Decide the product and the price you can pay
One product, one market, and the most you can pay the factory, worked backwards from your selling price.
NUMBER: target factory priceDEFINITION: FOB
Start from the shelf, not the factory. Take the price your customer will pay, subtract your margin, your shipping, your duty and your returns, and what is left is the most the factory can cost you. As a rule of thumb from people who buy for a living, you can usually pay the factory about a quarter to a third of your selling price. That is a starting shape, not our quotation: the worked example at step 7 shows where the rest goes.
FOB, the term most quotes use, means the price puts the finished goods on the ship in the factory’s country; everything after the ship’s rail, the freight, the duty and the delivery, is yours and comes out of your share.
For a reality check on your category, the import prices by product show what whole shipments of your product actually declared at the US border, per piece or per kilogram. It is an average of everything inside a customs line, not a price list, and it is the closest honest thing to one that exists free.
Check it outside, at the source:
- UN Comtrade (opens in a new tab) the HS6 values and quantities the unit values are computed from, so you can pull your own line instead of a category average
- OTEXA, US textile and apparel imports (opens in a new tab) the US Commerce dashboards by country and category with Excel export, a clean cross check on your own line
- US Harmonized Tariff Schedule (opens in a new tab) confirms which HS line your garment actually falls in before you read anything into its unit value
- OEKO-TEX label check (opens in a new tab) type in the certificate number on the quotation and see whether it is genuine and still current
- Textile Exchange, find a certified company (opens in a new tab) the same check for a recycled content claim, which is the one most often overstated in polyester and blends
Tools for this step
- Garment costing template Excel
Cost a garment from fabric consumption and minutes, with two routes to the making charge so you can test the CM a factory quoted against the work in the garment.
- Unit values by product
Find your own product family rather than the category average, and see what is actually being paid per piece into that market.
Every tool for this guide, grouped by what you are trying to do, is on the tools page.