Garment Costing: The Complete Guide for Fashion Brands
How to cost a garment line by line, from fabric consumption through to landed cost, wholesale price and the margin you actually keep.
Joe Lauder·Founder, Kōbō·Updated Jul 29, 2026What Garment Costing Actually Is
Garment costing is working out what one unit really costs you before you commit to making it. Not the factory quote. The full number, with fabric, trims, labour, freight and duty in it.
That number is called the landed cost, and it's the only figure your pricing should be built on. Everything else is a partial view. The factory price ignores shipping. The material total ignores labour. Only the landed cost tells you what a unit costs sitting in your own warehouse, ready to sell.
Get it wrong in one direction and you price too high, and the range doesn't sell. Get it wrong in the other and you sell well and still make no money. The second one is worse, because it takes a whole season to notice.
Want to follow along with your own numbers? The garment costing calculator runs the same maths as this guide, from material lines through to landed cost and margin.
The Components of a Garment Cost
Every garment cost is built from the same set of lines. What changes is how much each one matters, and that depends on the product far more than on any industry average.
A plain jersey tee is mostly fabric and very little labour. A lined jacket with twelve trims and a complex construction is a different shape entirely. So treat the table below as an ordering of what to check, not a formula to copy.
| Line | Weight in the cost sheet | What to watch |
|---|---|---|
| Shell fabric | Usually the largest single line | Consumption times price per meter, at the width you were quoted. On most woven styles this one line moves the total more than everything else combined. |
| Lining and interlining | Small on unlined styles, significant on outerwear | Easy to leave out on a first pass, and the omission always shows up later as a cost increase rather than a saving. |
| Trims and hardware | Small per piece, meaningful in total | Buttons, zippers, elastic, drawcord, rivets. Individually pennies, collectively a real number, and often carrying minimum order quantities of their own. |
| Labels and packaging | Small but never zero | Main label, care label, hangtag, polybag, carton. Nearly always custom, which means MOQs and artwork lead times. |
| Labour (CMT) | Second largest line on most styles | Standard minutes to make the garment multiplied by the factory rate. Complexity, not fabric, is what pushes this up. |
| Testing and QC | Small, and non-negotiable if you sell wholesale | Lab tests, inline and final inspection. Retailers will ask for the reports whether or not you costed them. |
| Freight | Depends entirely on mode and volume | Sea freight per unit on a full order is modest. Air freight on a late order isn't, which is why lateness is a costing problem. |
| Duty and clearance | Set by your HS code and country of origin | Apparel duty rates are rarely trivial and they vary by product and origin. Look yours up before you commit to a price, not after the goods land. |
| Agent or buying office | A percentage of the order, where you use one | Charged on the factory value, so it scales with everything above it. Include it in the cost sheet rather than treating it as overhead. |
You'll see confident percentage splits quoted for all of this online. Be careful with them. The split for a knitted basic made nearby looks nothing like the split for a wool coat made offshore, and a number borrowed from someone else's product won't survive your first real quote.
The one rule that does hold: fabric is usually the biggest lever you have. A small reduction in consumption or price per meter moves the total more than a hard negotiation on the sewing rate, and it's easier to win.
A Full Worked Example
Here is one style costed all the way through. A cotton overshirt, 600 units, made offshore and shipped by sea. The numbers are illustrative, but the structure is exactly what a real cost sheet looks like.
Step one: the materials
Materials come straight off the BOM. Fabric is gross consumption times price per meter. Everything else is quantity times unit price.
The marker says the pattern needs 1.85 meters at 150cm width. We add an 8 percent allowance for cutting waste, shrinkage and faults, which rounds to 2.00 meters. That allowance is a costing decision, and it belongs in the BOM rather than in someone's head.
| Component | Description | Unit | Qty | Price | Total |
|---|---|---|---|---|---|
| Shell fabric | 8oz cotton twill, 150cm width | meter | 2.00 | $5.40 | $10.80 |
| Interlining | Fusible, collar and placket | meter | 0.15 | $1.60 | $0.24 |
| Buttons | 16L corozo, incl. one spare | piece | 10 | $0.22 | $2.20 |
| Thread | Poly-cotton 40/2 | cone | 0.06 | $3.00 | $0.18 |
| Labels | Main, care and size labels | set | 1 | $0.26 | $0.26 |
| Packaging | Hangtag, polybag, carton share | set | 1 | $0.29 | $0.29 |
Material cost: $13.97 per unit.
Note the shell fabric on its own is $10.80 of that $13.97. If the mill comes back 50 cents a meter cheaper, the style saves a dollar a unit. No amount of arguing about buttons gets you there.
Step two: labour, then the full cost sheet
Labour is standard minutes times the factory rate. Our overshirt runs at 35 minutes across cutting, sewing, finishing and packing. At $0.09 a minute that's $3.15.
