How to Calculate Wholesale Prices

Pretty excited to bring you my first “Ask The Fashion Business Mentor” Post!

—-Is retail always 2xs wholesale?

At least.  Once you start selling to large chains they will talk down your wholesale price so they can turn a larger profit.  It also gives them more wiggle room for the big percentage sales (50% OFF!) they have.  They couldn’t make money if they only doubled wholesale and they will expect you to lower costs if you want to do business.  Keep this in mind when you price a collection that you plan to market to large chains.


–If you figure out what retail pricing would be according to the formula below, and think that it is too high, how low should you go to get the wholesale price down to get the retail price down?  Or do you make other changes such as fabric type to get the price down?        

  • cost of dress x 2 = wholesale x 2 = retail (if this is too high?)               
  • cost of dress x 1.5 = wholesale x 2 = retail               
  • cost of dress x 1.25 = wholesale x 2 = retail (Is this too low and not worth doing at this point?)

Fabulous questions I personally struggled with.  If it costs me $20 to make a dress it is very hard to ask $80 for it if my target market is toddlers.  Wholesale pricing is based on volume and when you sell in volume you buy in volume so your costs go down.  The problem is that if you are just starting out you aren’t getting the price breaks in materials or production (sewing).  You need to do some research and planning here to project volume costs:  

1.  Project Volume

Determine the volume you think you will sell in a season.  How many stores are you targeting and how many pieces do you think you will sell?  In forecasting you need to be realistic and conservative. 

2.  Get Volume Based Materials Quote

Determine how much fabric you will need for the season based on your projections.  Say you determine you need 30 yards of fabric (same color) and you need 3 colors.  So a total of 90 yards.  You will get wholesale pricing on this so find out what it is.  If you are already getting wholesale pricing you may get a larger discount for volume.  Ask and negotiate.  Almost all fabric dealers will negotiate and all of them offer wholesale pricing.  Buy from the source not the local fabric store.  You can buy a bolt of fabric direct for the same price as a few yards at your local shop. Don’t forget to get quotes on notions and labels too.

3.  Get Volume Based Production Quote

Talk to your seamstress/sew shop about costs based on volume.  How much if I bring you 10 of the same thing?  20?  50?  100?  Time yourself sewing the garment and see if this price is fair.  Keep in mind if you use a home machine for sewing it takes 1/3 of the time to do it on an industrial machine.  I have one and now that I have timed myself sewing I realized my seamstress was making $40/hr.  Too Much!!!

4.  Calculate how much one garment will cost based on these volume quotes 

Now use this formula:

cost of dress x 2 = wholesale x 2 = retail

If this is too high based on what you think is fair market value you can cut into your profit margin or you may need to make changes in fabric or how your garment is constructed.  You can ask your seamstress what part of the garment is taking the longest or how you can change the design to make it easier to produce.  OR You keep the high price and market it to high-end clients.  You may sell less but you have a larger profit margin.  If you do this then you really have to make a unique product worth the price not just slap a high price on a generally simple product.

So initially you will be making low volume (which will cost you more) but selling it for high volume prices.  Do the math though, don’t lose money to try to wholesale your line.  If you are losing money you need to make changes to your product or charge more.

Want to “Ask The Fashion Business Mentor” an anonymous question?  Email it to katie@kangacoo.com.  OK I will know who you are but I won’t tell.  However you may see your anonymous questions and my answers here on the blog.

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Opportunity to Participate: Celebrity Fundraiser

I am so excited to be on the committee of this fabulous fundraiser.  My role is organizing silent auction donations for an upcoming celebrity fundraiser for the Covenant House.  I actually volunteered for this role because  know I have many followers that would want to both donate and get their product in the hands of some of LA’s elite and celebs.  First I will give you some information on the Covenant House and the event and at the bottom of this post is the information on how to donate.

