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How much does it cost to start a clothing line?
You might be interested to know EXACTLY how much money you need to set aside for your apparel brand to get the ball rolling. It's not an exact number or figure. It's different for everyone. Of course, you need to have ENOUGH, but how much money do you NEED to start a new fashion brand?
It depends on a few different variables:
A. WHAT ARE YOU PLANNING TO SELL? IS IT SKU INTENSE?
What you are creating and therefore planning to sell is a BIG element of knowing how much it will cost to start your clothing line. For example, suppose you're planning to do something straightforward like socks or boxer briefs. Your product is not work-intensive, so the costs are pretty low, but the minimums might be higher. High minimums, in this case, aren't such a bad thing because you need a lot of volume of these items to make your money back, and also, these are things that people tend to buy in more quantities than just one.
If you plan to sell something like a swimsuit, that changes the dynamics. In that case, you'll probably need to offer multiple styles, sizes, and colorways. Unfortunately, these additional layers make swimsuits, lingerie, and SKU-dense items more complex and capital-intensive.
B. WHERE ARE YOU MAKING IT?!
The straightforward answer is that
*MOST* items will cost more money to be made in the USA. Our labor force has changed drastically over the last 100 years, and we no longer teach this skill set in the United States. The minimum wage in the USA is also higher than in other countries. If you manufacture in Asia, you'll have the lowest production costs. Still, there are tradeoffs in the shipping/time/turnaround and whatnot. We'll share more on this in a future post on manufacturing domestically vs overseas.
C. WHAT KIND OF MARKET ARE YOU ENTERING? LUXURY? BUDGET?
The market you enter will also decide the cost of the final goods and the minimums you must adhere to. Naturally, the more luxury you go, the fewer quantities you will make and buy. Going luxury will also mean you'll use higher-end materials and perhaps need a more skilled worker for detailed handcraft work. You'll also pay more for the final product.
Going with a more budget-friendly cost, you'll encounter other barriers to cross, like meeting fabric and order minimums which turns into buying in larger quantities or a sea of surcharges. You might pay less overall, but those small costs add up. Make sure you know what cost parameters to fit into before going too far down any path.
D. WHERE DO YOU NEED THE MOST SUPPORT IN
YOUR BUSINESS?!
Your support areas will look different if you're a fashion designer or merchant with industry connections vs. non-fashion natives learning the ropes. Regardless, you've got to know where your skills sit when considering where you'll allocate funds for your business to grow and launch. This is all about being intellectually honest with yourself. Don't try to fool yourself into thinking you can wear every hat and do every role in your business. You can't. If you try this, I can almost guarantee you'll fail. A famous saying goes: "If you want to go fast, go alone. If you want to go far, go together." Remember to embody this principle to fuel your success.
E. WHAT ARE YOUR AMBITIONS?
You've also got to consider the kind of business you're trying to run.
Are you doing everything made-to-order with deadstock fabric, or will you need to buy inventory and hold it in a spare room or warehouse? Having inventory comes with a higher cost than something made-to-order, so knowing that from the onset will help you create a better foundation.
What about the size range you want to offer? In this day and age, everyone wants to be inclusive, but that's one of those cost-driving forces. Inclusion is incredible, but it's also going to change the path a little bit.
Maybe your ambition is to be more sustainable and design with more intention. The loftier the aspiration, the more likely you'll need some sort of capital infusion at some point down the line. That being said, slower fashion is a growing market, and it's a way to get yourself into the market without crushing yourself with minimums.
Okay, all the above considered, here are the major costs you'll rack up at the beginning of creating a new fashion line:
Business setup cost varies depending on where you want to incorporate your business, where your company operates, and what type of entity you form. Most likely, you'll go with a corporation or LLC, neither of which is very expensive to open up. It will run you around $200 to $600 for the essential paperwork.
Design cost: This is incredibly product dependent and highly variable based on category. Expect a cost of anywhere from $2,000 to $5,000 for sketches and thoroughly completed tech packs. Usually, the more niche and specific you are, the higher the expense for specialists to help you with this aspect.
Development cost: This is the most time and labor-intensive area. If you hire a specialist like our agency, this will take many months to get right and run you anywhere from $10,000 to $50,000. This number considers the many rounds of samples, the fit comments, shipping fees, sample fees, finding factories to suit your needs, and other standard development expenditures. Most brands fall in the middle of that range for their first year and production cycle.
Production cost: Another factor totally depends on your category and styles. Your production cost can vary quite a lot based on the product you're making. It might be around $4,000 to $10,000 for simple things like socks and undies for your first purchase order. You might be more in the $20,000 to $50,000 range for more complicated garments or SKU-heavy items. Of course, the total cost here also depends on the quality and final price point of the product you're creating. Is it a budget item or something more luxurious? An easy way to ballpark your product cost by working backward is to figure out what you want to sell it for and then divide that number by 4. That's roughly where your cost will probably be, as we usually mark up the initial garment costs by a 4x multiplier.
Marketing cost: Your marketing costs are highly variable. The actual cost will depend on how much you rely on organic growth, your ability to create buzz, and how good you are at talking about your product.
Suppose you're not a social media guru or have zero interest in that area. In that case, this is another area that will cost you, but it's more variable in that you can tailor this cost more to what you're able to spend vs. what you WANT to spend.
One piece of advice I always have when you're ready to start marketing your product: Don't start spending money on ads immediately. It's not a great use of your money, and in many instances, knowing too little about how pay-for-click ads work can be more damaging to your Google ranking and future possibilities. Try and figure out how to win people over organically and then look for someone that can help you maximize your marketing with ads.
So what's the grand total? 💸
If you've been adding up the costs along the way, you know that the total is roughly between $32,200 and $105,600.
Remember, this total will vary from brand to brand and can go much much higher with more initial capital invested. Still, I hope this gave you insight into what you should plan to budget for when starting your fashion brand.
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