How a Merchandiser Prepares the Price for a New Order

When a merchandiser prepares the price for a new order, they must consider various factors, calculate precisely, and make decisions based on practical experience and current market trends. Below is a step-by-step outline of the entire process:

1. Understanding the Product Specifications

At the very beginning, the merchandiser must gather all necessary details such as:

·         Type of garment (T-shirt, shirt, pants, etc.)

·         Fabric type and GSM

·         Size and measurement chart

·         Any add-ons like print, embroidery, wash, etc.

·         Packing requirements

2. Preparing the Costing

Now comes the core calculation. Costing is usually prepared based on the following components:

A. Fabric Cost

·         This typically accounts for 60–70% of the total cost.

·         Includes sourcing, dyeing, finishing – up to a ready-to-cut stage.

B. Trims and Accessories

·         Includes buttons, zippers, labels, tags, bags, poly bags, cartons, etc.

C. Manufacturing Cost (CM – Cost of Making)

·         Includes cutting, sewing, finishing, pressing, QC, and packing.

·         Garment factories usually quote a specific CM per piece.

D. Printing / Embroidery / Wash Cost

·         If applicable, these costs are calculated separately.

E. In-house/Office Costs and Bank Charges

·         Includes merchandising cost, indenting, LC charges, telecom, etc.

F. Wastage and Buffer

·         Typically, 3–5% wastage is added for fabric.

3. Adding Profit Margin

A profit margin of around 10–20% is usually added, depending on company policy. Some companies may accept lower margins to maintain customer relationships.

4. Preparing Final FOB or CFR Price

After summing up all costs and adding profit, the final price is calculated. Example:

Costing Element	Cost (USD)
Fabric Cost	2.50
Trims & Accessories	0.35
Making (CM)	0.70
Printing	0.20
Packing & Carton	0.10
In-house/Bank Charges	0.05
Subtotal	3.90
Profit (15%)	0.60
FOB Price	4.50

5. Negotiation with the Buyer

The price is now shared with the buyer. If they request a lower price, the merchandiser identifies areas where costs can be reduced—such as changing buttons, sourcing cheaper fabric, or reducing embellishments.

6. Price Confirmation and Production Start

Once the price and terms are finalized, the buyer issues a Purchase Order (PO), and the production process officially begins.