On the evening of Sunday, May 20th, a VIP fashion event is being held to support The Covenant House of California Teen Shelter.  The Covenant Houses are located in urban regions throughout the globe. California Covenant House located in Hollywood, is one of the most impressive in their success with pulling teens off the streets and helping them to create new lives for themselves.  Oprah just produced a piece featuring our LA Covenant House in Hollywood and its renowned heart and spiritual guide, Sister Margaret. She is an outstanding nun who ministers to youth through the Covenant House’s outstanding mission. The California Covenant House was founded in 1988 and has brought hope to over 100,000 teens. The Covenant House Organization as a whole has performed miracles in restoring the lives of youth throughout the world since it’s founding in early 1970s.

Event Hostess – Gordana Gelhausen Project Runway Star

Gordana has offered her beautiful new boutique in Santa Monica as the venue for the “Night of Fashion”.  Her boutique is designed with a runway and large projector screen to showcase both the live models, photographs and film of the designers being showcased.  Gordana has extended the invitation to participate in this event to her Project Runway co-stars and is looking forward to their participation.  Gordana, is renowned for her generous heart and positive spirit, she has participated in Project Ethos helping to develop young up and coming fashion designers.  In addition, Gordana has participated in many philanthropic community and charitable events since first appearing on Project Runway.

There will be beautiful celebrity MC’s through the course of the evening presenting for the selected designers.  The ladies planning to participate are award winning actresses who are loved for their great hearts and philanthropic activities and great sense of fashion!

Romi Dames

Dynamic and adorable, Romi is currently a starring voice in the hit Nickelodeon series “Winx Club”.  Romi starred on Hannah Montana and Bill Nye the Science Guy.  She is a regional Emmy nominee for her work in an award winning sketch comedy show for kids, “Watch This”.  Romi is a great philanthropist and her many activities include being a celebrity spokesperson for the Covenant House in LA, several Autistic charities including being the Mistress of Ceremonies for the Spirit Ranch auction each year.  She has participated in national fundraisers for The Special Olympics and AIDS charities (She, Kate Linder, Joell and I all had the pleasure of doing the AIDs Walk in LA together a couple years ago!). Romi has been a celebrity reader for “Read Across America” and has given generously of her time for years to “The Let Them Play” organization which provides sports scholarships and equipment for underprivileged youth.

Kate Linder

Beautiful Kate was selected for a Star on the Walk of Fame and is one of the most enduring and beloved actresses of Daytime television, a star of “Young and the Restless” for 30 years. Kate, was elected to the Academy of Television Arts and Sciences as an Emmy Governor and is a renowned philanthropist. She was active with the USO, visiting troops in the US, in Afghanistan, Pakistan, Korea and Guantanamo Bay.  Kate also served as the national celebrity spokesperson for The ALS Association (ALS commonly referred to as Lou Gehrig’s disease) and is active in several AIDS charities and the Los Angeles Mission.

Event Co-Hostess Joell Posey

Spokesmodel for i.CTZN, Joell started modeling for Ford at the age of 5. In addition she has modeled for Gordana Gelhausen Goga and the OC Fashion Association. Joell has been a Cover Girl several times and appeared in national campaigns for Macy’s, Nordstroms, Bayliner Boats, Hewlett Packard, Talbots, Sears, and was featured as Purina Puppy Chows Cover Girl for the last 7 years. She appeared in fashion publications for Vogue and Cosmo Girl. Joell is currently co-producing a fashion reality series and pilot project with her girl’s recording group, Apple Pie Society.. Joell has been involved in philanthropic activities including “Let Them Play”, Amnesty International, “Read Across America” campaign, and  “Champions Against Bullying”.

There is also a surprise celeb host to be announced.

I, Katie of kangacoo designs, am excited to be dressing 2 little celeb models for the runway portion of the event.  The clothes modeled for the runway portion will be auctioned off for charity.  I will be dressing:

Aubrey Anderson-Emmons of Modern Family.  Aubrey is the youngest actress to ever be nominated for and win a Golden Globe.  She also has a BAFTA award under her belt at the age of 4.  I  had the opportunity to dress Aubrey for both of her awards events on the red carpet.

