Entrepreneurship, Costing and Marketing in Textile Design
What this domain tests
Entrepreneurship questions test costing arithmetic, pricing logic and a realistic marketing mix for a textile design venture. Expect a cost sheet or a break-even calculation.
Core rules
- Unit cost = direct material + direct labour + direct expenses + allocated overhead. Add wastage, packaging and payment gateway or GST costs where applicable.
- Pricing: cost-plus (markup on cost), competitive and value-based. Know the difference between markup on cost and margin on selling price.
- Break-even quantity = fixed costs ÷ (selling price per unit − variable cost per unit).
- Marketing mix: product, price, place and promotion. For textiles, also consider people, process and physical evidence.
- Channels: direct-to-consumer, exhibitions, craft melas, online marketplaces, boutiques and export buyers. GI tags, the Handloom Mark and ODOP can support positioning.
Worked example
A cushion cover uses 1.2 m fabric at ₹250/m = ₹300; embroidery thread and mirror work ₹90; tailor labour ₹180; overhead allocation ₹60; packaging ₹20. Total cost = ₹650. A 30% markup on cost gives ₹845. If a retailer takes a 40% margin on selling price, the retail price must be ₹845 ÷ (1 − 0.40) = ₹1,408. Reasoning: markup on cost and margin on selling price are not the same; confusing them undercuts the maker. Fixed costs such as studio rent must be recovered across units.
Traps
Forgetting wastage and packaging; paying yourself nothing for design time; applying margin to cost instead of selling price; ignoring returns and marketplace commissions; pricing below cost to get exposure without a break-even plan.