Build the true unit cost
Your unit cost is everything one sold item carries, not just what the printer invoices. Pricing from the blank and the print alone is an expensive habit, because the other lines are real and they come out of every sale. Build it line by line:
| Cost line | What goes in it | Where your number comes from |
|---|---|---|
| Blank | The garment at your quantity, per size, since extended sizes often cost more | Your printer's quote or supplier price list |
| Decoration | Printing or embroidery per piece, per location | Your quote |
| Setup | Screens, digitizing, test prints, sample fees, divided by the units in the run | Your quote, divided by quantity |
| Finishing | Neck labels, hang tags, folding, polybags, size stickers | Your quote or supplier |
| Inbound freight | Getting finished stock to you or your warehouse, divided by units | The freight invoice |
| Packaging | Mailer or box, tissue, seal, insert card, per order | Supplier invoices divided by orders |
| Fulfillment | Receiving, storage, pick and pack, per order | Your fulfiller's rate card, or your own time |
| Payment processing | A rate on each sale plus a fixed fee per transaction | Your payment provider's published pricing |
| Platform and apps | Store plan, apps and any transaction fees, spread over expected sales | Monthly bills divided by monthly units |
| Shipping subsidy | The gap between the label cost and what the customer pays for shipping | Your shipping reports |
| Losses allowance | Misprints, samples, giveaways, returns and stock that never sells | Your history, or a cautious estimate |
Two points make this table more accurate. First, per-order costs (packaging, pick and pack, shipping subsidy) are shared by every item in an order, so a customer who buys two items costs less per unit than one who buys one. Second, setup is a fixed cost: spread over a bigger run it shrinks per unit, which is why the quantity you order changes your price floor. What drives screen printing cost and stitch count and embroidery pricing explain how those quotes are structured, and merch fulfillment options lists the fees to ask a fulfiller about.
Margin and markup are different numbers
Both start with gross profit per unit: price minus unit cost. They differ in what they divide by.
- Margin = gross profit ÷ price. It tells you how much of each sale you keep.
- Markup = gross profit ÷ unit cost. It tells you how much you added on top of cost.
- Price for a target margin = unit cost ÷ (1 − margin).
- Price for a target markup = unit cost × (1 + markup).
The classic mistake is setting a price with a markup while thinking in margin. If you want to keep half of every sale but add half the cost on top instead, a cost of 10 becomes a price of 15 and you keep 5, which is a third of each sale rather than half. Decide which number you mean, write it down, and use the matching formula.
Use the margin calculator
Enter your own cost lines and a price below. The calculator shows what each unit really costs you, what you keep, and the margin and markup on it. Then change one thing at a time: a bigger run to spread setup further, a different blank, a shipping subsidy, a two-item order. Watching the margin move is the quickest way to learn which costs matter most for your merch.
Margin calculator
Use your own numbers, per unit, in your currency. Nothing is filled in for you and nothing leaves this page.
Worked example with round numbers
A brand prints 100 tees and expects each order to contain one tee. Its cost lines per unit:
| Cost line | Example figure |
|---|---|
| Blank | 5.00 |
| Decoration, two-color front print | 3.00 |
| Setup: 100 for the run ÷ 100 tees | 1.00 |
| Finishing: neck label, bag, size sticker | 1.00 |
| Inbound freight: 50 ÷ 100 tees | 0.50 |
| Packaging: mailer, tissue, card | 1.00 |
| Fulfillment per order | 3.00 |
| Payment fees on a sale of 30 | 1.20 |
| Shipping subsidy | 2.00 |
| Losses allowance | 2.30 |
| Unit cost | 20.00 |
At a price of 30, gross profit is 10. The margin is 10 ÷ 30, a third of each sale; the markup is 10 ÷ 20, or one half. Someone who priced from blank and print alone (8) would believe they keep well over two-thirds of every sale, when they actually keep a third.
To reach a margin of one half, the price would be 20 ÷ (1 − 0.5) = 40. Payment fees scale with the price, so they rise a little at 40 and the margin lands just under half; recheck in the calculator rather than trusting a single pass. The alternative is to lower the cost: a run of 200 halves the setup and freight per unit, and a customer who buys two tees shares the packaging, fulfillment and shipping lines between them.
Wholesale and retail pricing
Retail is the price the end customer pays. Wholesale is the price a store pays you, and the store then adds its own markup to reach retail. Retail buyers sometimes talk about "keystone", which means a retail price double the wholesale price; ask each store what it actually needs rather than assuming.
Your wholesale unit cost is different from your direct-to-customer unit cost. Remove per-order costs that only apply when you ship to individuals (packaging, pick and pack, payment fees on single orders, shipping subsidy), then add costs the store's terms create, such as hang tags, barcode stickers, carton packing and freight to the store.
That thin result is a common discovery, and it is useful early. The options are a lower production cost (bigger runs, fewer colors, a different blank), a higher retail price, or skipping wholesale for that product. Keep your own web price at the retail price you ask stores to charge, so you do not undercut the shops that stock you. Consignment, where the store pays only for what sells, is another model: it lowers the barrier for the store and leaves the stock risk with you.
Prices for shows, events and bundles
Merch tables have their own costs and habits. Round prices make cash sales and change quicker. Decide whether table prices include sales tax, and price accordingly. Some venues charge a fee or take a share of merch sales; ask before the show and treat it as a cost line for that night. Card readers charge their own fees.
Bundles raise the value of each sale: a tee and a poster, two tees, a hoodie and a cap. Because per-order costs are shared, a bundle can carry a small discount and still earn more per order than the items sold separately. Run it through the calculator before printing the sign.
Discounts, free shipping and extended sizes
A discount comes straight out of gross profit, not out of the price in proportion.
Use discounts on purpose: a reward for your list, clearing a size you overbought, a bundle. Discounting every release teaches buyers to wait.
Free shipping moves the label cost into your cost lines. Work out your average label cost from your shipping zones and order mix, then decide whether the price carries it all or a free-shipping threshold covers part of it.
Extended sizes usually cost more as blanks. Either price them higher or keep one price and accept the thinner margin; check both in the calculator, and plan quantities with how to plan a size run.
Mistakes that quietly erase margin
- Pricing from blank and print only, ignoring the other lines in the table above
- Using a quantity break you did not actually order
- Forgetting that a single-item order carries the full packaging, fulfillment and shipping cost on its own
- Leaving out payment fees, app subscriptions and platform transaction fees
- Spreading costs over the units produced instead of the units you expect to sell
- Matching a competitor's price without knowing their costs or their volume
- Keeping last year's price after blank, freight or postage costs have moved
Re-run the numbers on every reorder
A price is only right for the costs it was built on. Blank prices change, a reorder may be a different quantity, setup may be lower if screens or digitized files are kept (ask), freight and postage move, and your platform's fees change. Put fresh quotes into the calculator before every reorder and before every new release. If the margin has slipped, decide openly whether to raise the price, change the product or accept less, rather than discovering it at the end of the year.
For the full path from idea to first release, start with how to start a clothing brand.
Useful for: clothing brands, bands, creators, breweries.