How to Estimate of Factory Cost for a Garment

Main purpose of garments manufacturer is to make a profit. So, it is very essential to estimate product cost for a successful business. Estimation of factory cost includes all the activities like purchase of fabrics and accessories, processing and finishing of fabrics, cutting, sewing, packing of garments, transport, shipping, overheads, banking charges, commissions, insurance and among others. Costing of garment is generally estimated by the merchandiser who is responsible for that’s specific garment item. So, merchandiser must have to know about all these process thoroughly about their costs, procedures, advantages & risk factors.

estimate garment factory cost
Fig: Estimate garment factory cost

The estimation of factory cost for a garment involves the following steps:

  1. Calculation of garment weight (for any one size)
  2. Calculation of fabric cost per kg.
  3. Calculation of fabric cost per garment.
  4. Garment costing process

1. Calculation of garment weight (for any one size):

The garment weight for any one size-normally the middle size of the all sizes in an order inquiry is calculated. For example, if there are 3 sizes S, M, L then the M size weight is taken for calculation. The garment weight can be calculated with formula.

2. Calculation of fabric cost per kg:

If the fabric for the garment order is purchased directly from the market which may be readily available, then the price per kg of the fabric is taken as fabric cost per kg. If the fabric for the garment order is made specifically, then the fabric cost per kg is calculated as follows:

Fabric cost per kg:

ParticularsAmount (Tk)
Yarn price / kgxxx
Knitting rate / kgxxx
Dyeing rate / kgxxx
Printing rate / kgxxx
Compacting rate / kgxxx
Heat setting rate / kg (for synthetic fabric)xxx
Process loss (8-10%)xxx (+)
Fabric cost per kgxxx

3. Calculation of fabric cost per garment:

Fabric cost per garment is obtained by multiplying garment weight and fabric cost per kg.

Fabric cost per garment = Garment weight x Fabric cost per kg

4. Garment costing process:

The cost of the garment is calculated as follows:

Fabric cost per garmentxxxBDT
Cost of Making (CMT) costxxxBDT
Special operations (embroidery, garment printing etc)xxxBDT
AccessoriesAmount (BDT)xxxBDT
Buttons, zippers, twill tapexxxxxxBDT
Main labelxxx
Wash care labelxxx
Poly bag/Pouchxxx
Hang  tagxxx
Insert cardxxx
Barcode stickerxxx
Hologram stickerxxx
FOB + Packing (Re. 1 per 30 gms of garment)xxxBDT
Sub totalxxxBDT
Overhead (10%)      (+)xxxBDT
Sub totalxxxBDT
Rejection 3%          (+)xxxBDT
Sub totalxxxBDT
Profit%                     (+)xxxBDT
Sub totalxxxBDT
Agent’s commissionxxxBDT
Garment price (FOB) in BDTxxxBDT
Garment price (FOB) in US$Price in BDT/1 US$ rate
Garment price (FOB) in EuroPrice in BDT/1 Euro rate

Though costing is a critical and most important task in apparel business. I have tried to explain above process with very simple way. After reading this post I think you understand how to estimate factory cost for garments. If you have any query about this article then please let me know, I will try to give answer.

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