Costing Exclusive: Learn how to cost your line for Profit and Success
Whether you want to position your brand as a Fast Fashion, Fashion, or Luxury Fashion, your pricing is a critical factor to determine your success. In this blog, I will explain how pricing can help define your brand and generate the essential revenue for your growth and success.
When it comes to building your fashion line, a core part of your success will be based on your pricing choice for your fashion business model and the consistency of your product and brand within that model. For example, if you offered clothing manufactured and priced in the fast fashion category but presented your brand as a luxury brand this would not be consistent. So what are the fashion business models and the price expectation within each category?
Fast Fashion
Fast Fashion is the most aggressive business model. Oftentimes brands will take inspiration from runway designers; design, produce and sell these products to their audience. A customer’s incentive to buy from these brands is often linked to the pricing of the brand. The price range for fast fashion is anywhere from $3 to $200. For example, the average blouse from H&M is $25. Meaning the blouse’s fabric, trim, labor, logistical cost, and mark-up all fit with the wholesale price which is then marked up by the retailer in order to be finally sold to consumers at $25. Due to the nature of the business, the margin made on each item is smaller, and more items need to be sold to make a profitable cash flow. Some other examples of Fast Fashion are Zara, Forever 21, Primark, and TopShop.
The pace of Fast Fashion is also indicative of its name. It must be fast. This means the development stage for a product must go at a faster pace than other fashion development business models. You must also find reliable vendors who can supply you with an adequate volume of fabrics and trims at a lower cost. In order to get the lower cost of materials, the minimum order quantity will be higher. You also must produce overseas. With the brand being fast and low cost, something needs to give way, producing offshore allows for lower labor costs and closer proximity to affordable suppliers for fabric and trim. Since you are producing a high volume of products, you must be able to “sell-out” quickly which also means you need a large audience to purchase your products. It is common that fast fashion retailers operate “Brick and Mortar” stores in malls to accommodate high volume selling. You can also sell fast fashion using e-commerce as well. It is important to remember that with higher minimums and therefore a higher volume of product, you will also need supporting logistics and customer service. Since it requires larger investment and overhead, it is common for fast fashion to develop from investors & established manufacturers.
Fashion:
The majority of our clients aim to be within the “Fashion” business model. The Fashion business model focuses on being both approachable and valued based on the brand’s core values. For example, having a sustainable brand is very in vogue these days. To have a sustainable brand you cannot have a fast-fashion brand, therefore you must choose between Fashion or Luxury for your business model. Some Fashion brands include Massimo Dutti, Calvin Klein, Tory Burch, Ann Taylor, Ralph Lauren Polo, etc.
By choosing the Fashion model you can have the option to produce in the USA or overseas, each option has its pros, cons, and effects on margins. Since clothing in the Fashion category can be priced between $25 - $400, you can utilize more natural fibers like cotton and linen because the budget for fabric and trim is a little more flexible. The Fashion model has the benefit of being perceived as better quality than Fast Fashion but also still more approachable than luxury goods, so the clientele could be bigger depending on your niche. However, you want to make sure your brand is not lost among the many other brands. This is why establishing and continuing core values or aesthetics will be important in your brand’s success. There will also be higher expectations of customer service than a Fast Fashion brand, but not as high as a luxury brand. Fashion brands can be sold both in brick and mortar stores such as department stores or boutiques or online. Brand exposure will be an important factor toward success within the Fashion business model.
Luxury Fashion:
What truly sets apart a luxury fashion brand is not only the perceived quality of the product, it is the intangible reputation, heritage, and prestige built into the brand name over time. Unlike best-selling fashion brands that change with seasons and trends, luxury brands tend to have long-selling items. Chanel’s quilted flap bag was introduced in 1955. Exclusivity, price, and marketing also play a role but quality, reputation, prestige, and customer experience is what people will keep coming back for. Some examples of luxury brands include Hermes, Chanel, Louis Vuitton, and so on. Luxury Fashion comes with a hefty price tag, oftentimes products will range between $75-$1,000+. It is important to keep the quality of material superior which is why when creating a luxury brand you must have high-quality vendors for fabric, trim, and manufacturing. Everything down to the garment’s finishes matters in luxury fashion, and you will be expected to price it accordingly. For example, a classic Chanel jacket is created to fit well. The finishes of the jacket are all clean-finished with no serged edges. Often a chain is also tacked to the bottom to help the jacket lay straight. Loro Piana, another luxury brand, will cleanly finish their garments with french seams or binding to offer a garment that feels luxurious.
Due to the high price, a customer will expect a certain type of special VIP treatment. Customer service in all aspects will need to be top-notch and very accommodating to reinforce the loyalty of a luxury customer.
The higher price tag also means there needs to be more money dedicated to marketing to acquire the exclusive clientele for the brand. Marketing for a luxury brand can be done through social media but oftentimes, you see luxury brands on billboards, in magazines, and on celebrities and influencers. Brands spend a lot of money on marketing and creating the appeal of exclusivity. For example, some high-end brands do not even have outlets. Louis Vuitton will often burn or destroy any damaged goods to preserve its exclusive status and prevent inferior goods from reaching the market and diluting its reputation. If you want to create a luxury brand, marketing and curating the right clientele will be the key to your brand’s success.
Whether you want to position your brand as a Fast Fashion, Fashion, or Luxury Fashion, your business model and pricing are critical factors in defining who you are to the consumer. If your brand image and pricing are not consistent, then you can create confusion within your audience and that can result in reduced sales and revenues. When your pricing works well with your brand identity, it can help further establish your line in exactly the market position you intend to thrive in. When pricing meets your customer’s expectations, it projects a consistent message to your target audience that reinforces your line. Your pricing delivers a marketing message and it is important that the message sent by your price tells the brand story you are trying to deliver.
Need help with pricing your product? Join “The Perfect Price” workshop on May 16th & May 23rd, 2022 Where we will go over Costing, and Pricing of your product. The Workshop will also include Q&A and 1:1 pricing advice from Anna Livermore. For questions please contact: vmorainquiry@vmora.com
Have a Marketing plan already, but need help with producing your line? V.Mora can help you take your brand voice and turn it into products. We will help each step of the way to design, develop patterns, and connect with the right vendors for your project through our Production Development and Management service. Please contact us if you are in need of the Production Development and Management Services below:
Sourcing
Technical sketches
Pattern Making
Prototype making
Sample Making
Fittings
Digitizing and Grading
Marker Making
Manufacturing
Please contact us at: vmorainquiry@vmora.com