Entrepreneurship, Costing and Marketing of Handloom Products
Entrepreneurship, Costing and Marketing of Handloom Products
The exam tests a full cost sheet, a selling price, break-even reasoning and realistic marketing channels for handloom goods.
Cost sheet
- Direct material: yarn weight plus wastage (usually 5–10%), dyeing and sizing charges.
- Direct labour: the weaver's wage - count it even when the owner weaves.
- Overheads: rent, power, depreciation on the loom, interest on working capital, insurance.
- Add packaging and selling costs, then the profit margin.
- Break-even quantity = fixed cost ÷ (selling price − variable cost per unit).
Marketing
Differentiate through GI status, natural dyes, Silk Mark certification and documented weaver stories; sell through haats, exhibitions, cooperative societies, state handloom outlets, e-commerce and social media; check capacity before accepting a large order; keep records of yarn lots, costs and orders; explore schemes such as the National Handloom Development Programme, weavers' welfare schemes, Mudra and PMEGP for finance.
Worked example
An eri mekhela chador uses 400 g of yarn at ₹1,200/kg = ₹480; dyeing ₹60; weaver's wage 3 days × ₹400 = ₹1,200. Subtotal ₹1,740; overheads at 15% = ₹261; total cost ₹2,001. At a 20% margin on cost, price = 2,001 × 1.2 = ₹2,401, rounded to ₹2,450, quoted together with yarn weight, size and washing instructions.
Marks-losing traps
- Leaving the weaver's own labour out of the cost, so the price looks profitable when it is not.
- Applying a margin to the selling price and calling it a markup on cost.
- Accepting a large order without checking loom capacity or delivery time.
- Ignoring transport, GST treatment and packaging in the final quotation.