Add testing and inspection, and you have the ex-factory cost. Then add the cost of moving the goods. Duty here is charged on the factory value plus freight, at an assumed 12 percent. Check the rate for your own HS code and country of origin, because it's one of the few lines you genuinely can't estimate.
| Materials | Total of the BOM lines above | $13.97 |
| Labour (CMT) | 35 standard minutes at $0.09 per minute | $3.15 |
| Testing and QC | Lab tests and final inspection, per unit | $0.25 |
| Ex-factory cost | What the factory invoices you per unit | $17.37 |
| Sea freight | Ocean freight and origin charges, per unit | $0.85 |
| Duty | 12% assumed rate on factory value plus freight | $2.19 |
| Clearance and inland | Customs broker and delivery to warehouse | $0.30 |
| Landed cost | Cost of one unit sitting in your warehouse | $20.71 |
So the factory invoices $17.37 and the unit actually costs $20.71. That gap is 19 percent, and it's entirely made of things that happen after the garment is finished. Brands that price off the factory quote are giving that 19 percent away without knowing it.
Step three: price and margin
Say the overshirt sells to stockists at $46. Gross margin is the difference over the selling price: $25.29 divided by $46, which is 55 percent. The markup is a different number entirely: $46 divided by $20.71, or 2.2 times.
Both are correct, and confusing them is how brands talk themselves into bad styles. A 2.2 times markup sounds thin and a 55 percent margin sounds healthy, and they describe the same style.
If your stockists take a 2.6 multiple, the shop price lands near $120. That's the number the customer judges, so it's worth checking it against the market before development goes any further. Our fashion pricing strategy guide covers how to set those multiples deliberately rather than inheriting them.
Consumption and Wastage
Fabric consumption is the number most likely to be wrong, and the one that costs the most when it is. Every other line on the sheet is a price you can ask for. Consumption is something you have to derive.
Take it from the marker - Not from a similar style, and not from the designer's estimate. The marker tells you what the pattern needs at your size ratio and your fabric width.
Cost gross, order gross - Net is what the garment uses. Gross is what you have to buy once cutting waste, shrinkage and faults are covered. If you cost on net you'll always be short.
Check the width - A price per meter is meaningless without the width it was quoted at. The same fabric at 150cm and 110cm gives you very different consumption.
Prints and checks cost more - Anything that needs matching raises consumption, sometimes significantly. That's a costing conversation, not a production surprise.
Watch the size ratio - Larger sizes use more fabric. If your ratio skews large, a blended average built on a size medium will quietly understate the buy.
CMT vs FOB Pricing
Two models dominate garment manufacturing, and they change what your cost sheet looks like. The worked example above is a CMT build-up, where we bought the materials and paid the factory for labour.
Under FOB, the factory sources everything and quotes one price. Simpler to manage, harder to interrogate.
| Aspect | CMT (cut, make, trim) | FOB (free on board) |
|---|---|---|
| What the price covers | Labour only: cutting, making, trimming | Labour plus all materials, packaging and local freight |
| Who buys the materials | You do, from suppliers you choose | The factory does, from suppliers it chooses |
| Control over quality | High, because you specify every component | Lower, unless you nominate mills and trims |
| Cost transparency | High, you see every component price | Low, the quote arrives as one number |
| Cash flow | You pay for fabric months before you ship | You pay the factory closer to shipment |
| Where the risk sits | Late fabric is your problem | Late fabric is the factory's problem |
| Typical fit | Brands with fabric relationships and volume | First orders, simpler products, tight timelines |
Most brands end up running both. FOB on basics where the factory's fabric is fine and speed matters. CMT on the styles where the fabric is the point.
One thing worth insisting on with FOB: ask for the quote broken into materials and making. Good factories will give you it. If nobody will, you can't tell whether a price increase next season is fabric, labour or margin, and you have no way to argue it.
Target Costing vs Actual Costing
These are two different jobs that use the same arithmetic, and doing only the second one is how brands end up with beautiful samples they can't sell profitably.
Target costing, before development
Start from the price the product can honestly command in the market. Work back through the retail multiple to a wholesale price, then back through your margin requirement to a maximum landed cost. That's your budget for the style.
For our overshirt: a $120 retail at a 2.6 stockist multiple gives roughly $46 wholesale. Requiring 55 percent margin gives a target landed cost of around $20.70. Now the design team knows what they're working to before a sample exists.
Actual costing, during development
Build the real number from real quotes as the style develops. Fabric quoted at the right width. CMT quoted against a sewn sample, not a sketch. Freight from the real carton count. Duty from the confirmed HS code.
Then compare the two, early and often. A style that comes in over target has three exits: change the design, change the sourcing, or change the price. All three are cheap in week two of development and expensive in week ten.
A cost sheet you finish at the end of development is a report. A cost sheet you keep live during development is a decision-making tool.
From Landed Cost to Margin
The landed cost is where costing ends and pricing begins. Two definitions matter here, and mixing them up is the single most common costing error in fashion.
Markup = selling price ÷ landed cost
Margin = (selling price − landed cost) ÷ selling price
On the overshirt: $46 ÷ $20.71 is a 2.2 times markup. ($46 − $20.71) ÷ $46 is a 55 percent margin. Same style, two very different sounding numbers.
Whatever margin you land on has to do more work than it looks. It funds samples that never made the range, the marketing that sold the ones that did, freight that ran over, returns, and the discounting you'll do at the end of the season. A style that only just clears its landed cost isn't a low-margin style. It's a loss with extra steps.
