Calculating the fabric cost is one of the most essential parts of starting a clothing manufacturing unit. The fabric cost usually varies depending upon the textile price as well as your profit margin. Therefore, you should have a good idea about how much you can spend on the material and create a fair fabric budget. Below is how you can establish the fabric price for your needs.
Understand the Price Points and Associated Costs
When you are estimating the development costs, work backward, and set a price point for which you would like to sell the clothing product. When you have that figure at hand, calculate the amount you plan to spend on manufacturing costs and what your intended profit margin is.
For instance, say that you are designing a t-shirt and plan to sell it for $60. If you want a profit of $35 on each product, then you will need to budget the remainder $25 for the manufacturing costs. This budget will include every cost, such as the cost of the fabric, labor, packaging, shipping, etc.
The next step is to calculate labor costs. For that, you can consult with the textile company and get an estimate for the clothing material manufacturing. This will give you an idea of how much the cutting, trimming, packaging, and shipping will cost. For instance, let us assume that the labor costs and other associated expenses come around $20 per t-shirt. That means you have $5 remaining that you can spend on the fabric cost per t-shirt.
Yet note that the fabric budget should also include the cost of zippers, buttons, elastic, or anything else apart from the fabric for your clothing item. Therefore, if the fastenings cost $1 per t-shirt, then you will be left with $4. Yet before you start thinking about spending the entire budget on the fabric material, you should also consider the final yield. Consider how many garments you can produce from a yard of fabric and then multiply that with the number you got.
For example, if the fabric maker says that yield is 0.5, it means that you can produce two t-shirts from the material supplied by the factory. So multiply that with the fabric budget you have. Here, you will get $2, which you can spend on choosing the finest fabric material for your t-shirt production. However, if the yield is less than one, then you may need to increase the final price of your product to keep your fabric budget at the same point and source the best material.