable for all ranges within their brand. Head of design is also head of business within a company. www.fashionnetwork.com.au
  26. Why take on a role not as a designer? If you are lucky enough to come out of college and land a design role you are doing very well. The benefits of taking on roles like Production assistant, pattern maker or sales / marketing assistant gives you additional skills that will enable you to be a better designer. The whole picture – team effort in every aspect of Fashion. www.fashionnetwork.com.au
  27. Design to sell-in – it takes a team. Handover of delivery Details, stock quantities, photo Samples, travellers samples, Advertising samples etc.. Delivery into store on-time, Communicate with stores, Booking freight time. Handover of tech sheets, production notes, fabric information, colour approval, Manufacturing notes etc.. Handover of store orders and Delivery conformation, orders Entered into computer, stock allocation Confirmed, stock quantities updated. www.fashionnetwork.com.au
  28. Company structures www.fashionnetwork.com.au
  29. Job descriptions Accounts / financials Budgets Profit & loss Forecasting Accounts payable / receivable Monthly reconciliations HR Internal policy & procedures Staff job descriptions Staff contracts OH&S Hire, manage and exit staff Design Concept Manage process Assistant designers Patternmakers Machinist Costing Forecasting Budgets /financials Production Production Assistant R&D Sourcing Local / offshore manufacturing Costing Logistics Warehouse Sales Targets New business Existing business Range showings Product knowledge Marketing PR / Advertising In-house Point of sale www.fashionnetwork.com.au
  30. Questions? www.fashionnetwork.com.au
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