How much money do you need to start your own clothing line? You won’t be able to make a solid business plan for your fashion business if you don’t properly understand the costs. We decided to make this guide on the costs of starting a clothing line so you can be better informed.
There are many factors involved in determining the cost of starting a clothing line, but we’ll do our best to give you a ballpark estimate of what you will end up paying. In order to do this, we’ll try to make reasonable assumptions about what a typical entrepreneur will do.
In general, we assume that you’ll try and get the best value for your money. You’re not going to be using the cheapest provider and sacrifice quality, but you also won’t pick the most expensive option.
We’ll also include the costs of selling clothing online. We’re going to assume that as a starting brand you won’t be able to sell your clothing to retailers.
All of the prices you see here are based on real prices we found on the internet. If you want to take a look at the sites for yourself, you can check out this google doc.
Price of Creating a Tech Pack
The first thing you’ll need to when creating a clothing line is to create a “tech pack”. A tech pack is a set of documents that explain to a manufacturer the details of a piece of clothing so they can manufacture it correctly.
If you work with Sewport, you won’t need to worry about this step since it’s a part of the overall process of using our platform to work with manufacturers. Still, we’re mentioning it here since we recognize that it’s a common step for many clothing brands.
Typically, a tech pack will contain drawings, diagrams, sketches, measurements, and other components. It’s a professional document that you can’t make yourself unless you’ve had the proper training.
For that reason, it’s typical to work with a freelance fashion designer or a freelance fashion agency to create a tech pack. Here are some typical prices we found for getting tech packs created:
The simpler a garment is, the less work goes into making a tech pack. For example, it’s less work to make a tech pack for a t-shirt than for a dress with complicated frills and patterns.
Because of that, some agencies and freelancers have a sliding scale of prices that they may quote you for a tech pack. Other agencies just have a single price that they charge for most/all tech packs.
We found prices from several agencies and one freelancer across the globe. Generally, the prices were around the $200-$300 range, so that’s the price you should expect to pay for each garment in your clothing line.
Cost of Sample Creation
The next step in setting up a clothing line is to turn your tech pack into an actual sample. It’s important that you actually see and feel your product before you start selling it to customers.
You’ll most likely order a sample from the same manufacturer you’re using to make your final products, but we did find a full-service fashion agency in New York City that does both tech packs and samples.
We included the prices here of various providers across the world so you can see how much different options cost.
Again, if you work with Sewport, you won’t have to worry about this step of the manufacturing process. It’s included when manufacturers send you bids on your project.
Expect to pay much more for one sample piece than you will for one piece in the final production run. The reason for this is that making just one piece of a brand new garment is expensive for a manufacturer. They might not have the exact materials or colors for your particular garment.
We found that samples from American agencies and manufacturers tend to be more expensive than samples from Asian manufacturers. This is to be expected as manufacturing and labor are generally more expensive in America.
If you’re working with a manufacturer in America, expect to pay around $200-$300 for a sample. If you’re working with a manufacturer in Asia, expect to pay around $50-$150 for a sample.
Remember that these prices are for only for one piece of clothing. You’ll have to buy a sample for each design in your clothing line.
Cost of Manufacturing, Storing, and Shipping Clothing
Now that you’ve approved samples for your clothing line, it’s time to actually manufacture and sell your clothing.
The costs for manufacturing, storing, and shipping clothing can vary drastically based on your situation. We’ve made these assumptions here as there are potentially dozens of variations that could affect your situation:
- You’re manufacturing from a Chinese factory. It’s a common choice for manufacturing and there are many shipping options available to you.
- You will only order 100 units of each product. We’re just exploring here how much it costs to start a clothing line. As you get more customers, you’ll probably want to order more.
- Your manufacturer will charge you market rates. We looked at several providers for each article of clothing and used the average price in our calculation.
- You’re going to start by manufacturing t-shirts, hoodies, leggings, and/or dresses. These are some of the most common products we see manufactured.
- You’re going to use a fulfillment warehouse to receive and ship your products. While you can initially do this out of your home, you’ll need a professional solution if you become big enough.
- You will ship your products to a warehouse in America via air. You can save a little by using ocean freight but your clothes will arrive in 30+ days instead of 5 days.
- All of your customers are in America and don’t ask for expedited shipping.
What we found is that all of the variations here come down to how expensive each article of clothing is to manufacture.
T-shirts are the cheapest to create at around $3 each. Dresses are the most expensive at around $10 each.
