Just like in every business, fashion entrepreneurs need to take note of their income and expenditure to be certain that the business is not running at a loss. Sometimes though, even if owners are being prudent in their spending and tracking the finance of the business strictly using software, the profit after a long period still doesn’t look very good.
This may be due to a lot of factors, such as a low number of clients, the high cost of materials used, or improper pricing of products.
As fashion entrepreneurs, it’s necessary to know the proper way to price products, in order not to run at a loss.
“You need to know the value of your brand before you decide on price.” – Chinelo Ikegbune
We spoke to fashion entrepreneurs on the factors that affect pricing, and how they determine the selling price of their products. Here’s what they shared with us,
Ruth Olawoyin, the creative director and founder of Ribbons And Stitches, which is a women’s clothing brand had this to say,
“Some of the factors that affect pricing in my fashion brand include, the direct cost of production of the items, fixed cost, variable cost and labour cost. So, I calculate the sum of my production cost and profit, to give an accurate price for my products.”
Oloyede Debby, the creative director of Magik Stitches, a ready-to-wear and bespoke fashion brand had this to share,
“In my brand, modelling is a factor that determines the selling price of my products. I also consider the cost of the fabrics, accessories and materials used.”
Here’s what we think.
Although the cost of materials, as well as profit, has to be considered before determining the selling price, other factors have to be considered also. Factors such as the labour cost, cost of fixed materials such as the atelier, machines used, and so on.
These things would help fashion entrepreneurs give a proper price to their products to avoid running at a loss.
From one of the top fashion school in Lagos, the price of an item should be the sum of the cost of production and profit. The cost of production includes the cost of materials, price for labour, as well as the overhead per item.
Using this method, the selling price of the item would cover all the daily cost of every machine, labour, material, and still have the profit included. So, fashion entrepreneurs wouldn’t need to worry about running at a loss with this method.
For more information on how to calculate the overhead per item, check here.