You're selling apparel. Orders are coming in. That's great—but are you actually making money? Too many brands confuse revenue with profit. You can do $50K in sales and still be broke if your pricing is wrong. Let's fix that.
The Real Cost of a Garment (Landed Cost Breakdown)
Before you can price profitably, you need to know your true cost per unit. Here's what goes into it:
Example: Custom Hoodie Cost Breakdown
- Blank hoodie from manufacturer $18.00
- Screen printing (2 colors) $6.00
- Custom woven label $0.75
- Poly bag + hang tag $0.50
- Shipping to you (per unit) $1.25
- Total Landed Cost $26.50
That's your landed cost—what it actually costs you to have a sellable unit in your hands. Now add:
- Shipping to customer: $6-$10 depending on carrier and speed
- Payment processing fees: ~3% (Stripe, PayPal, Shopify Payments)
- Platform fees: If selling on Shopify, Etsy, etc.
- Marketing costs: Ad spend per customer acquisition
⚠️ Common Mistake:
Most founders forget to factor in shipping, payment fees, and customer acquisition costs when pricing. Don't make this mistake.
Margin Math: Why 50% Markup Isn't 50% Margin
Here's where people get confused. Markup and margin are not the same thing.
The Math:
Scenario: Hoodie costs $26.50, you sell for $60
Markup: ($60 - $26.50) / $26.50 = 126% markup
Margin: ($60 - $26.50) / $60 = 55.8% margin
Why does this matter? Because you need to think in margins, not markups.
- 50% margin minimum for direct-to-consumer (DTC) brands
- 60-70% margin ideal to cover marketing, overhead, and profit
Wholesale vs. Retail Pricing Strategy
Planning to sell wholesale to boutiques or retailers? Your pricing structure needs to account for that from day one.
Retail Pricing
Selling directly to customers (DTC):
- • Cost: $26.50
- • Retail Price: $60
- • Your Margin: 55.8%
Wholesale Pricing
Selling to boutiques/retailers:
- • Cost: $26.50
- • Wholesale Price: $30 (50% of retail)
- • Retailer sells at: $60
- • Your Margin: 11.7%
The Rule: Wholesale price should be 2x your cost (keystone markup). Retail price should be 2x wholesale. This gives retailers a 50% margin and you a 50% margin on wholesale orders.
💡 Pro Tip:
If you want to do wholesale, design your pricing structure assuming wholesale first. Don't price for DTC and then try to squeeze in wholesale margins later—it won't work.
Common Pricing Mistakes (And How to Avoid Them)
❌ Mistake #1: Racing to the Bottom
"I'll just undercut everyone on price to get sales."
Why it fails: You attract price-sensitive customers who'll leave for whoever's $2 cheaper. You can't build a brand on low prices alone.
❌ Mistake #2: Ignoring Shipping Costs
"I'll offer free shipping and eat the cost."
Why it fails: You're giving away $8-$10 per order. Either bake shipping into your price or charge for it—but don't subsidize it out of thin margins.
❌ Mistake #3: Undervaluing Your Brand
"I can't charge more than [competitor] because they're bigger."
Why it fails: Premium brands charge premium prices. If your quality, story, and customer experience are strong, customers will pay more.
❌ Mistake #4: Pricing Based on "Feels Right"
"$45 sounds like a good price."
Why it fails: Math doesn't care about feelings. Run the numbers. Know your margins. Price strategically, not emotionally.
How to Raise Prices Without Losing Customers
What if you're already selling but realize your prices are too low? You can raise them—but do it strategically:
-
1
Raise Prices on New Products First
Keep current products at the old price. Launch new designs or colorways at the higher price. Customers won't notice.
-
2
Improve the Product First
Upgrade to heavier fabric, better printing, premium packaging. Then raise the price. You're giving customers more value.
-
3
Grandfather Existing Customers
Give your email list a "last chance" sale at the old price. Then raise it for everyone else. Loyalty matters.
-
4
Raise Gradually (10-15% at a Time)
Don't jump from $40 to $65 overnight. Go $40 → $45 → $50 over time. Customers adapt.
✅ Real Talk:
You'll lose some customers when you raise prices. That's okay. You're not trying to be the cheapest—you're trying to be profitable and sustainable. The right customers will stay.
The Bottom Line
Pricing isn't just about covering costs—it's about building a profitable, sustainable business. Here's the checklist:
- Know your true landed cost (including shipping, fees, packaging)
- Aim for 50-70% margin on DTC sales
- Price for wholesale from day one if that's in your plan
- Don't race to the bottom—value over volume
- You can raise prices, but do it strategically
Need Help Getting Your Pricing Right?
We help apparel brands build pricing strategies that actually work—balancing profit, positioning, and customer psychology. Let's make sure you're making money, not just sales.
Book a Strategy Session