Fashion Unraveled - Second Edition - How to Start and Manage Your Own Fashion (or Craft) Design Business

Take your average direct and indirect fixed cost for one month (which we will say is $2000) and divide it by the GPM (turn the percentage into a decimal point). Example: $2000 Fixed Cost / .5 Gross Profit Margin (in decimal form) = $4,000 Break Even Point

calculate this once you cost your garment and figure out your wholesale pricing. Based on my pricing method, this will vary for each item. To be precise, you can calculate the average of the projected quantities, but that becomes very complicated. I would recommend determining your GPM for each product and use the lowest percentage of the batch to

What is the break even point? It is the point where your sales match your expenses. “Breaking even” does not mean you are making a profit, only that you’re not losing any money. To figure your break even point, calculate how much it costs for you to be in business each month (your direct and indirect fixed costs).

Calculating your Break Even Point Instead of spending hours going back and forth with how much you need to sell in order to break even, let’s create a mathematical formula to figure it out for us. We need to first calculate our Gross Profit Margin (GPM). Your GPM is the percentage of markup from the Cost of Goods to wholesale. You can only

This statement is named the balance sheet because your Current assets equal your Liabilities and Capital.

Equity is the value of your business. It can be calculated by the following equation: Equity = Total Assets – Total Liabilities – Net Profits

Don’t forget your salary (I can’t stress this enough). Take your total annual indirect fixed expenses and divide them by the quantity minus damages. (_____ Indirect Monthly Cost x 12 Months) / (____ Quantity - _____ Damages) If you plan to produce more than one

To determine the amount you need to factor into your wholesale price, divide your total direct fixed cost by the quantity planned for production minus the quantity reserved for damages. _____ Direct Costs / (_____ Quantity - _____ Damages)

The liabilities detail the loan balance, credit cards and accounts payable (money billed to you but not paid). Capital (also referred to as equity) is basically what you have invested as owners and the net profits that you leave in the business each