Which is why the discipline is to check margin at the range plan stage, across the whole collection, rather than style by style at the end. Some styles carry the range and some are there to complete it. That's a decision worth making on purpose.
Costing Mistakes That Kill Margin
None of these are exotic. They're the six that turn up in nearly every costing review, and each one has a cheap fix if you build the check into the process.
Costing net consumption
You buy less fabric than the marker needs, and the shortfall gets covered at spot prices
Fix: Cost on gross consumption, with your wastage allowance already inside the number
Leaving duty until later
A rate you never checked lands on top of a price you already published
Fix: Confirm the HS code and rate during development, then put it in the cost sheet
Ignoring trim minimums
You pay for 1,000 custom labels and use 600 of them
Fix: Spread the surplus across the units you actually make, or design to a stock trim
Costing at last season's prices
Margin disappears quietly between the range plan and the purchase order
Fix: Re-confirm component prices with suppliers before you sign the costing off
Fixing the exchange rate in your head
A currency move turns a healthy style into a break-even one
Fix: Cost at a conservative rate and review it when you place the order
Confusing markup and margin
You think you're making 50 percent and you're making 33
Fix: Margin is profit over selling price, markup is selling price over cost. Write both on the sheet
The Costing Checklist
Run this before you sign off any style. It takes ten minutes and it catches most of what goes wrong.
Costing at Collection Scale
Costing one style in a spreadsheet is straightforward. Costing sixty styles across multiple colorways and suppliers, twice a year, is a different problem, and it fails in a specific way.
It's never one big error. It's a fabric price that moved in March and got updated in four files out of eleven. An exchange rate from last season. A style re-costed after a component change, and three that were not. By the time the season is bought, nobody quite trusts the numbers, and the margin report is a reconstruction rather than a record.
Purpose-built garment costing software fixes this structurally rather than through discipline:
The cost sheet builds itself - Material costs come straight off the BOM, so a component change updates the cost the moment it's made rather than the next time someone opens the file.
One price, many styles - Component prices live in a shared library. Update the fabric once and every style using it re-costs itself.
Currencies handled properly - Suppliers quote in their own currency and the cost sheet converts at a rate you control, so FX stops being a manual step.
Target against actual, live - You see the gap between the target cost and the current build-up while you can still do something about it.
Costing across the collection - Margin by style, by category and by season, rather than one style at a time in separate spreadsheets.
A record of what changed - When a cost moves you can see which component moved it, when, and who agreed it.
If you're weighing that move up, our comparison of the best fashion PLM software covers the realistic options at each brand size. Kōbō runs from $140 to $300 per user per month with supplier seats included at no cost, and most teams are live in one to two weeks. Full detail is on the pricing page.
Want to follow along with your own numbers? The garment costing calculator runs the same maths as this guide, from material lines through to landed cost and margin.
Frequently Asked Questions
How do you calculate the cost of a garment?
Work bottom up in three stages. First add every material line from the BOM: gross consumption times price for fabric, quantity times price for trims, labels and packaging. Second add the factory cost, which is standard minutes times the sewing rate, plus testing and inspection. That total is your ex-factory cost. Third add freight, duty, clearance and inland delivery to reach the landed cost, which is what one unit really costs you sitting in your own warehouse. Your wholesale and retail prices are set from the landed cost, never from the factory quote.
What is landed cost in fashion?
Landed cost is the total cost of getting one finished unit into your warehouse. It's the ex-factory price plus freight, duty, customs clearance, inland delivery and any agent commission. Brands get into trouble by pricing off the factory quote instead, because freight and duty are added after the price list is printed. If you only track one costing number, track this one.
What is the difference between CMT and FOB pricing?
CMT means cut, make and trim: the factory charges for labour only and you buy and ship the materials yourself. FOB means the factory buys the materials, makes the garment and quotes you one all-in price. CMT gives you more control and full visibility of component costs, but you carry the sourcing risk and pay for fabric long before you ship. FOB is simpler and better for cash flow, but the quote arrives as a single number that's harder to challenge line by line.
How much wastage should you add to fabric consumption?
Enough to cover cutting waste, shrinkage, end-of-roll loss and fabric faults, which is a real allowance rather than a rounding-up. The right figure comes from your own marker and your own history with that mill, and it's higher for prints and checks that need matching than for a plain fabric. Whatever you settle on, apply it inside the BOM so the costed number and the ordered number are the same number.
What margin should a fashion brand aim for at wholesale?
There's no universal figure, but the useful discipline is to work backwards. Start from the retail price the product can honestly command, divide by the multiple your stockists take, and you have your wholesale price. The gap between that wholesale price and your landed cost has to fund samples, marketing, freight surprises, returns and the discounting you'll do at the end of the season. If the gap only just covers the cost, the style isn't viable no matter how good it looks on the range plan.
Joe's the founder of Kōbō Labs. Before this, he founded Satta, a fashion brand he scaled to sell internationally at Mr Porter, SSENSE, and Beams Japan. A decade of running his own brand - design, suppliers, production, the lot - is what Kōbō is built on.
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