Cost vs. Target Retail Price Assignment in Fashion

For each assignment, instead of you sketching new products, do the same assignment but from the viewpoint of a Retail Buyer - you will source EXISTING PRODUCTS from brands that fit your criteria.  

So for everything you would otherwise need to sketch - you just go find the brands and products that fulfill the requirements assignment.

Sketches - 1 new Spring look of 2 coordinating pieces.  1 new Fall look of 2 coordinating pieces.  

Take 3 pieces from your 5-piece collection you sketched.  For each:  1) Determine target retail price.  2)  Determine "starting budget" for cost (Product Cost + Indirect Cost + Profit = Retail Price)  3)  Tally up all materials & qtys used in product and estimate total cost for materials.  4)  Based on materials cost estimate, determine total Product Cost and then determine new retail price based on estimated cost of materials.  5)  How does this compare to your Target Retail price?  How can you make adjustments to meet it?

Class Notes

• Determine Pricing Strategy - 1) Determine your target retail price, so that you have a price goal you are trying to meet from the very beginning.
• Price broken down into: COGS (Cost of Goods Sold / Product Cost) + SG&A (sales, general & admin / Operations Cost / Costs of doing business) + Profit (profit margin).  
  • COGS + SG&A + Profit = Price
    • COGS = Materials + Labor + shipping/other/buffer.
    • SG&A (operations cost) = all other costs of doing business (ex. rent, salaries, insurance, marketing costs, development costs, etc)
• How to determine "starting budget" for cost: Take target retail price / 3 = estimated budget for cost.  Ex $250 is target retail price = $83 for COGS + $83 for SG&A + $83 for Profit.  And then adjust from there.

Methods of Selling

• Wholesale is selling to stores at a lower price and they will resale to the end consumer.  
  • Benefits are stores already have their customers (essentially you are outsourcing sales and marketing duties to the store).
    • a way to sell more units in one transaction.
  • Drawbacks to wholesale include having to sell at a much lower wholesale price because store needs to take their mark up.
• Direct to Consumer is selling straight to the consumer (skipping the 3rd party store).
  • Benefits include keeping more profit per piece in your own pocket (can sell for a larger mark up).
  • Drawback includes having to market and sell to own customer base = you need to build a customer base.