We found quotes for shipping from China to the USA from Freightos. We found that small variations in weight and volume didn’t affect our shipping rates. That’s why 100 pieces of any of these types of clothing cost $1,150 to ship to America.
We found two fulfillment warehouses that charge $2.50 per item to receive, store and ship each article of clothing. You do have to pay shipping costs which come out to three dollars per item sent.
Add all of these costs together and you see that you have at least $2,000 in costs for every article of clothing in your line.
Setting Up a Website
Now that we have calculated the costs for manufacturing and shipping our clothes, we have to create an online store for customers to find out about our brand and buy our clothes.
There are many options for making a professional eCommerce site. We’re only going to show the costs for a Shopify site since it’s well-known and many of the other platforms have similar costs.
While you can setup Shopify yourself, it might take you a bit of time to create a professional looking site.
You may want to hire someone to create a basic Shopify site for you. It will cost you at least $500 and possibly more depending on how complex you want your site to be.
Shopify installs can cost even more than that, but it’s not likely that you’ll need something that complicated when first starting out.
We’re only showing three months worth of cost of Shopify (at $30 each month) since we’re being optimistic and assuming that you’ll sell out your initial inventory within those first three months.
Add in a $10 annual fee for a custom domain and the total for a website comes out to something between $100 and $5,100. Most likely, you’ll be at the lower end of that range when starting out.
Costs, Revenue, and Profit for a Small Clothing Line
Now let’s put all of these numbers together. Let’s say you want to start off as an extremely small clothing line with only four products.
You don’t have that much money, so you try and do as much work yourself as possible. You set up the Shopify site and do all the marketing yourself.
Since you’re trying to minimize costs, you create simple designs that don’t require as much money to design and manufacture. This means that your products don’t sell for as high a price.
Here’s what your costs and revenue might look like:
After adding up all expenses, you’d want at least $12,000 to fund this small clothing line. Ideally, your total sales will be $13,500 and you’ll end up with a profit of $1,225.
If this seems low to you, keep in mind that the fashion industry has a profit margin of around 4.5%. In this scenario, you have a profit margin of around 9%.
A lot of your money went into upfront costs like creating a tech pack and buying samples. If you continue to sell the same products, you won’t have to pay those costs again.
Costs, Revenue, and Profit for an Eight-Piece Clothing Line
Now let’s say that you want to create a slightly bigger clothing line with eight pieces: two t-shirts, two hoodies, two leggings, and two dresses. We’ll assume that you sell 100 articles of each of these eight designs.
You have a bit more money, so you’re willing to manufacture higher quality clothes that cost more but you can sell at a higher price. You have enough money to pay someone to help you with your Shopify setup.
We’ll also say that you even have $1,000 to spend on your marketing. We won’t specify any specific type of marketing here, but at this budget, we imagine it could be either a small amount of facebook ad spending or social media marketing.
Here’s what the costs and revenue of this line would look like:
In this scenario, you need around $25,000 of your own money and make a profit of $3,724 on $29,200 in sales.
Again, if this seems low to you keep in mind that this would be a profit margin of 12.7%, much higher than the majority of companies in the fashion industry.
Costs, Revenue, and Profit for a Sixteen-Piece Clothing Line
Now let’s say you want to create a larger, more extensive clothing line. You have enough capital to create a line of high-quality products that cost even more to make but have even better margins.
In this scenario, we assume that you’ll pay $1,500 for a professional-looking Shopify setup. We’ll also assume you spend $4,000 on marketing. Because of your investment, you’ll be able to sell 100 pieces of each design.
Here’s what your numbers might look like:
In this scenario, you invest $50,900 and make a profit of $12,720 on $66,000 of sales. That’s a profit margin of 19.2%.
While that’s higher than the industry average, there are fashion retailers who have even higher margins. With sufficient volume, a profit margin of 15% or higher is definitely possible.
We hope that you now have a better understanding of the costs of starting a clothing line. It is a substantial investment, but you’re able to make your money back and more within a few months if you have the customers.
Your next steps should be to figure out what types of clothes and designs you want to include in your clothing line. It’s important that you plan for pieces that are within your budget.
There have been a lot of steps presented here since clothing manufacturing can be a complicated process. Making a mistake anywhere along the way can be the difference between a profit or a loss.
If you want to make the process easier on yourself and also be connected to verified manufacturers, try the Sewport platform out or contact us. After seeing countless brands go through our platform, we’re confident that we have the know how to make your dream clothing line a reality.