Piper Reese has been the planet’s youngest entertainment reporter, red carpet interviewer and podcaster since launching the show in 2008 at only 7 years old!  She has interviewed everyone from Taylor Swift to Tom Hanks.  Piper’s got a natural gift for gab.  When it comes to reporting, staying on script is just not her style.  Piper picks the topics…TeamPiper does the background work.

Piper’s Picks TV has covered red carpet and events such as Variety’s “Power of Youth” charity event, Nickelodeon’s Kid’s Choice Awards, Elizabeth Glaser Pediatric AIDS Foundation’s “A Time for Heroes”, Kids Helping Kids: Project Haiti, the Young Artist Awards and The Palm Beach International Film Festival!  Piper has also MC’d events such as Palm Beach County’s Friends of Severely Abused Children event.

Piper Reese is the high-energy Kid Entertainment Reporter who hosts the podcast. www.Youtube.com/PipersPicksTV www.PipersPicks.TV www.PiperReese.com/ www.youtube.com/PipersPicksTV www.Twitter.com/PipersPicksTV

Fred Sweet, La Jolla Fashion Film Festival Director is an event sponsor.

The OC Fashion Association will also be sponsoring.

A special thank you to Carlyne Grager of Dramatic Artists Agency for her work in organizing the event.

DONATION DETAILS:

I hope you’ll plan to participate and join us in supporting this great and prestigious cause with a donation of your products!  You will receive special credit in our evening program and in selected promotional materials for the event!  Your product will be included in a silent auction or in grab bags for VIP attendees, this is an invite only event.  You can send as many items as you wish to donate.  We ask your donation is at a value of at least $40 and that it arrives no later than May 15th.  Please be sure to include business cards with every item you donate to be included with your donation.   If you plan to donate I need the following:

 

Email a photo of your product(s) along with your company name, your website and Facebook links, and product(s) value. katie@kangacoo.com

Then mail donation no later than 5/12/2012

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What do Larry King, Astronauts and Fashion Designers Have In Common?

All I can say is I wish I had gone to Beverly Hills High!  I had the opportunity to participate in their career day last week and WOW!  I joined 123 speakers in different professions to share our career experience with the students of Beverly Hills High last week.  123 speakers from professions covering anything from acupuncture to acting, fashion design to engineering, pilot to astronaut and everything in between!  A far cry from my high school career day…wait did we even have one?  Well, no, but my high school didn’t look like this either:

As if the prestigious list of company heads and talent in their surrounding area wasn’t enough the opening assembly meeting was given by Larry King, yes, as in the old man with suspenders and glasses you see on TV.  Let me tell you that career day was as much fun for me as it was for the students!

I’ll tell you a bit more about the day but what I am really getting to is the talk I gave and the questions the kids asked.  They were fantastic questions for anyone embarking on a career in fashion so I want to share them with you.  But first back to the halls of Beverly Hills High.

The first thing I noticed were the big bubble signs announcing pep rallies and after school activities.  It was so nostalgic!  I remember making those.  Then the kids filled the hallways as the bell rang.  All 2000+ of them.  WOW!  I looked around expecting Brandon Walsh to pop his head out of a locker…

I was lucky to have some friends of my own there or I would have felt a bit outnumbered.   I was joined by Julia Tudor of Orange County Fashion Association and we were both involved because of Carlyne Grager of Dramatic Artists Agency.  Carlyne took us under her wing and introduced us to her circle of friends who included actress Romi Dames (you’d know her from Hannah Montana as Traci) and Gordana Gehlhausen from Project Runway.   Apart from the TV celebs there were real life celebs such as an agent from the CIA and an Astronaut.  It was really a fabulous group of speakers!

