In garment manufacturing, price quote is very important. A proper and intellectual price quote can obtain more profit for manufacturing company. In the apparel industry, before starting bulk production, merchandiser must do the price fixation work carefully. It is one of the most important jobs for an apparel merchandiser. Different types of price quotation methods are used for garment export business. Merchandiser always prefers different price fixation or quotation methods that are helps to get a profitable price for the garment export order. This price fixation method mainly depends on the negotiation of buyer. Two parties like buyer and manufacturer are selected for their best price fixation process and create an official document for shipment.
Before prepare a price quote, merchandiser should know about how to prepare garment costing. Garment costing is the initial stage of export order. When manufacturer give an order from the buyer, primarily merchandiser send the costing of garment on that order. If they are pleased then the actual export business is started here.
Garment costing is a process of determining the overall expenses involved in the production of a garment. For a garments export business, costing of garment is a very important task. Costing of garment is made by the considering of raw materials expenditure, salary and wages of officers and workers, distributions and advertisement expenses etc. Garment costing is a crucial aspect of garment industry, as it directly impacts the profitability and competitiveness of a clothing brand.
Cost is divided into 2 types-
- Pre-cost- merchandiser
- Final Costing- Merchandiser + import section
Garment for example: $3.00 = cost
Garment costing: $3.00 + profit = costing
1. Pre Cost-
- It is an estimate made before the garment is adopted in to the line
- Fabric, trim and labor costs for each garment is calculated
- The merchandiser usually keep a record of all materials costs on a work sheet
- Then the costing department can roughly estimate the cost and price structure.
2. Final Costing-
- It is an exact figures for fabric, accessories and labor cost
- Using actual figures for fabric, accessories and labor cost
Costing department uses-
- Merchandiser work sheet
- A proto type garment
- Production pattern
- A detailed cost analysis made for each garment the final cost is plotted on a “cost sheet”.
Different Price Fixation Process in Garment Industry:
There are 5 types of price quote methods that are widely used in price fixation process in garment industry. These methods vary based on the complexity of the garment, customer requirements, and industry practices.
Here I will discuss the following methods for price fixation in the apparel industry-
1. FOB (Free on board):
- Exporter does not bear the cost of freight of ship or air
- It is buyer who himself bear the freight
2. C&F (Cost & Freight):
- Free on board+ freight= c & f
- In this case ship or air freight is carried by the exporter while quoting price.
- This price a bit higher than FOB
3. CIF (Cost, Insurance & Freight):
- C & f + insurance = CIF
- In this case in addition to the bearing of freight, the cost of insurance is also borne by the exporter.
4. CM (Cost of Making):
- Manufacturing or exporter will get only making charge of that garment
- Fabric, trimming, accessories and other materials is supplied by the buyer
5. CMT (Cost of Manufacturing and Trimming):
- Manufacture or exporter will get the making charge and at the same time will get the trimming cost
- Fabric is supplied by the buyer.
To prepare price quote for garment export orders involves providing detailed information about the garment costing, quantity, delivery terms, and any additional charges. The quote includes company information, customer details, a description of the garments, unit price, total price, and any applicable terms and conditions. The quote serves as a formal document that outlines the pricing and terms for the customer’s consideration and facilitates smooth communication in the export order process.
You may also like:
- List of Documents to be Maintained by Garment Merchandiser
- Garment Costing Sheet Analysis and Format
- What is Garment Costing | Classification of Garment Costing
- How to Become a Successful Apparel Merchandiser
Editor of Fashion2Apparel. She is a fashion designer and ex-lecturer in Fashion Designing. She wants to spread fashion knowledge throughout the world.