What is Garment Pricing?
Determination of price of a product is an important function of a marketing manager. Price of a product is influenced by the cost of product and services offered, profit margin desired, prices fixed by the rival firms and government policy. A sound pricing is an important factor for selling the products to the customers. The price policy of a firm should be such that it attracts all types of customers of different means. A good price policy helps in determining the varieties of a product to be made or procured to satisfy the demands of various kinds of customers.
Once the garment is manufactured it is subjected to be sold in the market. The market may be the same as where it was manufactured or in another part of the world. Nowadays, due to price competitiveness, normally the garments are manufactured in one part of the world and sold somewhere else. So after the garment is manufactured in a company, various other types of costs are involved or added before being sold to the final customer. Pricing of the garment can be done by manufacturing cost (CM) added with estimated mark-up or profit % to it.
Factors Affecting Garment Costing or Pricing:
Garment pricing decisions most closely relate with regard to the image that is being put forward to consumers. Most people perceive a relationship between price levels and quality, though not always a linear one. Usually, the expectation is that, high quality goes with high prices and low prices reflect low quality or possibly out-of date or out-of-season clothing.
Since pricing or costing impacts directly on profitability, so it is decided carefully considering many factors. If the product is new and first in the market, then the company may achieve a first-mover advantage and set the retail price higher, as opposed to when the product becomes generic the companies will have to reduce the prices in costing sheet. There are main two factors which has considerable affect on garment pricing. Such as-
- External factors influencing pricing decisions
- Internal factors influencing pricing decisions
A. External factors influencing pricing decisions:
- The nature of competition in the particular market
- Joint or related demand for products
- The nature of the product
- Other members of the distribution channel
- Government policy and legislation
B. Internal factors influencing pricing decisions:
- The ability to control costs
- Other elements of the marketing mix
- The product range
Top 6 factors which directly affecting pricing are given below:
1. Brand recognition:
Popular brands can be sold at a higher price due to brand acknowledgement and popularity.
2. Nature of garment:
The quality of the merchandise will decide its price and mark-downs.
3. Garment size:
Size specification is an important point for garments costing or pricing. After receiving an order, a garment merchandiser must confirm the correct size specification given by the buyer with order.
4. Market pressure:
Competition in the market is a major driving force behind the price decision. One company out of two, selling the same product will not be able to set the price higher; otherwise they will be out of the market.
5. Supply and demand:
In the case of low demand and high supply, the prices are to be lowered, and vice versa.
6. Other costs:
Inventory control, storage cost, pilferage cost, handling cost, alteration cost, delivering cost, etc. will also be an input in deciding the final price of a merchandise.
Main Methods of Setting Garment Prices:
There are many methods of setting prices, but most are variants of the two principal methods, namely cost-plus pricing and market-based pricing. Cost-plus pricing is simply calculating the cost of raw materials, labor and overheads such as administration and adding an amount to cover profit to arrive at the selling price. Market-based pricing is founded on market research to find the optimum selling price which then acts as the main driving force on cost containment via design and quality control effort.
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Editor of Fashion2Apparel. She is a fashion designer and ex-lecturer in Fashion Designing. She wants to spread fashion knowledge throughout the world.