Star studded excitement aside this day was for the kids.  Really nice kids with insight and interest in fashion.  I had put together a list of questions for them gathered from people just starting out in this industry.  I had asked them what do you want to know about the industry or where are you struggling?  It was such a relatable list of questions.  Really smart questions.  I used it to give my talks to the students and I have added some questions the students asked.  So I want to give you this list.  I challenge you to ask them as often and to as many people as you can in this industry because it is how you will learn.  We all go about it in different ways and we all find our way to success differently.  So gather as much info as you can to create your own path.  I’ve also included a short list of educational resources I like.

EDUCATION

Do you recommend any courses to take?

Do you need to know pattern making and sewing?

 

SALES AND MARKETING

How do you find places to sell your clothing?

When a sales rep approaches you, should you hop on that offer?

How do you know what contracts to sign and what not to sign?

Does a lot of money go towards press?

 

SET UP AND RUNNING THE BUSINESS

How much money do you need before starting a business?

Do you need a big office space?

How do you find manufacturers?

When should you expect to make profit?

GENERAL QUESTIONS

What are your typical hours in a day?

Where do you find resources for labels?

How do you know if you can trust people in industry?

Where do your inspirations come from?

What is your best advice for a young person getting started?

RESOURCES I RECCOMMEND

Industry News: Apparel News  www.apparelnews.net

All on the Line with Joe Zee (creative director of Elle)-on Netflix

My Blog: The Fashion Business Mentor

I share my own industry related experience and resources

www.thefashionbusinessmentor.wordpress.com

I answered these questions for the kids but I didn’t answer these questions here today.  I will come back to do that but for now I am going to nurse my cold with a cup of tea and snuggle with my daughter.  :)

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Social Media That Works For Me

So if you follow my Facebook page you saw the teaser that I would post about social media and what works for me and what doesn’t. So here is my inside scoop…

I am sure you have asked yourself many of these questions.  In a sea of social media to get lost in where do I start?  With the daily emails and Facebook requests to participate in a giveaway or sponsorship which do I choose?  Do paid advertisements work?  What if I have no money how do I get my name out?  Well here are my dos and don’ts.

GIVEAWAYS

DO:  Do them.  But only participate in giveaways hosted by pages with a lot of fans and with requirements to like all pages participating in the giveaway.  Promote other pages that are participating with tag links on your page.  The idea is to cross promote your fan bases.

DON’T:  Giveaway a one of a kind item.  Consider this an advertisement.  Give away an item others can come and buy.

 

SPONSORSHIPS/DONATIONS

DO:  Support causes that are important to you within the circle of people you know.

DON’T:  Have a bleeding heart for every cause out there.  Many of them are scams.

 

PAID ADVERTISEMENTS

DO: Ask what the readership/reach of the publication is before purchasing.  Understand that advertisements are more about branding than bringing in actual sales.  You may not make your money back.

DON’T:  Pay more than you can afford.  If you are a small business and the ad is over $50 I say wait.  There are many free ways to grow your audience until you can afford print ads in recognizable magazines.

 

PROMOTING YOURSELF ON FACEBOOK

DO:  Align yourself with people you know and trust that create a quality product.  Cross promote in this circle of friends.  Reach out to fan other pages you honestly like and build relationships to cross promote.  Join pages that are in the business of building fan bases.  I like Forty Toes Photography and The Craft Show.

DON’T:  Go to pages and leave a link to your page to fish for fans.  It’s annoying.

 

PROMOTING OTHERS ON FACEBOOK (which promotes yourself)

DO:  Give credit where credit is due.  If another business helped you out publicly thank them with a tag to their page.  If another business does or creates something fabulous promote them on your page.  They will return the favor down the line (hopefully).

DON’T:  Promote anyone and everyone who will promote you.  If you promote every page out there without knowing the quality of their product or what they stand for your fan base will not be able to trust you or your judgement.  Do not put your stamp of approval on a brand you are not familiar with.

COLLABORATE!

DO: Gather a group of 4-5 vendors that create complimentary products and do a photo shoot.  Promote each others products and encourage your fans to buy the ensemble and go like the other pages.

