As clothing manufacturers for more than 400 clients around the world, we have gained a valuable insight of how brands start and blossom. Finances are what could make or derail a promising brand and we hope by sharing our experience, more brands will succeed.
In this post, we will discuss in more detail about the two main costs centres of any fashion brand and touch on about distribution costs as well.
Production
Cost: $5,000 to $25,000 (Dependent on your collection)
Once your samples are complete and you’re satisfied with how they look, the next steps will be the production phase. This is where you will place a bulk order for your designs. Production is one of the main stages of your business and a large portion of your funds will be allocated to this.
Think about how many pieces you would like to produce per design for your bulk order. Factories would usually already have an MOQ (minimum order quantity), for example, 300pcs per design, per colour. These MOQs are in place because factories are able to produce at a lower cost when you order in bulk. Thus, if you were to ask to produce lesser than the stated MOQ, factories might drive up your production costs to make up for the low quantity. Hence, it will always be cheaper to produce at the factories’ MOQ or higher.
However, you must be prudent about this decision. It doesn’t always mean that you have to opt for the cheaper alternative. Weigh out your options and anticipate what is a manageable amount of stock for you to sell. If you’re not confident about selling 300pcs per design for example for your first collection, you might have to find another factory with a lower MOQ or spend a little more on producing a smaller quantity, whichever ensures a lower risk for your cash flow. If this goes well, then you can scale up in the following collections to enjoy lower cost and higher margins.
Besides how much you produce, where you produce also affects the costs of manufacturing. Manufacturing in western parts of the world like Europe or the U.S. may be more costly as compared to eastern parts like in Asia. There are factories all over the world, however, finding a suitable and reliable one is extremely difficult. Think carefully about what you require from your factory – communication, location, quality, timelines etc. so that you have a better gauge of what you’re working towards, and how much money it would take to get there.
At Bryden, our aim is to streamline the manufacturing process for fashion brands; we offer both product sourcing and production as a one-stop service. We differ from other manufacturers out there as we can assist in sourcing of fabrics, trims and notions based on your preferences and requirements, translate ideas into technical packs for our factories, produce both samples and bulk orders, conduct quality control checks and arrange delivery from factories to your doorstep. In addition, we provide services such as the production of brand labels, hang tags, and product packaging and photography for e-commerce stores. The best part of all, the MOQ at Bryden is 80pcs per design, per colour, make it a low-risk option for any brand starting out.
Pro tip: Find a manufacturing partner who provides both convenience and offers a low minimum order so that you can cut down on your inventory risk and get the most bang for your buck.
Advertising & Marketing
Cost: $1000 – $2500 per month for start-ups
Next would be promoting your finished product. There is a multitude of ways to go about promotion. To find out the costs involved, you would need to decide on your advertising and marketing approach.
Traditionally, advertising would often mean buying ad spaces in print and on television, and marketing efforts would constitute sending out samples to PR agencies, media companies and participating in trade shows for example. These are some costs to account for if you’re taking a more traditional approach.
However, as we live in a digital age, options for advertising and marketing methods have expanded way beyond the traditional. As a clothing label, you can now also think about utilizing Google ads, SEO (search engine optimization), sponsored ads and boosted posts on social media and product placement on personalities with a large social media following just to name a few options.
More often than not, these methods are also more cost-saving than traditional methods and could help with lowering your budget for a start-up label. Some brands start off with the founders having an influence on social media and drive up business from there.
Choosing which advertising and marketing methods to use ultimately depends on your demographics’ consumption behaviour. For example, 18-35 yr. olds might encounter brands and products primarily on digital platforms for example, whereas ages 35 & above might turn to traditional media – print, television and radio.
Know how your market behaves and save costs by casting a smaller net in concentrated waters, instead of a wider net in an environment that caters more to the general public. It’s important to be mindful that what you want is to create genuine engagement with your target market and not be considered as spam.
Pro Tip: Start marketing even before you get the products. Create your social media account and think of creative ways to create curiosity about your brand and products. Go local and get your first customers from your home turf.
Distribution
Depending on your business model, selling directly to consumers or to retailers for wholesale or consignment will incur different costs.
Selling directly to consumers can mean setting up a brick-and-mortar store or an e-commerce store. As a start-up label, opting for e-commerce can definitely help you to save on the overhead costs of a physical store such as rent, renovation & furnishing and employment of sales staff. However, this goes back to knowing who your target market is and what their buying habits are. If you’re starting a luxury brand for example, you might lean more towards brick-and-mortar, as traditionally, consumers under the luxury demographic prefer to shop in physical stores.
As you calculate your costs in your financial plan, always check against your budget and ensure that you don’t exceed it so that you avoid overspending in areas where you shouldn’t and spend in areas where you should.
Pro tip: Go for the e-commerce model from the start to generate demand and interest before approaching stores. Stores want to sell popular products and will be more likely to stock your products if you have perceived demand in their markets.
In Conclusion
The costs involved in starting a clothing line will differ from brand to brand as every label’s business model and requirements are different. However, it is useful to remember that starting small and comfortable can help to save a lot of initial costs and allow you to focus on managing parts of your business that are more important in the early stages of the label – design, marketing and distribution for example.
Managing your finances is crucial to the sustainability of your brand. Drawing up a financial plan that includes the potential costs mentioned above can help to give you a fair gauge on how much you need to spend/can save. Remember to constantly update the plan as you go along too so that you are always well aware of your financial status, which will allow you to make decisions for the business responsibly and more easily. This is important so that you know not to burn a hole in your pocket before you even make a sale.
