Fashion Unraveled - Second Edition - How to Start and Manage Your Own Fashion (or Craft) Design Business

Take your average direct and indirect fixed cost for one month (which we will say is $2000) and divide it by the GPM (turn the percentage into a decimal point). Example: $2000 Fixed Cost / .5 Gross Profit Margin (in decimal form) = $4,000 Break Even Point

Blocks are your basic patterns for your sample size and type of garment. You will gener­ally create a basic skirt, bodice, torso, sleeve and pant pattern to be used in drafting each pattern in your collection.

In actuality, these items are examples of fixed costs directly related to each collection you produce.

Retail Pricing Here’s your next wake up call. The retail markup is going to be anywhere from two to three times what the retailer paid for your product wholesale.

Your variable costs are your costs of production. To determine this you first need to determine your cost of goods. In the fashion industry, this process is generally described as costing.

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To determine the amount you need to factor into your wholesale price, divide your total direct fixed cost by the quantity planned for production minus the quantity reserved for damages. _____ Direct Costs / (_____ Quantity - _____ Damages)

Utilities – Figure these for any rented space, as well as your home office if you have one. You will figure the percentage your office takes up in your home and calculate your costs based on it. Utilities include gas, electric, water, telephone and internet. Budget for any designated phone or fax lines for your business, and your cell phone. You ca

In the finance world, start-up costs are also referred to as a “Goodwill Investment.” Even though these expenses occur in the start of your business, the actual expense is usually amortized over 30 years, meaning the expense is spread out equally over 30 years. A similar process occurs with your contributed assets. Your assets