Beyond Materials: Labor and Overhead Costs
Hello Reader,
Our Pricing Series is making steady progress, and we're now approaching the critical phase of factoring in labor and overhead costs.
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What are Labor Costs?
Labor costs are the wages or salaries you pay to those involved in the production process, from seamstresses to designers to social media managers. Overhead costs, on the other hand, include rent, utilities (electricity), internet/data fees, insurance, and other indirect expenses that keep your fashion business running.
And if you are the only one working on your business right now, YOU ARE THE LABOR.
Make sure you factor in paying yourself, even it's something small at the beginning.
To calculate labor costs, determine the time it takes to create each fashion piece and multiply it by the hourly wage of your employees.
For overhead costs, divide the total monthly expenses by the number of fashion pieces produced in that time frame.
By adding these costs to your material costs, you'll have a comprehensive view of your production expenses.
So, to recap, the costs we have so far are: Material costs + labor costs+ Overhead costs
This knowledge is essential for setting a competitive yet profitable price.
Stay tuned for our next email, where we'll explore market research and pricing strategies to determine the optimal price point for your fashion pieces.
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Talk soon,
-Your comrades at Business of African Fashion
Hi, I’m a creator
Hi Reader, It's time for our grand finale in the Pricing Mastery Series! We've covered a lot of ground and we hope you feel more confident about pricing for your business! To recap, the steps are as follows: Understand Your Costs: Calculate material, labor, and overhead costs for each fashion piece. Determine Your Pricing Strategy: Decide whether you'll position your brand as luxury, premium, or affordable. Market Research: Analyze your target audience and competitors. Set Wholesale and...
Hello Reader, As we near the conclusion of our Pricing Series, it's time to focus on market research and pricing strategies to ensure you hit the bullseye with your fashion piece prices. For your Market research to be effective, you need to: Understand your target audience, competitors, and the overall industry. Analyze how brands similar to yours price their fashion pieces. Are they positioned as luxury, premium, or budget-friendly? Examine their pricing structures, such as whether they use...
Hi Reader, I hope you have been enjoying our Pricing Series so far and are taking notes! In our journey towards mastering pricing, we're moving on to a crucial step: calculating material costs. This is where you'll need to pay close attention to the details. Step 1: Start by listing all the materials used in a single fashion piece. This includes fabrics, buttons, zippers, lining and any embellishments. Step 2: Determine the quantity of each material required per piece and its cost. Assign a...