Pricing is one of the most critical decisions in apparel manufacturing. A selling price that looks profitable at first glance may produce weak results once discounts, commissions, payment fees, and logistics costs are included.
A correct pricing formula must go beyond simple markup and reflect how much revenue the business actually keeps per garment.
Apparel pricing formula
These formulas define the nominal selling price before commercial deductions. However, real profitability depends on what remains after discounts, commissions, payment fees, and freight-out.
Markup vs margin
Markup and margin are often confused, but they are fundamentally different.
- Markup is calculated over cost.
- Margin is calculated over selling price.
Because they use different bases, the same percentage produces different results. For example, a 50% markup does not equal a 50% margin.
Nominal price vs real profitability
The selling price calculated from markup or margin is only the starting point. Real profitability depends on net revenue after deductions.
Discounts, commissions, and payment fees can significantly reduce the revenue actually received per garment.
Profit per garment
Freight-out and other post-production costs must be included to avoid overestimating profitability.
Example: apparel pricing in practice
Suppose a garment has the following inputs:
- Production cost: $10.00
- Target markup: 100%
- Discount: 20%
- Sales commission: 5%
- Payment fees: 5%
- Freight-out: $1.00 per garment
- Order quantity: 500 units
Even with a 100% markup, the real profit is much lower once discount, commission, payment fees, and freight-out are included.
What the calculator returns
- Selling price per garment
- Production cost per garment
- Net revenue per garment
- Profit per garment
- Total profit
- Target price margin
- Realized net margin
- Profit as percentage of cost
Common pricing mistakes
- Using markup instead of margin without understanding the difference
- Ignoring discounts and commissions
- Ignoring payment or platform fees
- Not including freight-out in profitability
- Assuming nominal margin equals realized margin
- Setting price without testing profit per garment
Pricing method used by the calculator
For a detailed explanation of how pricing, net revenue, and margins are calculated, see the pricing strategy method.
Calculate selling price and profit
Use the Pricing / Profit Engine to calculate selling price, net revenue, realized margin, and profit under real commercial conditions.