The Art of Pricing

A strategic guide to pricing fashion products profitably for both wholesale and direct-to-consumer channels.

Joe Lauder·Founder, Kōbō·Updated Apr 22, 2026

Pricing is where profitability meets perception. Get it wrong, and you're either leaving money on the table or pricing yourself out of the market. Get it right, and you build a sustainable business that attracts both retailers and consumers.

Markup vs. Margin: Know the Difference

These two terms are often confused, but they measure profitability in fundamentally different ways. Understanding both is essential before setting any price.

Markup

(Selling Price − Cost) ÷ Cost × 100

Margin

(Selling Price − Cost) ÷ Selling Price × 100

A product that costs $20 and sells for $50 has a 150% markup — but only a 60% margin. The distinction matters because retailers think in margin, while many brands mistakenly think in markup.

The True Cost of a Garment

Before you can price profitably, you need to understand every cost that goes into getting a product to market. Many brands underestimate this, leading to margin erosion.

Cost Factor	What's Included
Materials & Trims	Fabric, buttons, zippers, labels, threads
Manufacturing	Cutting, sewing, finishing, quality control
Packaging	Hangtags, boxes, poly bags, tissue
Logistics	Shipping to warehouse, freight, handling
Duties & Taxes	Import tariffs, VAT where applicable

Price is what you pay. Value is what you get. Your pricing should reflect both.

The Industry Standard

Fashion pricing follows a predictable structure. While there's room for variation based on positioning and channel, these multipliers represent the baseline for a healthy business.

Wholesale

Cost × 2–2.8

50–65% margin

Retail

Wholesale × 2–3

60–75% margin

ExampleA garment costing $20 to produce becomes $50 at wholesale (2.5×), then $125 at retail (2.5×). This 6× total markup from cost to retail is standard in fashion.

Three Mistakes That Kill Margins

Underpricing your brand — Setting wholesale prices too low leads to unsustainable margins. Use industry-standard markups and don't be afraid to negotiate higher price points with retailers.

Ignoring markdowns and returns — Seasonal sales, markdown allowances, and returned inventory eat into profit. Build a 10–15% buffer into your pricing model.

Skipping competitor research — Setting prices in a vacuum means you're either leaving money on the table or pricing yourself out. Benchmark against comparable brands.

These compound quickly. Underpricing by just 10% at wholesale cascades through to retail, eroding margin at every step of the chain.

Adjusting for Markets

A single global price rarely works. International duties, local expectations, and channel conflicts require thoughtful adjustment.

Duties & VAT

European prices are typically 20–40% higher than US prices due to VAT and different tariff structures. Factor this into your international pricing strategy.

Channel Conflict

If you sell DTC and wholesale, be careful not to undercut your retail partners. Many brands maintain MSRP on their own sites to protect wholesale relationships.

Retailer Requirements

Some retailers demand exclusive pricing or markdown participation. Build flexibility into your wholesale pricing to accommodate these requests without sacrificing margin.

The Pricing Checklist

Before finalising prices for any collection, run through every step below.

✓Calculate all costs — materials, labor, duties, fulfillment

✓Apply standard markups — 2–2.8× for wholesale, 2–3× for retail

✓Build in buffer — 10–15% for markdowns and returns

✓Research competitors — benchmark against similar positioning

✓Adjust by market — account for duties, VAT, and local expectations

About the Author

Joe Lauder

Founder · Kōbō Labs

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.