Apparel Pricing: Start From Landed Cost, Not Markup

Short answer: price apparel by starting from your landed cost (unit cost plus freight and duty), applying a mark-up to reach wholesale and retail prices, and then checking the result against what the market will actually pay. A common formula is landed cost × 2 to 2.5 for wholesale, then wholesale × 2 to 2.5 for retail — but the market price, not the formula, is the final test.

Pricing is where a good product becomes a viable business — or does not. This guide shows the math and the judgement.

Step 1: Calculate Landed Cost

Everything the garment costs before it reaches a customer:

A $4 FOB tee can easily be $5.50–$6 landed once freight and duty are added. Price from landed cost, not FOB, or your margin quietly disappears.

Step 2: Understand the Two Mark-ups

In wholesale, two mark-ups stack:

This is why a garment that lands at $10 might wholesale at $22 and retail at $55. The "keystone" 2× mark-up at retail is the traditional minimum.

Worked Example

Step 3: DTC Pricing Is Different

Direct-to-consumer brands skip the retailer mark-up and keep more:

A DTC price often sits between the wholesale and retail prices: high enough to fund ads and returns, low enough to compete with retailers selling the same style.

Step 4: Check the Market

The formula gives a floor, not a ceiling. The market decides the real price:

If the market price is below your floor, the problem is cost or positioning, not pricing. Rework the product, not the maths.

Step 5: Build in Your Costs

Retail and wholesale prices must cover more than the garment:

A 60% gross margin can become a thin net margin once these are counted. Price for net profit, not just gross mark-up.

Pricing Strategies

Most successful apparel brands combine value-based thinking with a cost-plus floor.

Common Pricing Mistakes

Conclusion

Apparel pricing starts from landed cost, applies wholesale and retail mark-ups, and is finished by the market. Get the landed cost right, understand how the two mark-ups stack, and check the result against what customers will actually pay. The formula sets your floor; value, brand and positioning set your price.

Key Takeaways for Buyers

About HONGTEX

We knit, dye, cut and finish under one roof, which is why our sampling does not queue behind an outside dye house. Development samples come back in 7-10 days and the fee is credited against bulk. Send us the spec and we will tell you honestly whether a style needs full development or can go straight to a pre-production sample.