# What's your profit margin on finished garments?



## hayatiggs (May 8, 2014)

My profit margin when wholesaling will be around $6-$8 per shirt. To me that seems right, but I have a family member throwing a fit.. "Do you know how many you'll have to sell at that rate to make it worth it?"

I can't make them understand that hopefully retailers will hopefully order a lot of shirts at a time. But are they right, is that profit too low? That's with a 45% wholesale discount.


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## fdsales (Jul 1, 2007)

First, you need to know what your overhead is, not just cost of shirt & ink, but All overhead: rent, electric, insurance, phone, supplies, deprecation of equipment, salary (just to name a few).
Drill down to how much does it cost you to operate your shop per day, per week, per month. You MUST include a salary for yourself, and any other help, in this process.
Generally speaking, you should be marking up your blank garments 50% to 100% depending on quantity. Then once you know your actual costs to print each shirt, you mark that cost up at least 50%.
$6-$8 per shirt wholesale profit may seem profitable, but is that the only jobs you have? Do you sell enough of that job in a week to pay your overhead, including your salary? If you're selling 100 shirts a week making $6-$8 profit per shirt, then you're doing very well, but only a few a week, another story.
Once you know your REAL overhead, then you'll know how much it costs YOU to produce each shirt, and then you'll know if your $6-$8 wholesale profit will be just enough for you to get buy, or enough for you to be able to expand for the future.


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## Comin'OutSwingin (Oct 28, 2005)

fdsales said:


> First, you need to know what your overhead is, not just cost of shirt & ink, but All overhead: rent, electric, insurance, phone, supplies, deprecation of equipment, salary (just to name a few).
> Drill down to how much does it cost you to operate your shop per day, per week, per month. You MUST include a salary for yourself, and any other help, in this process.
> Generally speaking, you should be marking up your blank garments 50% to 100% depending on quantity. Then once you know your actual costs to print each shirt, you mark that cost up at least 50%.
> $6-$8 per shirt wholesale profit may seem profitable, but is that the only jobs you have? Do you sell enough of that job in a week to pay your overhead, including your salary? If you're selling 100 shirts a week making $6-$8 profit per shirt, then you're doing very well, but only a few a week, another story.
> Once you know your REAL overhead, then you'll know how much it costs YOU to produce each shirt, and then you'll know if your $6-$8 wholesale profit will be just enough for you to get buy, or enough for you to be able to expand for the future.


All very helpful advice for someone starting up a printing shop.

But, the OP is starting up their own brand of shirts. MUCH different scenario than what you've outlined.


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## hayatiggs (May 8, 2014)

Yes, I guess I should have specified, sorry


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## PatWibble (Mar 7, 2014)

hayatiggs said:


> My profit margin when wholesaling will be around $6-$8 per shirt. To me that seems right, but I have a family member throwing a fit.. "Do you know how many you'll have to sell at that rate to make it worth it?"
> 
> I can't make them understand that hopefully retailers will hopefully order a lot of shirts at a time. But are they right, is that profit too low? That's with a 45% wholesale discount.


Although your family member has a point, in reality your wholesale price will be dictated by the price your vendors can _realistically _expect to sell the item for, and by the margin that they want to achieve.

It is possible to increase the wholesale price by targeting more exclusive outlets, but exclusive outlets tend to buy in smaller quantities. You would also probably need to add some value to the garments - extra prints, labeling, packaging, etc - increasing your costs.

Your own circumstances can also dictate pricing strategy. Are you building a brand for the future or do you need to earn a full time income from it from the start?


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## hayatiggs (May 8, 2014)

Building a brand for the future. I live in a college town that loves a southern brand. Those kinds of shirts sell for $30+ around here, and that's the market I'm going for.

There are 10+ stores within a 10mi radius of me that sell the popular shirts.


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## kimura-mma (Jul 26, 2008)

The nature of the wholesale t-shirt business is low margins and high volume. Your family member brings up a good point that is worth thinking about though... how many *do* you need to sell to make it worth it? While you may not be able to adjust your pricing (natural supply and demand may take care of that), you should be trying to get an idea of how many stores you need to carry your shirts and how many you need each to buy to make sure you are covering costs and have enough to sustain and ultimately grow your brand. Generating cash flow is priority #1 for a startup business.

As for your pricing, the popular brand in your area may be able to get $30+ at retail. But how do you know your shirts will sell at the same price? And please don't tell me about the quality of your shirts. You will soon learn that it's not apples to apples with an existing, popular brand. Have you gotten feedback from the stores in the area that your shirts can compete and steal market share? Do you have a Plan B if you need to drop your prices to compete? Retail stores will expect high margins. At a $30 retail price, they will expect to buy your shirts wholesale at $10-15, maybe even lower to minimize their risk as you are a new brand. They may also require you to buy back any unsold product after 60-90 days. They may also want you to extend credit terms, like NET30 or NET45.

Your estimation of $6-8 profit per shirt is pretty good. But as Pat mentioned, the price may be adjusted based on what the store can realistically sell them for and what they expect *their* margins to be. Lots to think about, but it seems you're on the right track. These are exactly the types of things you should be thinking about before launching your brand. Your family member may have come across skeptical, but it's this type of thought process that will put you a few steps ahead of the game when you get out there to sell. Just be prepared to be flexible and have a Plan B and Plan C ready.


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## PatWibble (Mar 7, 2014)

hayatiggs said:


> Building a brand for the future. I live in a college town that loves a southern brand. Those kinds of shirts sell for $30+ around here, and that's the market I'm going for.
> 
> There are 10+ stores within a 10mi radius of me that sell the popular shirts.


In that case go with your gut and stick with the pricing that you feel is right.

Family members always worry about the viability of business ventures. Sometimes that is a good reality check for us, but if you are in a position to put your share of the food on the table then do what is best for the brand.

In a retail/wholesale situation you can only sell the item for what it is worth. You have to trust that you will sell enough to make money (that's not saying don't be aware of your costs or break even point).


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## hayatiggs (May 8, 2014)

I'm trying to do as much research and gather as much info as possible before sinking large amounts of money into the brand, so that's why I've been Miss Sally Asks-A-Lot around here, lol. And I greatly appreciate every bit of info and advice I get. 

I have two local stores (the only two I've reached out to) that want to sell my shirts when they're ready, knowing my retail and wholesale prices already. 

And I totally understand the skepticism. Like I said, $6-$8 a shirt *seemed* right to me, just wanted to make sure I wasn't way off base. I think their concern was more, "if they sell for $30 each, why do you only make $6?"

I'm trying to do some extra little things to help the brand, such as brand logo in the necks and logo hang tags. 

Fortunately for me, this isn't a job I need to live on. It's something that I'm trying out, and will try very hard to make into a successful brand. However, if it does not work, I can sell the few shirts that I have for $10 and break even on what I have invested, minus my time.


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