1. Topics covered: Business practices of Australian Fashion businesses Business considerations for manufacturing and selling off shore Role of designer Costing garments

2. Introduction to costing Apparel industry can be profitable Business plan in place Revenues & profit www.fashionnetwork.com.au2 Retail price Wholesale price Cost price Production cost Design kit quote Feasibility study

3. What is your price range T-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.au3

4. Factors to keep in mind 1.Check your competitors, do they match up? 2.Are they lower or higher? 3.Is the quality similar? 4.Is your pricing in the same range as your niche market? 5.Will your target market pay this price? www.fashionnetwork.com.au4

5. 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.au5

6. Wholesale price to retail price www.fashionnetwork.com.au6 Item Wholesale price Mark up (%) Mark up ($) Price so far equation: Price so farGSTGST$ Sale price equation Sale price jeans 100.00100%$100$100 + $100=$20010%$20$200 + $20=$220.00 T-shirt $30.00 dress $250.00

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.au7

8. Cost price to wholesale price ItemCost price Add 25% for tax,freight etc.. Add $ Mark up % Mark up ($) Price so far equation: Price so far GST %GST $ Wholesale price jeans 10.0025%12.50100%$12.50 10+2.50+12.50 = $25.0010%$2.50$27.50 T-shirt dress www.fashionnetwork.com.au8

9. Cost price How do you get the cost price? Fabric cost + labour cost = cost price Simple really? www.fashionnetwork.com.au9

10. Really simple? There are typically 2 main ways to achieve the cost price a)Usage cost sheet b)Fixed price Both of the above methods of costing will calculate the following to gain the cost price: 1.Fabric cost per garment (usage) 2.Raw materials per garment (usage) 3.Labor cost per garment (typically minutes to make) 4.Packaging cost per garment 5.Printing tags, labels per garment 6.Hanger per garment www.fashionnetwork.com.au10

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.au11

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.au12

13. 3 parts to costing. Internal costing procedures are broken down into 3 parts a)Feasibility study b)Design kit costing c)Production final costing www.fashionnetwork.com.au13

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’sUS$6.00 – US$9.00 / RRP $49.95 – 79.95 www.fashionnetwork.com.au14

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.au15

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.au16

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18. 10 minute activity In a group name some of the crucial elements in the costing process www.fashionnetwork.com.au18

19. Total costing process together Item cost price Add 25% tax duty Add $ Mark up 100% Mark up $ W/S price Mark up 100% Mark up $ GST %GST $RRP RRP + GST RRP price jeans 10.00 T-shirt dress www.fashionnetwork.com.au19

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21. www.fashionnetwork.com.au21 COST SHEET - SAMPLE ONLY Style No.FNW003 Garment DescriptionDRESS ColourRED Fabric Article numberFabricQty Cost/mts/yrd Total cost mtv00013Fabric 1.0.5 $ 6.00 $ 3.00 abc23456Fabric 2.0.1 $ 8.00 $ 0.08 xyz4567Fabric 3.1 $ 4.00 Access. Article numberAccessoriesQty Cost/each Total Cost bu567Button5 $ 0.20 $ 1.00 tr987Trim0.6 $ 1.20 $ 0.72 ykk007Zipper1 $ 1.50 th345thread0.33 $ 4.00 $ 1.32 lab0009label1 $ 0.30 lo890Logo/pip1 $ 0.45 mis4567Miscellaneous5 $ 0.05 $ 0.25 Total materials $ 13.34 Detailed Manufacturing machineoperation thread colour total minutes single needlesew front to back black0.5 THIS WOULD BE WORKED OUT BY AN OUTSOURCED MAKER IF NOT IN-HOUSE Total labour cost $ 3.70 Cost of garment $ 17.04 Fixed cost duty, freight etc… add approx 25% cost price of garment $ 21.30 wholesale price $ 47.48 retail price $ 86.32 Retail price GST incl $ 94.95 Gross profit %55.13%

22. Roles within the industry www.fashionnetwork.com.au22

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) www.fashionnetwork.com.au 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.

24. Designers role within a company 24www.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.au25

26. Why take on a role not as a designer? 26www.fashionnetwork.com.au 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.

27. Design to sell-in – it takes a team. designproductionsalesdistribution Sell thru into retail www.fashionnetwork.com.au27 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.

28. Company structures GENERAL MANAGER / SELF EMPLOYED ACCOUNTS / FINANCIALS HR DESIGN SAMPLE ROOMPRODUCTIONSALES CUSTOMER SERVICE WAREHOUSEMARKETING www.fashionnetwork.com.au28

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 29www.fashionnetwork.com.au

30. Questions? 30www.fashionnetwork.com.au