minimum average cost per unit calculator

MINIMUM AVERAGE COST PER UNIT CALCULATOR HOW TO

Retail Price = Cost Per Unit * (1 + Margin Rate) In knowing that my cost per unit would be $66.25 and that I would like a margin of 50%, I can use the following formula to calculate my retail price. Margin rates work on a percentage basis, so if I would like a 30% margin that is. Taking our trench coat example into account, I can calculate my retail cost by either basing it off a percentage margin that I want to achieve or by just picking a price segment I would like to target. Once you have your costing down you can then measure the margin or percent of profitability that you have in mind. Retail Price - This is the price at which you intend to sell this product for. I will probably need some of this extra cash to create a pattern, sample, techpack, and source my materials if I have not done these steps already. This is a great in that I'm about $3,000 away from total budget of $10,000. Now that I have calculated by cost per unit to be $66.25 and I know that I want to produce 100 units, I am at a minimum of $6,625 budget. Remember, you can always change these numbers and factories will not view your Project unless you send it to them. Nick goes a bit further with margins and overhead cost but the process of pricing a garment is just about the same. This number doesn’t have to be exact, but it does serve as a great way for you prepare yourself before you speak with a factory. You can view the following video by Nick Veros on ' pricing garments'. This leaves me at a total cost per unit of $66.25.

Lastly, I roughly estimate that it will take about $20 worth of labor to create one jacket.īelow is the breakdown of our total cost per unit I will also need 12 buttons per jacket which are priced at 50 cents each, a 6 inch zipper priced at 25 cents. I've done a Google search at some fabrics and have seen that I should expect to pay $10 per yard for the nylon fabric that I want to go with. I start off by estimating the total yardage for my coat which I will estimate to be 4 yards. Let's take a look at this example with a trench coat.

price per unit for materials (yardage, square feet, units etc.).

total fabric/material needed to make 1 product (fabric, buttons, wood etc).

If this is your first time producing a product and you are not sure of what the price should be, you may want to consider the following: This will also serve as a ballpark idea for factories. This is important when trying to effectively match your vision with your budget. If I want to produce 100 units of something and I have a $10,000 budget the most that I can spend per unit is $100.Ĭost Per Unit - This is what you intend to spend on the production cost of each particular unit item. This means that a maximum, the most I can afford to spend on the cost per unit is $100.

Thus far I have noted a $10,000 budget and want to product 100 units. Note that I have indicated that I want to produce 100 units. Remember, you can always come back and change this number.

MINIMUM AVERAGE COST PER UNIT CALCULATOR HOW TO

This will also help you think about your budget and how to best align your sourcing needs. While there are many factories that work with low quantities, there are some that only work in larger quantities that exceed 500+ units. This is important because it informs the factory of your production needs. Quantity - This is the number of units you are looking to produce during the production phase. Note that I have selected a budget for $10,000. This will help you better align yourself with the factory that can meet your needs. Remember, you can always come back and change this number. Some factories only prefer to work with smaller clients while others prefer the opposite. It will not hinder you if the number is low it serves as a way to properly position yourself with the best factory. Budget - Your budget should be the total price that you have allocated for your entire project. You may want to use a pen & paper or a spread sheet to calculate. It's also a tool that as a brand, will help you think through the essential elements to not only successfully create and launch your product but to also communicate with factories effectively.įor this section in particular, it's okay to take your time. It's something that you can return to often and change. This section does take a bit more thought and that's totally fine! We created Projects to be a living breathing document. Calculating Your Budget, Quantity, Cost per Unit, and Retail Price

Minimum average cost per unit calculator