Markup Pricing Formulas

When sourcing apparel, it's crucial to use specific formulas to estimate costs, lead times, and profitability. Here are some key formulas used in apparel sourcing: ### 1. Costing Formula To calculate the cost price of a garment: **Cost Price = Material Cost + Labor Cost + Overhead Costs + Transportation Cost + Profit Margin** - **Material Cost:** Fabric cost per unit (e.g., meter/yard) × Consumption (per piece) - **Labor Cost:** Per unit labor charge × Total production quantity - **Overhead Costs:** Factory expenses allocated to each unit - **Transportation Cost:** Shipping charges divided across total units - **Profit Margin:** Desired percentage of profit on total cost ### 2. Fabric Consumption Formula To calculate fabric requirements for a garment: **Fabric Consumption = (Length × Width × GSM × Panels × Wastage %) / Yield** - **Length & Width:** Based on pattern size - **GSM:** Fabric weight per square meter - **Panels:** Number of pieces in the pattern - **Wastage %:** Typically 5-10% for cutting waste ### 3. Order Quantity Formula To calculate the required order quantity for production: **Order Quantity = (Total Demand × Safety Stock) / Batch Size** - **Safety Stock:** Buffer stock percentage to avoid stockouts - **Batch Size:** Production lot size ### 4. Lead Time Formula To estimate total sourcing and production time: **Lead Time = (Sampling Time + Production Time + Quality Check Time + Shipping Time)** Include time for supplier negotiations and approvals. ### 5. Markup Price Formula To calculate the selling price: **Selling Price = Cost Price × (1 + Markup %)** Example: If cost price is $20 and markup is 50%, the selling price is: **Selling Price = $20 × (1 + 0.50) = $30** ### 6. Profit Margin Formula To calculate the profit margin: **Profit Margin (%) = [(Selling Price - Cost Price) / Selling Price] × 100** ### 7. Yield Calculation for Fabric To calculate fabric yield per roll: **Yield = (Fabric Roll Length × Fabric Roll Width) / Area Per Garment** ### 8. Freight Cost Per Unit To estimate shipping cost for each piece: **Freight Cost Per Unit = Total Freight Cost / Total Quantity** These formulas help ensure accurate costing, efficient production planning, and optimal profitability in apparel sourcing.

STOP charging less than $2,000. Instead: Focus on providing value worth OVER $2,000. Here’s 2 pricing formulas I’ve seen work over and over again. For Income-Generating Products: - Price = 20% of customer's expected 12-month income - Example: If your method helps them make $50K/year - Your price point = $10K - This gives them a 5X return on investment For Lifestyle/Hobby Products: - Base price on customer profile + acquisition costs - Example: Wildlife photography course - If customer acquisition costs $1,500 - Price at $3,000 for healthy margins - Target wealthy hobbyists who value quality Key insight: Time saved is incredibly valuable. If you can help someone master in 3 months what typically takes 2 years, that's worth a premium price. Remember: Low prices often signal low value. Don't undersell transformation.

Zero to $7m in a new channel in 12 months. With just a phone and some basic systems and processes. That’s what John Roman is working on with BattlBox via live shopping. This week, on the ASOM Pod, John shares with Amer and I the exact step by step tactical playbook of exactly how he’s doing it. And the most important lesson: If you're going to sell live, you need a pricing rule that accounts for the hidden costs most people forget. John broke down the exact math that made live shopping profitable for them from day one. They instituted the "52% Markup Rule". This isn't arbitrary. It's calculated to cover the real costs of the platform: - Whatnot fees: ~8% - Payment processing: ~3% - Team Commissions: ~10% That's 21% off the top, right away. A 52% markup ensures you have a healthy margin left over after these costs. Some items will sell at retail (or even above!), but setting this as your minimum protects your profit on every single auction. 1. Know your product's landed cost to the penny. 2. Multiply that cost by 1.52. That's your minimum starting bid or "Buy It Now" price on the live show. 3. Any product that can't support that margin might not be a good fit for this channel. This rule turns live shopping from a speculative marketing cost into a predictable, profitable revenue stream from the start. Now streaming on your favorite platform Watch it on the big screen (with a full presentation): https://lnkd.in/g2dJswUG Big thanks to Omnisend, Kintsugi and LiveRecover for the sponsorship 🙏