Starting your fashion brand (pt 2)
At Start by WGSN, we know how difficult it might seem to start a fashion brand, not only in terms of personal feelings – self-doubt, the search for perfection, etc. – but also when it comes to business considerations: planning, finance availability, and so on. Starting a fashion business takes tremendous effort, planning and time. You have to find a supplier that will deliver what you need, when you need it. You must also be able to sell and build a brand that talks directly with its consumer, and so on.
To help you throughout this journey, we have described a few steps that will be essential when starting your fashion brand.
Want to read part 1? Click here.
Now that you have developed a business plan, it is time to start planning the production, thinking about the supply chain, customers, and marketing.
Before considering the production, you first need to set your pricing, and this begins with identifying a customer niche. Finding the pricing point is very important because this will guide your business, from the production, to the collection, to the marketing.
For example, if you are targeting financially independent women, you need to understand their priorities and how much they are willing to pay for a piece. Meanwhile, knowing the pricing for wholesale, and your competitors’ prices, will make your businesses more successful – you will have an idea of the average price, the total cost, etc.
So, how can you determine the right price for a piece? Usually, the aim is to achieve a margin of 60% – a retailer gets about a 58% margin. Garments that are expensive to make but are good value to your company marketing-wise often have smaller margins, while the core items with already fixed costs have bigger margins. Here, it would be best to consider a price that will allow discounting when the season ends. If you are direct-to-consumer, your business doesn't need to mark up the product as much because there is no cut going to an intermediary seller.
To determine the landed cost, you should include materials, labor, packaging, duties, transportation, and distribution. The retail price is usually the landed cost multiplied by six. If the landed cost for a shirt (considering marketing too) is $20, your company should suggest a retail price of $120, and allocate the retailer $50.
When thinking about how you will manufacture your product, it is essential to have a supplier that will deliver what you need. Where the product will be produced can dramatically change the process. Production is key to your brand's success – a business can live or die based on what you deliver to the end consumer. There are endless production options, but partnering with domestic labs or factories can significantly impact quality control for small brands. If you opt for overseas production, it might reduce your costs, but it can be challenging to deliver. Also, you must make sure the factory of your choice will have what is required to produce your product.
Make sure you get a pre-production sample from your chosen manufacturer. Even if you are working with the same one for a few collections, these samples are crucial because they are the last chance to double check that everything is being done correctly.
Want to learn more about production? Download our e-book.