How to price your clothing line.

Every pricing decision in this page assumes you have one number: landed product cost per unit. That is the factory price plus the extras that arrive with the goods — freight, duty, inspection — spread across the run. It deliberately excludes two things this page handles separately: the channel costs of making a sale, and your fixed operating costs. If you have not built the cost number yet, stop here — our business basics guide walks through the cost sheet step by step, and your landed cost per unit should come out of the importing guide's landed-cost checklist if you produce overseas.

For the worked examples below, one garment: $25.00 landed product cost. Every number that follows is an illustrative assumption — your costs and channels will differ, but the method is the same.

These two words get used loosely and mean different things. On our example garment:

• Markup is profit as a share of cost. Sell at $50 what cost $25, and you marked it up 100%.
• Gross margin is profit as a share of the selling price. On that same $50 sale, gross margin is 50%.

Same transaction, same dollars — different denominators. A "100% markup" sounds enormous until you realize it is only a 50% margin, and a 50% margin is roughly where a boutique sits when it keystone-prices your goods. When a buyer or an accountant says "margin," they almost always mean the second one. Train yourself to hear it that way, because nearly every expensive pricing mistake in a young brand is a markup number mistaken for a margin number.

The reliable method works backward from the margin the business needs. Decide the margin first, then let the price fall out of the math:

Price = Cost ÷ (1 − target margin)

For a 60% gross margin on our $25 garment: $25 ÷ (1 − 0.60) = $62.50. Check it — $62.50 minus $25 is $37.50 profit, and $37.50 is 60% of $62.50. (The common shortcut "double the cost and add a bit" gives you a 50%-ish margin; the formula gives you exactly what you aimed at.)

What target is right? There is no universal number — it depends on your overhead, channel mix, and returns rate. But a useful discipline: whatever margin you choose must cover everything in the next two sections. If you want to test a target retail price instead, our target FOB price calculator runs the same math in reverse — from retail price back to the maximum you can pay a factory.

Where you sell changes the price you can charge. The same garment lives in different channels at different prices — and "keystone" is the convention that ties them together.

• Keystone pricing means retailing at double wholesale — a $50 wholesale price keystones to $100 on the store floor. It is a long-standing retail convention, not a law or a guarantee of profit. Many retailers use it as a starting point and adjust.
• Wholesale gets you volume and shelf presence at roughly half of retail — before your own costs.
• Direct-to-consumer gets you the full retail price — before the costs of generating and fulfilling each order yourself.

Two worked comparisons on our garment, priced for wholesale at $50 (landed cost $25, retail $100 keystoned):

• Selling wholesale at $50: gross profit is $25 per unit — a 50% gross margin. Clean, but remember what it must cover: sampling, trade shows, sales commissions, and every unit a store returns or marks down.
• Selling DTC at $100: gross profit looks like $75 — a 75% gross margin — until the channel costs in the next section take their share.

Neither channel is "better." The honest comparison is contribution per unit — price minus product and channel costs — the framework our selling guide covers in detail. The pricing decision is making sure both prices work before you commit to either channel.

Subtotal on the illustrative stack: roughly $34 out of the $100 sale. That $75 of gross profit is now about $41 of contribution — money toward fixed costs and, eventually, profit — before overhead, before your salary, before the sample run that never sold. Discounting makes all of it worse: drop the price 20% and the percentage-based lines shrink with revenue (3% processing and the 6% returns allowance come to $2.40 and $4.80 on an $80 sale) while fulfillment and marketing hold near $10 and $15 — a channel stack of about $32.20 leaves only about $22.80 of contribution from the same garment, versus roughly $41 at full price. Discounts are not free marketing; they are the most expensive line in the stack.

Wholesale has its own eaters — chargebacks, markdown support, sales commissions — they are just quieter. The break-even planner is built for exactly this: it folds one-time costs, per-unit costs, fees, clearance value, and planned sell-through into one break-even number for a style or a whole collection.

Three different numbers, in order of when you learn them:

• Gross profit is price minus product cost; gross margin is that profit as a percentage of price. They tell you the garment is worth selling.
• Contribution is price minus product cost minus channel costs. It tells you the channel is worth selling through.
• Break-even is the point where contribution covers fixed costs — sampling, patterns, photography, your rent, your time. It tells you the business is worth doing at all.

A collection can be profitable per unit and still lose money overall — that is a sell-through problem, and it is why ordering quantity matters as much as setting price. Before committing to a production quantity, compare factory price tiers with the price break calculator, which weighs a larger order's lower unit cost against freight, duty, and the clearance value of unsold units.

• Pricing from fear. The cheapest position in a market is the hardest to fund growth from — and the easiest for a bigger competitor to crush.
• Copying a competitor's price. You cannot see their cost sheet. Their price may already be wrong for them.
• Forgetting the channel stack. A 70% gross margin that leaves $20 of contribution after marketing and returns is not a 70% business.
• Treating wholesale and DTC as the same price. One price for two channels means one of them is mispriced.
• Ignoring quantity risk. The cheapest unit price on a bigger order is only cheap if you sell the units. Price the order, not just the garment.
• Never re-pricing. Costs change — freight, duty, and fabric move. Review margins every season; a price set in year one will quietly go negative in year three.