So, I am sure that you know that...
Any customer buying a product from a business at market price which, includes a profit margin.
One business buying product in bulk from another at a discounted rate usually 50% of production costs with a mark-up for profit in the wholesale price.
The calculations are usually done together. The brand decides how much they want to make based on a percentage. Trust me, this is the math you’ll WANT to know!
For example, let’s say that I want to design a shirt which, cost me $15 to make. I know that on the retail end I want to make anywhere from 100% - 200% of my costs. So, I am going to charge between $45 to $75 for the shirt that cost me $15 to make. I think that math’s right.
On the wholesale level, I want to make 50% of that which, would give me a profit of $30.
See examples of a calculation below:
*Note on average luxury brands usually mark-up product by 200%
Usually developed by luxury brands to make their products more accessible to a larger customer base, but don’t you think for a second that the quality is anywhere near the retail stuff! The more expensive fabrics and finishes are swapped out with less expensive substitutes. This is the reason why it is affordable. It is in no way a deeply discounted version of the higher priced stuff. So, if you buy Ralph Lauren at the outlet please don’t brag on it like the full price stuff. "Chaps" is in no way on par with "Polo Ralph Lauren".
What do you think about the mark-ups for retail, wholesale or outlet items? Share your thoughts