Entrepreneurship, Costing and Marketing
What this domain tests
This domain tests whether you can turn a garment or home-furnishing idea into a viable enterprise: research the market, cost a product, price it correctly, choose a channel and manage basic records and compliance.
Core rules and concepts
- Business plan: product, customer, competition, operations, finance, risks and a cash-flow forecast. Market research should test demand before bulk purchase.
- Marketing mix (4Ps): product, price, place and promotion. For apparel, fit, fabric, size range and delivery also shape the offer.
- Cost sheet: direct material + direct labour + direct expenses = prime cost; add factory overheads for factory cost; add administration, selling and distribution costs for total cost.
- Fixed vs variable: rent, salaries and insurance are fixed; fabric, thread, buttons and piece-rate labour are variable.
- Contribution: selling price − variable cost. Break-even units = fixed cost ÷ contribution per unit.
- Markup vs margin: markup is on cost; margin is on selling price. They are not interchangeable.
- Compliance: UDYAM registration, GST where applicable, invoices, and records for raw material, production and sales.
Worked example
A kurta sells for ₹300. Variable cost is ₹180 and monthly fixed cost is ₹48,000. Contribution = 300 − 180 = ₹120. Break-even = 48,000 ÷ 120 = 400 units per month. Margin = 120 ÷ 300 = 40% of selling price. Markup on cost = 120 ÷ 180 = 66.7%. If the owner says “I add 40% markup”, the price would be 180 × 1.40 = ₹252, not ₹300.
Traps that cost marks
- Calculating break-even with total cost instead of contribution.
- Confusing markup on cost with margin on selling price.
- Omitting fixed costs from the price and then running out of cash.
- Ignoring GST, packaging, returns or wastage in the cost sheet.