The Guide to Production Budgeting

How much is it going to cost to get your line produced? It’s the task you keep putting to the bottom of your priority list but regardless of how incredible your designs are it’s imperative you set and manage a budget. Talented designers too often declare bankruptcy because they have not planned effectively and efficiently.

Outlining a comprehensive production budget will allow you to calculate the number of units of samples that must be manufactured.

Do you really need those custom buttons that cost $15 apiece if this particular style calls for ten buttons? You just added $150 to the expense of that piece when you should be using buttons that are no more than $.50–$1 a piece. These are small details that can significantly increase your production time and costs if not thought out carefully.

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Photography by Maker’s Row preferred factoryBlack Anchor Manufacturing.

Step 1: Cost out your production.

I have had numerous requests to do 100 or 500 units with a newer brand. In reality, the designers and brands that approach me with such inquiries think that they need to start at this minimum number of units because many large manufacturers have an MOQ (Minimum Order Quantity) of 300 units.

Pro-Tip: Avoid having your pattern graded before orders come in.

I had the same challenge until I found my factory partner. I was able to find a factory partner who offered small runs, and now my factory offers the same service. Our unique positioning as a boutique manufacturer allows us to work with runs of 100 or less, which is ideal for new designers and small brands.

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What factors affect production costs?

  1. Material cost: Your total materials cost (for production units) should not exceed 30% of your wholesale price. Figure one third materials, one-third sewing and another third to cover overhead and profit.
  2. Production Service Cost: Professional pattern makers and sewers charge between $50 and $70 an hour to produce your pattern. This service will typically be structured into pattern work, cutting, sewing, and finishing. Be sure to ask your factory for a breakdown of costs and services required to produce your pattern. The market condition also impacts the cost of this service.

Pro-Tip: Be conservative in the number of units you produce.

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Photography by Maker’s Row preferred factoryBlack Anchor Manufacturing.

Step 2: Decide your unit quantity

When you find a great factory to produce your product, start with 20 or 30 units, and then after selling through that inventory you can reorder more units. This will be relatively simple since the factory already knows how to produce your item(s).

On the other hand, some designers solely focus on made to order pieces for their online stores and promotional events. By using this strategy, they avoid holding any excess inventory.

When beginning your first season, streamline your production process by narrowing down your assortment to 5-10 styles. This tactic will also allow you to grow your production more easily the next season.

Fashion designers are also using a crowdsourcing approach to reducing further production cost. Designers leverage their social media platforms and invite customer input in the product development stage. Designs or styles that aren’t popular are removed from the production queue.

Pro-Tip: Expect your first samples to not be to your liking or for there to be problems (small or large).

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