What Are the Real Costs to Start or Run a New Sportswear Clothing Brand?
Welcome back to the Eurofitness Resources center, where we provide you with educational tips and guides to help you on your journey.
Nowadays, to start a new clothing brand has never been more straightforward. It almost seems like new clothing brands are sprouting everywhere on platforms like Instagram and Tiktok. If anything, this is a sign of how healthy the clothing business really is!
But while it may seem like a straightforward path – running an online retail store for your clothing items can very quickly become an expensive venture, especially if you haven’t considered the ‘real’ costs of your business.
In this guide, we’ll explain some of the most important costs to consider, as well as the costs you can expect when you order clothes for your business.
We also manufacture all kinds of sports and fitness wear apparel so if you have a design you’d like to prototype or would like to produce for your brand, then do get in touch with us. Learn more about us in our brochure below:
The Startup Cost of Your Clothing Brand
First thing is first, you’ll have to consider the start-up cost of your clothing brand. For the sake of this guide, we’ll only be looking into online stores as physical stores are a whole different territory which we’ll cover in the future.
Online stores nowadays are the most common outlets for clothing, sportswear and accessories.
Using Shopify or Amazon
The fastest and easiest way to start your online clothing brand is heading over to Shopify or Amazon, creating an account and launching your site / business. You can get started even in a day.
Note that using Shopify or Amazon comes at a cost. You’ll be charged monthly, a percentage of your profits will be taken on each sale and there is usually a transaction fee as well. So know that your margins can thin out quite quickly if using these fulfillment services.
Using an Example
The alternative approach is to setup your own website. If you’re proficient with technical and design skills – you can setup the entire website yourself. Or else, it helps to hire a professional to do it for you.
Let’s use an example. Let’s call an online store ‘Brand A’. Below is a table which would list some of the key startup costs for Brand A’s online store. Let’s assume Brand A is run from home.
| Expense | Cost ($) |
|---|---|
| All Logos, Graphics and Illustrations | 600 |
| Domain Registration (1 Year) | 20 |
| Hosting Service (1 Year) | 120 |
| Hire a Professional Web-Designer For Website | 800 |
| Registering Your Company | 50 |
| Total | 1630 |
Now you’re costs can be significantly greater, or significantly lower. It really depends on who you’re employing to take care of your website, where you’re getting your work from (Fiverr will much cheaper for all this – but it may not be great quality) and whether you’re taking consultations from anyone or not.
We also haven’t factored in whether you need to buy office equipment, computers or rent an office space. These costs are more or less dependent on your preferences – but it’s usually always a good idea to save where you can.
The Costs of Your Products
Arguably, the most important cost to consider in your business is the cost of your products. And you need to anticipate what your costs will be and budget your investment accordingly. To start a clothing or sportswear brand, you’ll need to find a suitable manufacturer / supplier first off.
Costs for your products will typically include the following:
- Samples Costs
- Production Cost
- Shipping Cost
- Import Tax
- Sales Tax or Value Added Tax (VAT – EU only)
- Packaging Cost
The Samples Cost
If you are determined to see your design physically – you will need to order samples. Manufacturers will charge you for samples depending on how complicated they are and whether all the components for its are accessible in the market or not.
Samples can be quite pricey sometimes. Don’t be alarmed if your sample is coming out 10 to 15 times the unit cost when they are ready for production. This is because the manufacturer is essentially creating an ‘art-piece’ for you. A once-off, exclusive design will require it’s own energy and resources.
Claim Credit on Your Samples
Sometimes, you’ll need to order more than a few samples. In this case, it’s best to request the manufacturer or supplier credit in case you would like to make a bulk order. They will be delighted to offset the cost of your bulk order by the samples costs.
At Eurofitness Apparel, any of our customers that order samples from us receive credit which they can later claim on their batch orders.
Production Costs
The production cost of your order is the cost the manufacturer charges to complete your product. You’ll go into production once you’re happy with your samples and once you’ve agreed on a price for the number of units of your product you want.
Don’t worry about the exact breakdown of your production costs – this is for the factory to decide. You’ll typically only be given a quote of the final price excluding shipping.
Controlling Your Production Costs
However, there are some general guidelines to controlling your production cost when you start a new clothing brand:
- Order higher Quantities: Ordering higher quantities means you’ll be saving more per unit of your product. For example, if a hoodie costs $7 per 100 – it may cost $6.50 per 300. this means you’ll save $150 on the cost of your hoodies.
- Don’t make your product too complicated. Complex clothing items with complex materials, designs and features will cost you much more than a simple one. Sometimes, the cost may be so high that it becomes unpractical – unless you have this is budgeted.
- Always confirm the final sample – you can’t change your mind during production. This can become a very expensive decision. Instead, leave your modifications for the next time your make an order.
It’s also a good idea to get multiple quotes from multiple sources so you can build a better picture of the average market value of the product – and ultimately decide which source to buy from.
We offer free quotations and guarantee some of the best prices on the market for your sportswear products!
Shipping Costs
This is the one cost which might not go noticed by new brand owners. It’s important to factor in your shipping cost, just as you would with your production costs.
