Wednesday, September 28, 2016

Fashion Production Costs

I'm taking an online certificate program called Fashion Industry Essentials through Parsons School of Design and Teen Vogue. One assignment was to design an accessory. I designed earrings made with these beautiful transparent blue paillettes that I connected with jump rings. I used ear posts with cubic zirconia stones to add sparkle. Another assignment was to calculate the cost of making our accessory if we were just selling one or a few of them, and the cost of making it if we were selling a lot of them, or wholesale.

Here are the earrings I made  ^_^

The table below called Transparent Blue Paillette Earrings #1 shows the cost of making the earrings if I was just selling one or a few pairs of them. The assignment said to use a wage that we would expect a local clothing retailer to pay us. I used $9 because that's the minimum wage where I live and I wanted to keep the cost as low as possible, because the costs of the materials made the estimated retail price for the earrings higher than I hoped.

Transparent Blue Paillette Earrings #1
Paillettes
$3.56
Jump rings
$2.68
Earring posts
$6.55
Cubic zirconia stones
$3.12
Earring backs
$2.18
1.667 hours @ $9
$15.00
Total production cost
$33.09
20% profit
$6.62
Total cost plus profit
$39.71
Estimated retail price
$42.00

The table below, Transparent Blue Paillette Earrings #2, shows the cost of making the earrings if I was selling them wholesale. I was able to buy all of the materials in bulk, and the bulk prices for all of the materials was lower. Still, I had to shorten the time it took to make the earrings from 1 hour and 40 minutes to 1 hour so that I could keep the total cost plus profit for selling the earrings wholesale, which was $20.66, under half of the estimated retail price, which was $42.00. I didn't want to shorten the production time any more than I did because I didn't want to sacrifice the quality of the earrings.

Transparent Blue Paillette Earrings #2
Paillettes (in bulk)
$0.69
Jump rings (in bulk)
$1.31
Earring posts (in bulk)
$4.06
Cubic zirconia stones (in bulk)
$1.28
Earring backs (in bulk)
$0.88
1 hour @ $9
$9.00
Total production cost
$17.22
20% profit
$3.44
Total cost plus profit
$20.66
Estimated retail price
$42.00

I never calculated production costs before, so learning how to do it for the earrings I made was very useful. I learned that production costs should reflect the cost of every material needed to make the item, the amount of labor, and a certain amount of profit. Another thing I learned is that the total cost plus profit for selling the earrings wholesale should be less than half of the estimated retail price so that the stores I'm selling the earrings to can also profit and mark down the price of the earrings if necessary. Calculating production costs also showed me that materials cost less in bulk.

I also learned that effective pricing considers production costs and quality with the target customer audience in mind. The estimated retail price for the earrings ended up being higher than I wanted it to be. When I made these earrings, I focused more on quality, and maybe not enough on cost. If I made these earrings again, I would try to balance cost and quality more by looking for materials that cost less without sacrificing quality to lower the estimated retail price.

No comments:

Post a Comment