In business, pricing is what helps the business grow. In wholesale, it is different in how much you charge retailers. The retailers will then price these fabrics that the direct consumers or customers will pay for. There are a lot of things to consider prior to tagging a price for the fabrics you purchased from your high quality fabric supplier.
Factors to include in pricing high quality fabrics involves formulas that helps determine the price of the fabric, margin, markup, markdown, profitability, and sales history for your fabric business that will ultimately involve or affect accordingly to your high quality fabric supplier.
The focus in wholesale and retail is different process-wise. Wholesale basically is more anchored towards manufacturing of the fabric until the distribution of the fabric from the high quality fabric supplier. Retail on the other hand, is the acquisition of the fabrics and then ultimately the direct selling of the fabrics to the customers.
Wholesale pricing are set in a variety of ways by different high quality fabric supplier. The idea is to generate a profit by selling items for more than they cost to produce. For example, if one product costs $5 in labor and materials, you could set a wholesale price of $10, giving you a gross profit of $5 per item. The first step in retail pricing is to consider the customer. To make a profit, a retailer will mark up the price of wholesale products.
Calculating wholesale price
- Conduct research
Determine the part of the market you’re attempting to capture and where you fit in before you establish a pricing for any retail product from a high quality fabric supplier. Are you a budget brand, a contemporary brand, or a designer brand, for example?
Keep this in mind while you conduct your research if a reduced price point is your competitive edge. When performing market research, keep in mind whether your target buyers are more budget-conscious or seeking for a high-quality, high-end fabric.
- Calculation of the cost of the goods manufactured
The whole cost of creating or purchasing a product, including materials, labor, and any additional expenditures required to get the fabrics from high quality fabric supplier into inventory and ready to sell, such as shipping and handling, is known as the cost of goods made (COGM).
- Setting wholesale price
When determining your wholesale price, multiplying your cost of the fabrics by two is a smart place to start. This will guarantee a wholesale profit margin of at least 50%.
The gross profit a high quality fabric supplier makes when an item is sold is referred to as the profit margin.
In the apparel industry, brands typically aim for a wholesale profit margin of 30 percent to 50 percent, whereas direct-to-consumer retailers strive for a profit margin of 55 percent to 65 percent. (Sometimes a margin is referred to as a “markup %.”)
Let’s imagine you’re in the business of selling swimsuits. If you buy a swimsuit for $25 and sell it for $50, your retail margin per suit is $25, or 50%.
Tips in retail pricing
A suggested retail price (SRP), sometimes known as a manufacturer’s suggested retail price (MSRP), is the price that a brand or high quality fabric supplier advises retailers to charge for their product. It’s critical that merchants adhere to your SRP in order to avoid undercutting you or your other retail partners.
The following formula is used to compute the retail price according to Damen, A. 2018:
“Wholesale Price / (1 – Markup %)= Retail Price”
Look at how other similar brands or high quality fabric supplier set their prices in your market. Then, based on the costs you pay to make your products, you can work backward to see if your desired retail price is reasonable.
It’s time to get started now that you have a better knowledge of the formulae utilized to compute product pricing. You can make a spreadsheet with columns for cost of goods, wholesale price, wholesale margin, retail price, and retail margin that identifies your fabric by style number and name.
Create a costing chart with the formulas above that you can insert figures into whenever you need to set pricing for a new fabric.
You can sell wholesale fabrics to high quality fabric supplier by selling on the Handshake marketplace or by adding the wholesale channel to your ecommerce store and creating a password-protected storefront.