Garment manufacturing costs are one of the prime concerns for every businessperson trying to run or start a clothing line successfully. It is quite obvious that investment plans, pricing, and costs play a vital role in a business’s operations. Thus, knowing about effective cost analysis is mandatory for any apparel business.
Certain estimates indicate that your expected expenses for manufacturing clothes can be between $15,000 and $30,000. The cost depends on the products as well as on the production companies’ services. It can go even higher if you require multiple products with maximum customization. You can expect an amount between $30,000 and $50,000.
A t-shirt manufactured with print-on-demand may cost around $20. Similarly, other products, their fabric, quantity, customization, and many other factors can alter the manufacturing cost, as there is no fixed price for apparel production.
There are multiple aspects that require capital and rotating money to keep the business running effectively. Clothing production expenses include the cost of labor, materials, technology, and more.
In this blog, you can find all the necessary information about the expenditure of various essentials for an apparel business.
Overview of the Clothing Manufacturing Process
The clothing manufacturing process is a crucial, full-of-effort, but effective way of making high-quality clothes. The process is conducted in a few simple steps that can help you understand how to initiate the manufacturing and finish it successfully to get the desired outcomes.
A few steps are:
- Pre production
- Production
- Cutting
- Final stage: quality assurance
- Delivery
What is the cost of a garment?
The cost of a garment refers to the amount utilized in making an apparel product. In terms of the seller, cost means the money spent to produce clothes. Those who think about starting a clothing line need to understand that clothing production expenses are not equivalent to profits.
If they sell products at the same rates as the costs of manufacturing, they might reach the break-even point in some time but won’t be able to generate profits. In case you are wondering how much clothing manufacturers charge clients to gain profit, they usually charge a certain fixed percentage above their total cost of production.
The clothing manufacturing cost sheet includes an estimation of the total garment production cost, which includes the making of apparel, raw materials, cutting and trimming, labor, packaging, and shipping.
The cost is calculated by adding the costs of the raw materials used, the company’s expenses, and the anticipated revenue in terms of profit. It is also important to understand the buyer’s budget.
Breakdown of Manufacturing Costs
If we break down all the aspects of manufacturing, we will know how much it costs to manufacture clothing. Let’s find out which important part of production costs how much.
A. Raw Materials
Raw materials are the basic and most important element, which requires a great deal of expense in order to launch a clothing business line. This is one of the reasons many brands opt for different ways to find clothing manufacturers to help them with their raw material needs to save the maximum amount of money.
As per the 2019 data on the cost of raw materials, the scratch used to create fabric is different for various fabrics. For example, the raw material for wool can cost around $123 per kg. Cotton and polyester raw material prices stand at up to $8 per kg. However, other materials like silk, jute, and linen are more expensive.
B. Labor Costs
Labor costs are very important in any clothing manufacturing business, as they are considered the direct cost of the product. It depends on company-to-company and their operations. As per the analysis on labor costs, hiring and outsourcing combined are between $2000 and $20000.
Hiring the employees full-time, depending on their designation, costs between $2500 and $5500 monthly.
Part-time labor costs less, as their payment is usually between $10 and $20 per hour. Outsourcing is also done on an hourly basis, typically. The cost is between $30 and $150.
C. Machinery and Equipment
A clothing factory cannot run without machines, equipment, and computers, which serve different purposes in a manufacturing vicinity. Industrial machines, including sewing, cutting, and finishing machines, are an absolute necessity. If you run an analysis based on their price range, you will find these prices:
Cost of cutting machines: $2000 to $12000
Cost of sewing machines: $19000 to $40000
Cost of finishing machines: $7,000 to $50,000
Cost of computers and relevant equipment: $2,000 to $12,000
Cost of Material Transportation: $20,000 to $50,000
The costs also depend on the usage, durability, functionality, and size of the machines.
D. Factory Overhead
Garment factory overhead includes a variety of factors that cost a big chunk of money. These are the indirect costs of a factory that are not linked directly to production. Some examples of factory overhead are:
- Vicinity Rent
- Salaries and payrolls of employees
- Electricity and other utility bills
- Transportation costs
- Fuel costs
- Lubricant costs
- Equipment setup amount
- Legal expenses (taxes and registration)
- Pantry costs
- Maintenance of the factory
- Machinery maintenance
- Etc.
e. Quality Control
The cost of quality (COQ) refers to the expenses of the manufacturer for the poor quality of the garment. It means that industry owners spend money on quality if an error of fault occurs while creating the apparel.
There is a misconception that quality control expenses are based on good-quality products. It is the opposite. Considering the correct information, an average producer spends 15% to 40% of their total return on the quality control of garments.
If you want to avoid errors in quality, you can always go for a trusted custom clothing manufacturer with advanced technology and a skilled workforce.
f. Licensing and Compliance
Licensing and registration of businesses are essential to avoid legal setbacks and stay protective of your business rights. The registration varies from region to region. Here is the cost of licensing and compliance.
State incorporation payment: it can be $100 to register the business in your region or state.
UCC filing costs: Between $50 and $100 can cost you in order to file for the Uniform Commercial Code.
Sales Tax Permit: The tax depends on the state you are running your business in; the fee can cost up to $100.
A federal or state tax identification or employer identification number (EIN) is free of charge.
g. Packaging and Labeling
Packaging and labeling also serve as major cost-consuming aspects of a manufacturing firm. An average manufacturer with a good budget can spend 10%–20% of their total invoice on their labeling and labeling services. Since the services depend on the customer’s order as well as the manufacturer’s budget, they can fluctuate according to the order.
Conclusion
Manufacturing costs define the effectiveness and success of the business. There is the concept that the more you invest, the more you get. It is not always the case since investment and cost structure are supposed to be smart.
If you are a brand looking for samples with amazing quality and reasonable prices, you can approach reliable clothing sample manufacturers with good industry knowledge because they will be smart enough to use theirs and your money wisely.
The cost of manufacturing garments includes various factors such as raw materials, labor, packaging, quality control, registration, factory overhead, and equipment.
