Here’s how to decide pricing strategy for your clothing brand!
One of the most important things for you to work out in order to be successful with your fashion brand is “how do I decide my RRP?”.
You probably started your clothing label out of a passion and love for fashion. But the fact of the matter is that your brand needs to be profitable in order to survive.
Setting the right fashion pricing strategy is possibly the single most important thing to get right if you want to make your clothing brand a lasting success.
Now, because we love you guys, we’ve put together an *Updated for September 2022* Estimated Fashion Pricing Guide, with everything you need to know in order to correctly work out a pricing strategy for your garments.
This spreadsheet is completely free, and is absolute gold for anyone looking to set out a successful fashion pricing strategy.
Keep reading for more info!
Step 1: Get our Estimated Fashion Pricing Guide (it’s free!)
We do a pricing analysis a couple of times a year where we take the average costing of the most popular garments and put them together in an excel sheet so you can see average costs, what you should be charging your customer and what your profits will be.
The guide is based on a quality level comparable with brands like Fear of God, Stussy, Represent etc.
This covers all the various costs you need to consider when working out your pricing strategy for your clothing brand.
If you'd like a copy, drop me a note on Whatsapp: +447939591255 and I'll send it across, but make sure you watch the video below and read to the very end of this blog to arm yourself with the knowledge you need!
This video explains how the pricing sheet is laid out! Check it out here:
This will give you an excellent basis to start making your pricing calculations.
Step 2: Consider your market positioning & quality level
For any start up clothing brand, we suggest that the best pricing strategy is to launch as a ‘bridge brand’. By that, we mean brands that sit somewhere in price between value brands (e.g. H&M, Primark etc), and ultimate luxury brands (e.g. Prada, LV etc).
These are brands that 'bridge' that gap, so think along the lines of Stussy, Fear Of God Essentials, Palm Angels, Aries. Basically, really good quality streetwear and loungewear.
With high quality standards you'll be able to sell your clothing to your customers at a higher price point than you would as a value brand. That means that your profits are much higher.
The only realistic way to start a value brand (where you have low cost garments that are at a reasonable quality) is to have very high Minimum Order Quantities (MOQ's), of around 2K-3K per design/colour. For most clothing startups, that just isn’t achievable, as it’s such a big capital outlay to produce such big orders.
So, all things considered, the rate of success for ‘bridge brands’ is much higher.
Step 3: Clothing quality, designs and cost implications
You might want to check out our guide on ‘The cheapest way to design clothes’. This is a fantastic guide on how to design using shape and fabric which helps to keep the construction of your garments non-complex and in turn lowers your unit cost.
When it comes to setting your Recommended Retail Price (RRP) and pricing strategy, you’ll need to have considered the cost of your tech packs, cost of sampling, the fabric choice, complexity of construction and the number of graphic applications. Alongside that, you’ll also need to consider photoshoot and marketing costs.
The more units you order per style/colour the lower your cost will be per unit. Also opting for longer (cheaper) shipping methods is a brilliant way to lower costing.
When you sit down to work out your RRP per style, all of the above elements will have an impact and need to be considered.
Step 4: Think about fuel costs and exchange rates
The world is in a bit of a crazy state right now, with costs for energy and fuel sky high.
That means that shipping costs at the moment are a lot higher than they were a few months ago (e.g. our previous estimated pricing guide was done in May 2022, and since then, shipping costs have increased enormously), so you need to work that into your fashion brand’s pricing strategy, and make sure that you’re still making enough profit.
Similarly, currency exchange rates are constantly fluctuating, and that’s an important thing to consider for your fashion brand’s pricing. Why?
Because if you pay for your bulk manufacturing in another currency, that can have a big impact on your costs. For example, if you’re based in the UK (GBP) and you pay your manufacturer in US dollars, a 5% stronger dollar means that it’s 5% more expensive for you (in real terms) to pay that invoice.
*Maths warning!* Back in May, the USD/GBP exchange rate was around 0.79 (so each dollar charged only cost you 79p). Now (September 2022) it’s around 0.88, so each dollar costs you 88p. When you multiply that across a bulk clothing order, that’s quite an important increase in cost. Again, you’ll need to work enough margin into your clothes pricing strategy to cover that risk and make sure that you’re still making enough profit to survive (and hopefully grow!).
Step 5: Go high with your pricing from the get-go
It’s really hard to raise your prices later on down the line, so the best bet is to set your pricing high from the start. If you start selling your garments for £40/unit, and then later realise that you’re not making enough profit, it’s difficult to then raise them (your customers won’t be best pleased with a 30% price increase!). But if you start at a higher price point, you can always offer special pricing with ‘friends and family’ discounts, or a slightly lower price if a customer is willing to place a larger order with you.
With higher pricing, you also have a buffer in case shipping costs or exchange rates start to erode your profit margin.
Step 6: Consider the type of shipping that you use
There are 3 main types of shipping that fashion brands use - Sea Freight, Air Freight and Express Courier. The shipping method can have a massive impact on your costs.
For example, express couriers are much more expensive, and they don’t include customs fees.
Sea Freight is way cheaper, and the added bonus for you is that it also includes customs fees.
The downside is that Sea Freight does take longer to arrive. So you the best thing to do is always design well ahead of time (at least 6-8 months). This time frame gives you options!
Step 7: If all of this seems confusing, reach out to a pricing expert
At Hook and Eye UK, we’ve worked with hundreds of successful fashion brands over the years, helping to set RRPs and pricing strategies that lead to healthy bank balances and happy clothing brands.
For a limited time, we're offering one-to-one consultations for £45/hr (inc.VAT) to help you set your fashion brand’s pricing strategy properly. This could make you £1,000s extra each year. If you think that would be useful, drop us a Whatsapp, and we can help from there.
In conclusion:
Deciding the right pricing strategy for your clothing brand is one of the single most important elements in running a successful fashion business. It’s really worth some time, effort and analysis to get it spot on!
Our Estimated Pricing Guide is handy tool to help you factor in all the costs and work out a solid pricing strategy. The calculations are based on estimates of similar ‘bridge’ brands, so feel free to use it as starting point (drop us a Whatsapp +447939591255 to get your copy!).
The next thing to do is always think about the costs of production (including tech packs, sampling etc), the cost implications of different order sizes, fuel costs, exchange rates, and different shipping methods. It all makes a big difference to how you should price your clothes.
Finally, if you need some professional assistance with getting your pricing right, HookandEye UK are here to help. Drop us a Whatsapp to see what we can do together to get your clothes pricing strategy spot on.
Love,
Joss H&E xx
P.s We're here for you if you have questions drop us a WhatsApp on +447939591255