Costing is an essential part of a merchandising job and this is a core responsibility for any merchandiser that his quoted price to the customer must be competitive as well as in the favor of his company. If the buyer will be willing to place an order against the quoted price as well as the company will gain an appropriate percentage of profit with this deal that would be a win win situation. Dissatisfaction of either party will make a reason to loss order or generate losses for the company.
This is important that merchandiser must have deep eye on what customers require and he should know that how can he make the price of that product competitive? He must know all those essentials which play an important part in the product costing.
Here in this article I will share with you all those essentials which every merchandiser has to keep into full consideration while doing cost of any Apparel product. He will definitely need support from the different services department for this purpose, but this is his job to get the required data in hand well on time because any delay in price submission from the agreed date will give a chance to other vendor for the negotiation over that particular inquiry and hence will give them opportunity to grasp it first so he needs to be smart enough as well in following the submission dates.
If the customer is new, then merchandisers must ask for the target prices before further working. This will help them to guide their services department in the arrangements of material options accordingly.
This is the most important factor in costing which takes around 60% of its weightage so for merchandisers; they always need to look for the fabrics which will fall in the price range of the given targets by brand.
They must know that from where the fabric is coming and need to add essential freight charges into the costing accordingly.
Accurate consumption is important in costing; any mistake or miscalculation for this parameter at the initial stage will not only lead to the order loses but also can cause the fabric shortage at the time of execution. Merchandiser must know the unit (Yards or meters) in which customer needs costing in order to avoid any confusion or unforeseen issue later on.
If pocketing quality has been advised by customer at the time of costing then merchandiser must add the cost accordingly in the total cost otherwise add the cost of basic pocketing and inform customer while quoting final price about the quality he/she has considered.
In every company, finance department gets arranged and finalized the specific overhead costs, it mainly covers the HR/ADMIN/IT and all other service department costs. As far as the calculation in particular product is concerned for overheads, IE helps the merchandisers for this purpose, they provide the standard minutes for that particular style which helps merchandiser to decide the garment level and they need to add the specific sewing and level cost based on the provided data by IE department.
In denim costing, the cost of garment washing and dry process plays a vital role, but as far as other products are concerned, merchandiser must have to get the relevant costing data for that specific product from washing and finishing department and add it into the costing accordingly.
Merchandiser has to get the product trims cost from MMC (material management & control) department and get included the freight charges and duties etc for imported items if any.
Special trims / Printing / Embroidery
If the product requires any embriodery, printingspecial trims, embellishment, fusing, threads or heat transfer etc, then it has to be added separately in order to give the clear idea to customer that what item is becoming the reason of price increase in trims.
If customer has any specific testing requirement at garment stage or from any nominated lab, then price of those specific testing parameters must be added into the costing.
Merchandiser must know on which payment term, customer is asking for the price, if the payment term is CNF, then the cost of freight must be added into the costing.
If customer requires any sort of land or Ocean insurance, then the cost of insurance should also be added.
Appropriate profit %age must be added, but it may vary while keeping the customer’s targets into consideration as well as to make the price more competitive. In special cases, this needs to be done with the decision of higher management.
All above parameters are essentials which a merchandiser must have in mind while doing cost of any Apparel product.
If I have missed any then feel free to add it in the comments section, I will update it in this article with proper credit.
Authored By HMS Khalid
Sohaib Khalid is the founder of "ThinkLikeGiant". He is an Apparel Merchandiser and have been working for Denim companies and brands since 2008. He loves blogging that's why started this blog with the aim to share his knowledge and experiences for the people associated with his field as well as for general public.
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