We get several enquiries every week asking how much it will cost to launch their activewear brand. Unfortunately, the question is too open to give an accurate answer as it depends on so many factors. I relate this question to building a house. You wouldn’t go into an architect’s office and ask, “How much for a house”? Size, quality, features, materials and location all play a part in both sportswear and house building and it’s only when you understand every aspect can you start to estimate the costs involved.
Before we go further, if you think you can replicate the ‘Gymshark Story” and launch a sportswear brand for £200, then please stop believing everything you read.
If you know it will take more than “good luck” and “£200”, please continue 😉
The first thing you need to do before you grab for the nearest calculator is work out some basic DNA of your brand and its position. Ask yourself the following questions-:
1. Who is my target customer?
2. Who are my nearest competitors and what are their price points?
3. What would my target customer expect product wise from my brand?
4. What RRP should I charge based on my target customer and competitor?
5. How is my product and brand going to set itself apart from my nearest competitor and will this effect the RRP?
Once you have answered these questions, you should have a clear picture of the brand position and styles you will need to offer.
There are 3 principle costs involved in launching a sportswear brands. These are listed below and each one will be broken down further in this article.
1. Cost of Goods (COG’s).
2. Design, development and production management.
3. Website & Marketing
COG’s is pretty simple to calculate as it’s a formula taken from the target RRP. Once you understand the RRP, the COG’s are simply calculation of this. some factors that will increase or decrease the Cog’s are -:
1. Quantity – The more you order the lower the price. If you don’t hit the normal MOQ’s for the factory, fabrics and trims then a surcharge will be applied to every aspect of the garment. For instance, 3,000yds is the normal MOQ per fabric. If you only want to order say 250pcs per style, then you will only need 3-400yds and therefore a surcharge will be applied. The same goes for trims, zips, thread, labels, badges, packaging and labour.
2. Location of production – Production in the EU costs around 30% more than the Far East. It’s not just the labour that stitches the garment together but also the trims, zips, thread, labels, badges and packaging which will also be produced in the EU and therefore cost more.
3. Sustainability – Saving the planet costs more. Sustainable and recycled fabrics currently cost more than their equivalent synthetic produced fabrics. We estimate this to be around 20-25% more expensive like for like, however some eco fabrics such as Silk, Organic Cotton or Merino cost a lot more than synthetics. Don’t be put off though as the world is waking up to the fact, we cannot continue to produce goods from toxic chemicals and are prepared to pay a premium for these goods.
To give you an example of COG’s, please find below a comparison between a start-up and an established brand.
Let’s pretend the start-up and the established brand want to produce the identical product in the same factory from say China. This is the typical COG for both. The start-up wants to order 250pcs in total and the established brand orders 3,000pcs.
RRP£ Start Up Established brand
Leggings £60 £17.00 £13.00
Sports Bra £30 £ 8.50 £6.50
As you can see, your margin won’t compete with the established brands until you get enough traction to order the normal MOQ and stop paying surcharges. You therefore need to make sure you don’t simply compete head to head with an established brand and offer something unique to make your brand stand out and steal their customers.
Design, Development and Production Management.
In the same way an architect would design your new house and then project manage the build, you also need to do this with your product.
Before you talk to any factory or supplier, you will need accurate CAD designs and a very detailed tech pack. This tech pack must include a BOM, grade, trim, pantones, sourced fabrics and trims, stitch method and construction. Without this, most factories won’t want to work with you, ignore your emails until you eventually get bored chasing them and disappear.
Please bear in mind that whoever designs and creates the designs and tech pack MUST know which factory will produce the goods, their capabilities and skill base and also have a very clear idea of costs for fabrics, trims, labour and components, otherwise you end up with a pretty picture that potentially won’t hit your target price.
We see this happen a lot where a start-up enlists a freelance designer with no experience in production and they end up with a design that isn’t achievable for the target audience. Again, relate this to an architect. You wouldn’t ask an architect to design a house if they had no idea about the cost of foundations, windows, bricks, heating, plumbing, electrics, tiles, bathrooms etc etc. Otherwise you end up with a great looking house that you can’t afford to build.
If you are not a trained sportswear designer and understand development and production, then you will need to outsource this or employ someone with this experience. This is what we offer and if you would like to receive a quote, please get in touch.
Website and Marketing
This is slightly easier to calculate; however, it still need consideration before you proceed with the build.
Work out what your website needs. Start by creating a wireframe of the website to follow the customers journey and this should determine how many pages the website will need.
We recommend skinning a plug and play site like Shopify or WordPress. These are easy to update when you run out of a colour or size or upload new products and look great too. You only really need to create a bespoke website if you need to offer a service that is unique to the customers online journey and this will save thousands.
Marketing is again a simple calculation based on the RRP of your product.
We suggest all start-ups spend around 25% of their predicted turnover on marketing their brand in the early years. To calculate this, please see the example below.
Style RRP Quantity Turnover
1 90 250 £22,500
2 75 250 £18,750
3 50 250 £12,500
4 35 250 £ 8,750
5 30 250 £. 7,500
6 20 250 £. 5,000
25% of their turnover would be £18,750
Note that you won’t need all of this £18,750 from day one of the launch. If you predict you will sell the first range in say 8 months, then you would need to cover the first month only which is around £2,343.00 (£18,750 divided by 8). After the first month, you should start to see your sales come in and you can use these funds to drive the marketing thereafter.
When it comes to marketing and website building, make sure you get these completed by someone who really understands your brand and target consumers. Don’t go with the cheapest option and look for someone with successful experience within your market. We provide website and marketing support to our start-ups for this reason as we see many brands use an agency that works on corn flakes one day and Lego bricks the next. Read hear how we can help.
Hopefully this gives you a little more background to the costs of starting a sportswear brand and if you still think you can stretch that £200 to cover all of this, then we wish you the best of luck.
It’s not a cheap exercise, launching a brand, however we think the risks of failure and exposure is pretty low. Providing the product is good quality, answers the brief and is commercial, then you should get your money back on the COG’s by dropping your price and going into a 65% sale. You may learn from any mistakes and come back for a second attempt or call it a day, but you shouldn’t lose your shirt.
We are mentoring a lot of our start up clients along the way to make sure they are as prepared as possible throughout the journey of developing their product and launching their brand. We understand that their success is our success as we retain their growing business for years to come.
Contact us today if you would like support in launching your start-up brand today.