Production Costing
The detailed calculation of all costs involved in producing a garment, from raw materials to finished product, used to determine pricing and profitability.
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What is Production Costing?
Production costing (also called garment costing or cost sheet preparation) is the process of calculating the total cost to produce a single garment. It encompasses every material, process, and overhead cost from raw fabric to finished, packaged product. Accurate costing is the foundation of profitable pricing.
Components of a garment cost sheet:
- Fabric cost: Primary fabric + lining + interlining (the largest single cost, typically 50–70%)
- Trim cost: Buttons, zippers, threads, labels, elastic, etc.
- CMT (Cut-Make-Trim): Labour charges for cutting, sewing, and finishing
- Embellishment cost: Embroidery, printing, washing, and special finishes
- Packaging: Polybags, hang tags, tissue paper, boxes
- Overheads: Factory overhead allocation (rent, electricity, management)
- Wastage allowance: 5–15% for fabric cutting waste
- Rejection allowance: 2–5% for quality rejections
Costing formula:
Total Cost = (Fabric Cost × Consumption × 1.10 wastage) + Trims + CMT + Embellishment + Packaging + Overhead
Example: Cotton kurta costing
| Component | Cost (₹) |
|---|---|
| Fabric (2.2m × ₹180/m × 1.10) | 436 |
| Lining (0.5m × ₹60/m) | 30 |
| Trims (buttons, thread, label) | 25 |
| CMT (cutting, sewing, finishing) | 120 |
| Printing/embellishment | 50 |
| Packaging (polybag, tag, box) | 15 |
| Rejection allowance (3%) | 20 |
| Total production cost | ₹696 |
Why This Matters for Fashion Entrepreneurs
Accurate production costing is the difference between a profitable brand and one that bleeds money without knowing why. Many Indian fashion startups underprice their products because they miss cost components.
Common costing mistakes:
- Ignoring fabric wastage: Fabric consumption × 1.10–1.15 (not × 1.00)
- Forgetting trims: Thread, labels, tags, packaging add ₹20–50 per garment
- Missing overheads: Quality inspection, transportation, office costs
- No rejection buffer: 2–5% of production will be rejected — include this in your cost
- Underestimating embellishment: Embroidery, printing, and washing costs add up
Pricing from cost:
- DTC pricing: Retail price = 3–4× production cost (e.g., ₹700 cost → ₹2,100–2,800 retail)
- Wholesale pricing: Wholesale price = 2–2.5× production cost
- If you can't achieve 3× markup: Either reduce costs or find a higher price positioning
Golden rule:
Never quote a price without completing a detailed cost sheet. "Feeling" your way to pricing leads to margin erosion.
Sourcing Guide
Production costing resources:
- Factory quotes: Request itemised cost breakdowns (not just FOB price) from manufacturers
- Cost sheet templates: Available from NIFT, industry associations, and fashion business courses
- Costing software: Stitch Labs, Techpacker costing module, or simple Excel templates
Getting accurate costs:
- Get fabric prices for your actual GSM and composition (not generic quotes)
- Request CMT charges specific to your garment complexity
- Get embellishment quotes based on actual designs (send samples/images)
- Include domestic logistics costs (factory to warehouse)
- Update costs quarterly — raw material prices fluctuate
Pricing & Costs
Building a cost sheet — key benchmarks:
| Component | Typical % of Total Cost |
|---|---|
| Fabric | 50–70% |
| Trims | 3–5% |
| CMT | 15–25% |
| Embellishment | 0–15% |
| Packaging | 2–3% |
| Wastage/rejection | 5–8% |
Pricing multipliers by channel:
- DTC website: 3.5–4.5× production cost
- Marketplace (Myntra, Amazon): 3–4× (factor in commission)
- Wholesale: 2–2.5× production cost
- Export: 2.5–3.5× production cost
Always validate your pricing against market comparison — the cost-based price must be competitive with similar products in your segment.
Frequently Asked Questions
Fabric consumption = (pattern length × pattern width) ÷ (fabric width × efficiency). A simpler method: ask your pattern maker for the marker consumption in metres per garment. For rough estimation without patterns: kurta = 2.0–2.5m, shirt = 1.5–1.8m, T-shirt = 0.8–1.2m, trousers = 1.3–1.6m. Always add 10–15% for cutting waste.
Standard DTC markup is 3–4× production cost. Premium/luxury brands may apply 4–6×. Budget brands work at 2.5–3×. Below 2.5×, you will struggle to cover marketing, returns, and operational costs. Factor in marketplace commissions (15–30%), return rates (15–30% for fashion), and marketing costs (10–20% of revenue) when setting your multiplier.
Not in full detail. Share your target FOB price and product requirements — let the factory quote against that. If their quote is significantly higher, share general cost expectations to negotiate. Never reveal your retail price or margin to manufacturers — it weakens your negotiating position. However, transparency about fabric type, quality requirements, and trim specifications helps factories quote accurately.
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