Shipping rates vary extensively and can change over time depending on logistics traffic, tariffs and schedules. The general rule of thumb that most shipping services use is that the price will depend either on the weight or the dimensions of your package.
You can always check an estimation of your shipping charges directly from a courier – but your manufacturer will also provide you with as close an estimation as possible.
Shipping charges also vary extensively depending on what type of shipping method is used.
For example, courier services like DHL, DPD and FedEX will cost more than Cargo services or Freight Services – though they are faster and have lower weight requirements. We’ll go more in depth into the shipping aspect in another guide.
Taxes and Duties
This is another hidden cost of your products. Some countries will require you to pay additional taxes and duties on imported items. Always refer to your national or state import tax / duty rates.
Typically, it will range from 2% to 15% but it can be outside of this range aswell. Some countries can charge 2 to 3+ times more tax than others on imported goods.
There is also VAT if you’re ordering from the EU. VAT is standard across most European countries but the advantage of this tax is that you can reclaim it on the sale of your product to your customers.
Packaging Cost
Packaging is often overlooked in the clothing business but is one of the most critical components in any retail goods business. When you start a new clothing brand, you should consider packaging to have numerous functions, both physically and psychologically.
Good packaging can prevent damage to your products. Great packaging will attract your buyer before they have even interacted with your product.
The packaging cost depends entirely on your personal preference. Whether you prefer a simple printed sip-seal bag for your clothing items or a draw-box with fancy graphics – the packaging cost will vary accordingly.
Ideally, you should source your packaging locally. Or if your manufacturer offers packaging aswell, it is best to order from them too.
This way, you won’t have to pay shipping and duties over again. Try to keep your packaging cost within 5% of your overall product price.
Calculating the Real Price of Your Products
Now let’s continue our example of Brand A. After receiving multiple quotations from various sources, Brand A orders 500 Hoodies from its chosen source – Eurofitness Apparel (a bit of harmless self-promotion!).
To make life easier, you’ll need a cost per unit of your item. Once you have these costs added onto the price of your product – then after all that, you should consider adding your own profit onto the price. Typical margins for clothes and sportswear items can be anywhere from 5% to 45%. It really depends on how well you sell and how intent your buyers are.
| Costs for Brand A’s Product – USA | Price ($) |
|---|---|
| x1 Sample (Shipping and Taxes Included) | 120 |
| x500 Hoodies (@$15 per Hoodie) | 7500 |
| x500 Zip-lock Bags (@$1 per Printed Bag) | 500 |
| Courier Shipping ($6 per KG) | 2,000 |
| Import Tax (@5.6% of $9,000) / Hoodies + Shipping | 560 |
| Total | 10680 |
| Total Cost Per Hoodie | 21.36 |
As you can see in the table above, the main costs that contribute to the price of the hoodie are the production costs and the shipping costs. If Brand A can somehow reduce the production cost (by typically ordering higher quantities) and find a courier with lower rates – then Brand A can save more on its product!
Now let’s look at if you lived in the EU for example:
| Costs for Brand A’s Product – Ireland | Price (€) |
|---|---|
| x1 Sample (Shipping and Taxes Included) | 100 |
| x500 Hoodies (@€15 per Hoodie) | 7500 |
| x500 Zip-lock Bags (@€1 per Printed Bag) | 500 |
| Courier Shipping (€6.50 per KG) | 2,000 |
| Import Tax (@12% of €9,000) / Hoodies + Shipping | 1080 |
| VAT – Value Added Tax (23%) | 2320 |
| Total | 12400 |
| Total Cost Per Hoodie | 24.80 |
The Running Costs of Your Business
Finally, you’ll need to evaluate the running costs of your business. We won’t get into details, but only you’ll really know what you need to run your business.
The running costs include:
- Rent for an Office or Storage
- Marketing and Promotions
- Software Licenses
- Fulfillment Fees (If Selling on Amazon)
- Energy Costs (Electricity & Heating)
Of these running costs, marketing is possibly one of the single, most important. Read up on our article: How to Grow Your Online Sportswear Business to learn just how important it is to market your products.
Let’s go back to our example of Brand A and determine the running costs for its business over a year-long period.
| Running Costs for Brand A – 1 Year Period From 2021 | Price ($) |
|---|---|
| 52 Weeks – PPC Advertising ($50 per week budget) | 2600 |
| Office Space (Including Storage + Electricity) | 25000 |
| Photography + Model Hire | 5000 |
| Miscellaneous | 5000 |
| Total | 38000 |
Keep in mind that this is just an example where you yourself could run your online store! We haven’t even talked about employing specialized people for your work!
In Short
So that’s pretty much all you really need to get started on thinking about the bare costs for your sportswear apparel. To start a successful online clothing brand will take time, patience, energy and commitment. But it’s always worth it when it works!
So in this case, Brand A may face up to at least $50,000 realistically in it’s first year of business. If Brand A sells 500 hoodies per month (which would be exceptional) – only then would the risk work in its favor. Always try to save where you can as cash is the life-blood of your business.
We’re also here to help you so simply reach out to us at info@eurofitnessapparel.eu or contact us through Whatsapp (contact below).
