Introduction to Costing

Greg 5215-GARMENT COSTING

1.Introduction

In

very

simple

manufacture
fabrics

terms

clothing

is the conversion of

(cloth)

into

wearable

garments.
To effect

this conversion

have to be cut

the fabrics

into component

parts, which are passed

through a

series of processes to produce the

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Fdes 4161-GARMENT COSTING

1. The pattern pieces are planned to form a marker- this indicates how
the component parts of t he garment wilt be cut out of the fabric.
2. The fabric is spread often several plies high to form a lay.
3. The pattern pieces that form the component pieces of the garment
are cut out of the fabric.
4. Some of the component pieces are fused with a fusible interlining to
give reinforcement.
5. The pieces then pass through a series of sewing operations; during
these operations other materials may be introduced . e.g. zips,
buttons, or lace.
6. The completed garment is pressed. Has loose threads removed and
is inspected for quality.
7. The finished garment is then packed.

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Two Important Questions

What is cost?

Why do we need to cost our

garments?

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Definition of Cost

Cost is the economic value placed

upon the resources consumed to
make a product.
By economic value, we mean a
monetary value expressed in terms
of the appropriate units of currency.
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Cost
To make a product (and

remember that

clothes or garments are products), the

manufacturer will have to use resourcesmaterials, labour and a variety of services and
other capital resources such as the use of
premises.
The

quantity

of

these

resources

used,

expressed as a monetary value, is the cost of

the product.
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 Cost

might

be expressed as relating

to

individual products, i.e. individual garments

(unit cost), a number of products (batch
cost) or a specific order from a customer
producing

perhaps

several

thousand

garments (job cost).

Alternatively,

cost

can

be

expressed

relating to time-the costs incurred for a

month, a quarter or a half year or a full year.
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The Need for Costing

Cost also has a relationship to the

price of the product, the price
being what the manufacturer's
customer or client will

pay for

the garments produced.

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 Clearly,

to

make

profit

the

manufacturer will need the price to

be
when

more than

the

determining

cost. Thus,

the

price

or

negotiating the price of a garment

the manufacturer will need to have a
good understanding of the costs
to ensure that the price covers the
costs.

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 The following are the main reasons

why a Clothing manufacturer needs
to be involved in costing and have an
understanding of the costs.
It is useful
cutters

if designers, pattern

and garment technologists

also have an understanding of the

costs.
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 Pricing

decisions.

If

the

manufacturer produces a branded

product or sells directly to the end
user of the garment. i.e. direct to the
public. then it may determine the
selling price of the garment.

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 The most commonly used method of

pricing is full-cost pricing, where a
percentage profit or markup is added
to the cost of the product. The
percentage profit, or markup, may
be determined based on an agreed
company policy taking in to account
what the market will bear on terms of
price for that product.
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 Acceptance decisions.
This is probably more common in
clothing
when

manufacture
a

retailer

and

occurs

instructs

manufacturer to make a particular

garment, but is prepared to pay only
a stated price.

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 Tendering. Though this is less common in the clothing

industry than in the building industry, it is a Situation

that is prevalent. Here, the customer advertises
in the trade press for a manufacturer to make a
specific garment or job of garments.
The work will have to be carried out to a detailed

specification and manufacturers will be invited to

submit a 'tender', i.e. a price for doing the job. The
customer, subject to checking that the manufacturer
can do the job, will usually select the lowest tender.

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 Thus, to make pricing decisions the

manufacturer needs to know the cost
of the product.
Thus

to

make

the

acceptance

decision the manufacturer needs to

know the cost of the product.
Thus, to make a viable tender the
manufacturer needs to know his costs.
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 Here, the retailer is in the driving seat in

terms of fixing the price that will be paid;

thus, to decide whether to accept this work
the manufacturer needs to know what it
will cost him to make that garment. This is
an acceptance decision-do I take this work
at this price and if I do will I make any
profit? or knowing what my costs are, do I
try to renegotiate the price?
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 Cost control.

It

is also important

for

manufacturers to keep control of their costs.

The profit margins in clothing manufacture tend
to be rather slim: thus ensuring that excessive
cost does not erode those margins is important.
The manufacturer who does not measure his

costs cannot hope to control them. Therefore,

measuring, recording and comparing costs
are all part of the control process to ensure
the ongoing profitability of the business.
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 Profit. People are in business essentially lo

make a profit. There may be other laudable
reasons for being in business- making use of
one's talents, providing employment for the
family.

and

so

forth-and

small

craft

businesses may not always pl ace the profit

motive at the top of their list of priorities.
However, the profit motive is important if the
business is to provide a living for those
runnig it and those employed by it.
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Thank you very much!

Any Questions?

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