Entrepreneurship, Costing and Marketing in Apparel
What the domain covers
This domain tests enterprise planning, cost sheets, pricing, break-even, marketing mix, target customers, channels, and branding for apparel products. Expect numerical pricing and clear cost reasoning.
Core rules and concepts
- Cost sheet components: fabric, trims, labour, overhead, sampling, packaging, freight, and wastage.
- Fixed costs do not vary with output; variable costs rise with each unit.
- Markup is usually calculated on cost; margin is calculated on selling price. They are not interchangeable.
- Break-even quantity = fixed cost ÷ contribution per unit, where contribution = selling price − variable cost per unit.
- Marketing mix: product, price, place, promotion. A target customer and channel must match the product.
Worked example
A shirt has material ₹250, labour ₹80, and overhead ₹40, so total cost is ₹370. A 20% markup on cost gives ₹370 × 1.20 = ₹444, with ₹74 profit. If instead the required margin is 20% on selling price, price = ₹370 ÷ 0.80 = ₹462.50. Reasoning: the same 20% figure produces different prices because the base differs.
Traps that cost marks
- Mixing markup on cost with margin on selling price.
- Omitting wastage, sampling, packaging, or freight.
- Pricing below total cost and calling the difference profit.
- Choosing promotion without defining the target customer.
Exam focus
Build the cost sheet first, then price, then test break-even and market fit.