DON’T There are no don’ts.  Collabs have been a cornerstone of building my business and fan base.

 

DO:  Get on out there and virtually meet people!  Growing a small business is all about networking!

DON’T:  Forget there are real live in the flesh people to promote your product to.  Don’t spend all your time online.

 

 

 

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What does Ron Jeremy have to do with Fashion?

Last weekend I was invited by a friend to attend a runway show in Beverly Hills. She has a women’s dress and swim line that is very new and she was thrilled to be invited to show it at an upscale event in a Beverly Hills mansion. I of course wad excited to attend and support her. The reality of our night was not what we anticipated to say the least.

We arrived at the Mansion at the top of the Hills and we greeted by a group of people at tables checking us in. We were ushered through the red rope and into the ground level of the house. It consisted of a large room set up with a bar and dj, a huge patio overlooking LA and a back room where the models we getting ready.

While the girls got ready I mingled with the photographer we brought who was told he actually can’t tale pictures because there were some high profile people coming who didn’t want to be photographed. We quickly noticed the crowd consisted of older men in expensive clothes (most of them dressed to young for their age). As the night went on lots more men showed up and lots of very young women dressed in very skimpy clothes.

The runway show was slated for 930 but didn’t happen until after eleven and consisted of the models doing a quick parade around the dance floor with no introductions or credits. Then the models were told to go back and change into bikinis that were provided for them and to walk the crowd. Um…what the heck was going on. My very appalled friend declined on behalf of her models and took them back to gather their things and leave. While I waited Ron Jeremy showed up.

So to answer the question: What does Ron Jeremy have to do with fashion? Absolutely nothing. So if he shows up to one of your runway shows its time to leave. Which is what we did.

OK so fun story but my blog is about teaching you what I can about this industry so let me give you my list of how to screen/what to ask before booking a fashion event or runway show.

1. What other designers are showing? (google them to be sure they are designers you want to show with.)
2. What will be used as the runway?
3. How many looks am I expected to show?
4. Who will be invited to view the event? No point in doing a show if you don’t get an audience of potential buyers.
5. How much will it cost me? (again without the right audience you may just be paying to walk your clothes down a runway for your personal satisfaction. Pretty pointless and very expensive.)

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Branding: Building a Brand

Today I went to a lecture at the California Market Center in LA.  They are hosting the LA International Textile Show this week.  The event is a 3 day exhibiting show with fabric/textile vendors from around the world and includes several lecture series.  I will be moving into a fabric series soon but I wanted to share a bit about a lecture I went to today hosted by FBI.  A non-profit resource to help businesses in the fashion industry.

12:30p-1:45p FASHION BUSINESS INC (FBI) Building a BRAND, Market Niche & Brand Protection Issues Including Sales from Ground Zero

One of the speakers was Alicia from Stop Staring.  A very successful womans line that is now carried in over 1000 boutiques and worn by many celebrities.  Alicia shared her story of how she built her brand.  She started sewing all of her own garments and really worked on a good fit and created a niche style.  She shared how while she wanted her business to grow her focus was always on her product and making sure it was the best fit it could be.  Her line grew more and more popular because of this.  She never borrowed money and she grew at a healthy pace.  It took 14 years to get where she is today.

Fast forward a few hours and I am on 9th street talking with one of my fabric vendors and her is telling me how he loves my line and when I am ready to grow it to a larger scale he is ready to invest.  He was working to convince me that small-scale was small money and I need to move up to the majors.  I smiled and told him I may be back to take him up on his offer but not yet.

I, like Alicia, believe in growing my business organically.  For those of you that don’t know, I started my business almost 4 years ago when I was 3 months pregnant with my daughter and found myself laid off from my position as VP of a recruiting firm overseeing a staff of 20 recruiters and sales people.  The California economy took a crash when the mortgage bubble burst so not only was the recruiting industry not hiring but I was 3 months pregnant so no one wanted that liability on top of switching fields.  I decided this was my life telling me to take a leap of faith and follow my dreams.  I had always wanted to do a creative job and I knew I wanted to design clothes but I had not touched a sewing machine since I was 12.

