How to Price Clothing: From Landed Cost to Wholesale to Retail

Most first-time founders price their clothes backwards. They look at what a similar brand charges, pick a number that feels right, and then hope the factory quote comes in under it. I did a version of this with my own menswear brand, and the first time a store asked for wholesale pricing I realized my margin only worked if I sold every piece direct, at full price, forever.

Pricing is not a guess you make at the end. It is a chain: what the garment costs you to land, what a retailer pays you, and what the customer pays the retailer. If any link is weak, the whole thing breaks. Here is how to build that chain properly, before you commit to a production run.

Start with landed cost, not the factory quote

The number on a factory quote is not your cost. It is one piece of it. Your real cost per unit, usually called landed cost, is everything it takes to get a finished, sellable garment into your hands:

• Fabric and trims (sometimes included in the quote, sometimes not)
• Cut, make and trim (CMT) labor
• Sampling and pattern costs, spread across the units in your run
• Labels, hangtags, polybags and packaging
• Freight, and for overseas production, duties, customs brokerage and fees
• Any grading, marker making or development fees the factory charges separately

In my experience working with factories in LA and overseas, the gap between the quote and the true landed cost is where most new brands lose their margin. A domestic quote can look higher than an overseas one and still land cheaper once freight, duty and a smaller first order are counted.

Before you set a single price, run your numbers through the small-batch cost calculator so you are working from a full landed cost, not just the line the factory sent you. If you want to see how this looks for one garment, I broke down the cost of making a hoodie line by line in an earlier post.

Know the difference between markup and margin

These two words get used interchangeably, and that confusion costs people money.

• Markup is how much you add on top of cost, expressed relative to cost. If a shirt costs you 20 and you sell it for 40, that is a 100% markup.
• Margin is how much of the selling price you keep, expressed relative to the price. That same shirt sold at 40 gives you a 50% margin.

A 100% markup and a 50% margin describe the same sale. When a buyer, a rep or a retailer talks about margin, they mean the second number. If you hear "we need a 60% margin" and think "markup," your math will be badly off.

Set your wholesale price

Wholesale is what a store pays you. Even if you plan to sell direct-to-consumer only, I would still set a wholesale price, because it forces you to build a price that survives if you ever want stores, pop-ups or a distributor.

A common rule of thumb in apparel is to set wholesale somewhere around two to two-and-a-half times your landed cost. That is a starting point, not a law. The multiplier you actually need depends on:

• Your overhead: samples, photography, website, your own time
• How many units you are making (small runs carry more fixed cost per piece)
• Whether you need to fund markdowns, returns or free shipping
• What your category can bear

The test is simple. After every cost, does the wholesale price leave you enough to keep the lights on and fund the next run? If not, the problem is usually cost or quantity, not price.

Set your retail price

Retailers traditionally use keystone pricing, which means doubling the wholesale price. Many stores, especially boutiques carrying small brands, want more than that to cover their own markdowns and overhead. So your suggested retail price is typically somewhere around two to two-and-a-half times wholesale, depending on the store and category.

If you sell direct, you keep that whole spread. That is the appeal of DTC. But your retail price should still be the same whether a customer buys from you or from a store. If your site undercuts your stockists, you will not keep stockists for long.

Once you have a number, sanity-check it against the market. The retail pricing benchmark lets you compare where your price sits against similar products in your category.

When the math does not work

This is the moment most founders hit. You multiply landed cost by two, then by two again, and the retail price is far above what anyone will pay for your product.

You have a few honest options:

1. Reduce cost. Simplify construction, swap a trim, use a stock fabric instead of custom, or consolidate colorways so fabric minimums go further.
2. Increase quantity. Per-unit cost often drops as the run grows, but only order more if you are confident you can sell it. Ask each factory where its price breaks fall before you decide.
3. Change the channel. If wholesale will never work at your cost, commit to DTC and price for it deliberately, knowing you are closing that door for now.
4. Change the product. Sometimes the answer is that this piece is a hero product at a higher price, and you need a lower-cost item alongside it.

What you should not do is shave your own margin to near zero and hope volume saves you. It rarely does on a first run.

Compare quotes before you lock a price

Your price is only as good as the quote it is built on. When you get quotes from more than one factory, make sure you are comparing the same thing: same fabric, same trims, same quantity, same sampling terms, same delivery terms. One factory's lower number often just leaves out something the other included. The quote evaluator helps line those up side by side so you can see what each quote actually covers.

The same problem, seen from the factory floor and the studio

If you run a factory: Brands that do not understand landed cost will often push you on CMT price when their real problem is freight, packaging or a run that is too small. You win more of these clients by quoting clearly, itemizing what is and is not included, and helping a founder see their full cost early, before they have promised a retail price they cannot hit. Factories that do this get the repeat order instead of the price war. If you want to be found by brands at that planning stage, you can list your factory free for 90 days.

If you're a consultant or product developer: Pricing is where a lot of your value shows up, even if clients hire you for patterns or tech packs. You are often the first person who can tell a founder that a design will not hit their target retail price, and suggest the construction or material change that fixes it before sampling. Building a costing review into your process makes your service easier to justify and protects your client's margin. Brands are actively looking for this kind of help, and you can join Runsheet as a consultant to be found by them.

The short version

• Price from landed cost, not the factory quote. Include freight, duty, packaging and sampling.
• Markup is relative to cost; margin is relative to price. Retailers talk in margin.
• A common starting point is wholesale at roughly 2 to 2.5x landed cost, and retail at roughly 2 to 2.5x wholesale. Adjust for your overhead and category.
• Keep your retail price consistent across your own site and your stockists.
• If the math does not work, fix cost, quantity, channel or product, not just your margin.
• Compare factory quotes like for like before you build a price on one.

If you are pricing a product right now, start by getting real, comparable quotes. Find factories that fit your run on Runsheet, then build your price on numbers you can trust.