Garment Cost Sheet is a crucial document to prepare to get a proper estimate of a collection design and production. It gives you if not exactly an approximate cost to execute apparel design and production for a collection. Here is a detailed guideline on how you can prepare a garment cost sheet. Additionally, you can obtain a format for the garment cost sheet. You can use this to prepare your cost and estimated profit from the collection drop. Remember to prepare the cost sheet properly you need to have your tech packs in order. Your tech pack designer has to mention all the details that you want to put in your garment. This gives clarity on your style and makes it easier to prepare a proper garment costing sheet.
What is the Garment Cost Sheet?
A garment cost sheet is prepared to calculate the cost of one piece of garment. It includes the material cost and the cost of processing. Production quantity is also a crucial factor in determining costs. This subject can be complicated, so let me explain it step by step, using an example to clarify. That’s how we can make it easier to understand the concept of preparing a garment cost sheet. The cost and profit are directly related to fashion design and production pricing. So the fashion design is directly proportional to production pricing.
Header Information
Header information of a garment cost sheet includes all about the style details. The details are Style Name, Style Number (SKU), Category, Designer, Season, Country of Production, etc. From this, you can identify the style for which the cost is calculated.
Bill of Materials (BOM)
List all the materials required for the garment, including fabric, lining, buttons, zippers, labels, etc. Specify quantities, units of measurement, and unit costs for each material. The product developer and tech pack designer should work together to create the Bills of Materials, which are a crucial part of the tech pack. A small mistake in the bills of material can lead to a high deviation in the cost. So, it should be done with utmost care.
Labor Costs
Break down the labor costs associated with the garment. This includes the cost of cutting, sewing, finishing, and any additional labor processes. Specify the number of hours required for each task and the corresponding labor rates. Calculating the labor cost is a complicated process. Some factories do it based on the operations one style has. Manufacturers calculate the number of operations and the cost of performing each operation. Then they come up with the total labor cost.
Overhead Costs
Factor in overhead costs, which include expenses beyond direct materials and labor. This may include utilities, rent, salaries of support staff, equipment depreciation, etc. Allocate a portion of these costs to each garment based on a predetermined formula.
Profit Margin
Determine the desired profit margin for the garment. This is usually a percentage of the total production cost. It’s crucial to strike a balance between competitiveness and profitability. Normally in garment industries manufacturers keep 15 % – 22 % on each garment production. The profit margin goes up or down depending on the risk and wastage factors involved. If the garment is risky or complicated and the risk associated with it the profit margin goes up.
Transportation and Logistics
Include costs associated with transporting raw materials to the manufacturing facility and finished goods to distribution centers or retailers. Consider shipping, customs duties, and any other logistics expenses. While usually, companies calculate internal logistic costs from one unit to another using miscellaneous costs, these costs should be calculated under a specific head for accurate accounting.
Packaging Costs
Account for the cost of packaging materials and the labor required for packaging the finished garments. This may include boxes, tags, labels, and any other packaging components. Tags, labels, and other branding materials are usually provided by the client. If the client provides those the only remaining packaging cost would be the carton boxes duct tape and poly bags for garments.
Quality Control
Allocate funds for quality control processes to ensure that the final product meets the specified standards. This may involve hiring quality inspectors or implementing quality control measures in the production process. This varies from client to client. Some clients include this with the manufacturing cost and some do it externally.
Miscellaneous Costs
Consider any additional costs that may arise during production, such as tech pack design, sample development, pattern making, or prototyping. Also, account for any unexpected expenses that may arise.
Total Cost Calculation
Sum up all the costs mentioned above to arrive at the total cost of production for each unit of the garment. This total cost is a critical figure that will help determine the pricing strategy.
Pricing Strategy
Determine the selling price of the garment based on the total cost. Consider market trends, competitor pricing, and your brand positioning when setting the final retail price. Typically, the ratio is 1:3, meaning the selling price is three times the total cost.
Documentation
Keep a detailed record of all the cost components and calculations for future reference. This documentation is essential for making informed decisions, conducting cost analyses, and refining your cost structure in the future.
Why We Need to Calculate Cost?
Before writing about the garment cost sheet, I scanned Google to find clear articles but found nothing. Businesses are often reluctant to provide a clear breakdown of their material costs. They call it a business secret. No clothing manufacturer will give you open costing. They will give you one final cost per garment. However, it is your responsibility to determine a sensible cost for a garment. Creating a cost sheet becomes challenging when you lack detailed knowledge of garment construction. And you end up losing a lot of money in production. To keep track of your expenses. you can prepare a cost sheet if you have a tech pack in hand. A tech pack designer can give you the detailing that helps prepare your cost sheet.
Visit Tech Pack Template Store if you are starting a brand with styles everyone using with your brand name or some graphics artwork to customize. You may buy the tech packs to send to clothing manufacturers. With this tech pack template, you may add your graphic artwork and logos. You can save hundreds of dollars with these tech packs. We develop fashion spec sheet templates and test them several times in production. Once the measurements come out perfect we finalize the spec sheet. For a proper clothing manufacturing cost estimation, it’s essential to have a proper tech pack design. By following these steps, you can prepare a comprehensive garment cost sheet. This approach considers all aspects of production, helping you make informed decisions about pricing and ensuring the financial viability of your garment.