I found my machine in the back of the closet, dusted it off and started sewing baby blankets and bath towel sets.  I had to start with something simple until I got better at sewing.  Here is one of my first towel sets:

The hood on the towel led me to the idea to create minky and faux fur ponchos which I sold on etsy and were discovered by a site in Japan who picked up my line.  They were my first wholesale customer and placed an order for almost 60 ponchos!  Here is an old banner ad from their site.

I then moved on to create coats and the following spring made dresses.  Initially I started making cotton poplin dresses.  My inspiration was Etsy and that’s what everyone was doing.  I could find my supplies on Etsy but I made my own patterns.  It was the beginning of my learning curve.  Below is one of my favorite dresses from my first season of making clothes.  (I probably could have found this pattern because now I see it all over the craft sites but making it on my own and grading it for each size was really a good lesson for me and got me familiar with child sizes and proportions.)

I did start marketing to stores at this point and found a few that picked up my line but I didn’t have a lot of success in wholesale yet.  I went on to do another season of outerwear improving on my previous season’s patterns and selling quite well on Etsy and to Japan.

Then in my second spring of making clothing I made a dress for Valentines Day.  I really felt I was coming into my own.  I stopped using cotton and started using fabric that spoke to me, unexpected and interesting fabric.  I incorporated this ruffle fabric and I decided last minute to make ruffle leggings to go under for a photoshoot.

I didn’t even list the leggings when I listed the dress and wasn’t sure that I would.  But everyone asked where do I get those?  So I started selling ruffle leggings in 10 colors.  Then people wanted capris and shorts so I sold those.  I couldn’t keep up with the orders, it was great!  My line developed based on customer demand.  First made to match tops and then dresses and then I branched into other products that I wanted to add.  Then the cherry on top, I was contacted by a showroom in LA.  I didn’t realize how big this was until recently.  Many people try for years to get representation but I was approached.  I call this a life path confirmation.  When you are doing your life’s purpose things will all fall into place for you.  I am more grateful than you know.

I did not sign with the room that originally contacted me.  My gut didn’t feel right, but I did approach and sign with another room:  Smallshop Showroom in LA.  My gut was right because the other showroom is now closed and I couldn’t be happier with my current showroom.  My rep helped me to balance out my line and coach me a bit as to what retailers look for.  She instructed me on what to include in line sheets and is always available for questions.  She also introduced me to my rep in Chicago, Erica from Mama Sooze.  I adore her too.

One year later I am in over 50 boutiques and counting and  I have started my third wholesale season.  I have learned everything as I have grown.  There have been lots of production bumps, cash flow issues, bad customers and great customers; I have experienced a lot.  But I have done it all on my own from day one.  Pattern making, cutting and working with a cut shop, sewing and working with a sew shop, sales on my own and showroom sales, billing and collections, contracts and marketing plans, the list goes on.  I would have it no other way because now as I grow I can feel confident in my dealings.  I know how long it takes to make a garment on an industrial machine and how many types of machines it takes and if a sewing contractor is trying to rip me off.  I know wholesale and retail costs of fabric and where to find the best deals.  I know that is a store asks for net 30 or COD and is new that I better try to negotiate other terms because it means they have cash flow issues and I may not get paid.  I also know that boutiques are small business owners just like me and treating them with that understanding and working with them is key to growing relationships and long term customers.

My brand is still building but it is building in the right way: organically, based on demand, and by me being true to my design aesthetic.  I really enjoy what I do and I know that comes across in my creations.  My customers have come to expect interesting materials in wearable silhouettes for their kids, that’s what my brand is and that’s what I deliver.

So stay tuned because as I build my brand I want to help you build yours.  I will share my experience and my resources with you and I am always happy to answer questions or point you in the right direction if I can. katie@kangacoo.com

Katie www.kangacoo.com www.kangacoo.etsy.com

 

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