Costing
Fabric, trim, labour, wash costing and FOB build-up.
What really happens at this stage
Costing at the pre-order stage translates a style's construction, fabric, trims, and process requirements into a landed cost figure that the merchandising team uses to negotiate the FOB (free on board) price with the buyer. The exercise starts from the tech pack and bill of materials, pulling fabric consumption from a marker efficiency estimate, trim quantities from the construction, and process time from a rough operation breakdown. Because the costing sheet is produced before bulk fabric is bought or a line is loaded, every line item is an estimate with a built-in contingency, and the accuracy of that estimate determines whether the factory protects its margin once bulk production begins.
A complete costing sheet separates fabric cost, trim and accessory cost, direct labour (SMV multiplied by a labour minute rate), wash or finishing cost, overheads, commission, and profit margin, then rolls these into the FOB. Wash costing deserves separate attention because enzyme, stone, or garment-dye processes carry variable chemical, water, and shrinkage costs that differ by wash recipe and cannot be estimated from a generic per-piece rate. Costing is revisited at least twice: once at quotation and again after the pre-production meeting, when actual consumption, real SMV, and confirmed wash recipes replace the initial assumptions, and any gap is flagged to merchandising before bulk cutting starts.
How it is done
- 1Extract the bill of materials
List every fabric, trim, and accessory from the tech pack with construction, width, and consumption unit so nothing is priced by memory.
- 2Estimate fabric consumption
Build a rough marker or use a consumption factor from a similar style, adding a wastage allowance of roughly 3-6% for cutting loss and fabric faults.
- 3Cost trims and accessories
Get supplier quotations for zippers, buttons, labels, and packaging per piece, including minimum order quantity surcharges if the order size is small.
- 4Calculate labour cost from SMV
Multiply the estimated standard minute value of the operation breakdown by the factory's minute rate to get direct labour cost per piece.
- 5Add wash, finishing, and overhead cost
Price the confirmed wash recipe or finishing process separately, then apply the factory's overhead percentage and commission on top of prime cost.
- 6Build the FOB and sign off
Sum all elements, apply the agreed margin, and route the sheet for merchandising and management approval before quoting the buyer.
Key metrics (indicative targets)
| Metric | Working target | Why it matters |
|---|---|---|
| Costing accuracy vs actual | within 3-5% of final bulk cost | large deviations erode margin or trigger renegotiation with the buyer |
| Fabric cost as % of FOB | typically 40-55% depending on product | tracks the single largest cost driver and flags outlier quotations |
| Costing turnaround time | 48-72 hours from tech pack receipt | slow costing delays quotation and risks losing the order to a competitor |
| Wash cost variance | within 5-8% of costed value | wash recipes are process-sensitive and easily under-costed |
| Re-costing frequency per style | 1-2 revisions before bulk PO | shows whether initial estimates were realistic or repeatedly wrong |
Targets are indicative working ranges, not standard or legal limits.
Control points to check and sign off
- Bill of materials matches the latest approved tech pack revision
- Fabric consumption is based on a marker, not a guess
- Trim quotations are current and include minimum order surcharges
- SMV used for labour costing is validated, not assumed
- Final costing sheet carries merchandising and management sign-off
Common pitfalls and their consequences
- Costing from an outdated tech pack version, which understates trim or process changes and erodes margin later
- Ignoring minimum order quantity surcharges on trims for small orders, leading to unexpected cost overrun
- Using a generic SMV instead of a construction-specific estimate, which misprices labour on complex styles
- Failing to separate wash cost from finishing cost, which hides which process is actually driving cost overrun
- Skipping re-costing after the pre-production meeting, so the factory commits to a price that bulk reality no longer supports
Main activities
- Brief interpretation and range planning
- Concept, silhouette and colour development
- Digital sampling and virtual fit sign-off
Quality risks
- Costing gaps
Sustainability risks
- Cheapest wins over impact
AI opportunities
- AI cost predictor
Official sources
Learn the skills used at this stage
Free GarmentEd lessons with worked calculations, checklists and practice questions for the work described above.
- Consumption and Cost ControlProduction planning
- Factory Finance and Cost ControlManagement & finance
- Margin and Commercial Risk ManagementMerchandising & costing
- Productivity and Cost ImprovementIndustrial engineering
Also relevant: Apparel Accessories Academy, Budgeting and Investment Analysis, Marker Planning, Marker Utilisation, Material RFQ and Bid Comparison, Time Study and Standard Minute Value.
Industry chapters that cover this stage
The GARMENT TECH Ed industry chapters whose lessons are applied here — each chapter has a reference page and a taught lesson you can read straight through.
- Chapter 22 · Costing & Commercial TechnologyDigital & AIRead the chapter lesson
- Chapter 19 · Marker Planning & Fabric OptimisationManufacturingRead the chapter lesson
- Chapter 23 · Material Sourcing & Supplier ManagementSupply Chain & RetailRead the chapter lesson
- Chapter 5 · Tech Pack & Product SpecificationDesign & DevelopmentRead the chapter lesson
- Chapter 3 · Product Concept & Fashion DesignDesign & DevelopmentRead the chapter lesson
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Questions about this stage
Ask about stage 15, Costing. No account needed — questions are published once reviewed, with the answer alongside them.
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