Entrepreneurship, Costing and Marketing in Apparel
This domain tests business planning, cost build-up, pricing, break-even and basic marketing for a small apparel unit.
Business basics
Survey the market (customer, price, competition), choose a product and niche, and prepare a simple plan covering product, process, capacity, cost, price, profit and risk. Register under UDYAM/MSME and comply with GST rules as applicable; keep purchase, production and sales records.
Costing
Prime cost = direct material + direct labour + direct expenses. Works cost adds factory overheads; total cost adds admin, selling and finance costs. Add profit margin to set selling price. Include wastage (often 3–10% on fabric), trims, packaging, transport and rejections. Break-even = fixed cost ÷ (selling price − variable cost per unit).
Worked example
A kurti: fabric 2.2 m at ₹150 = ₹330; trims and thread ₹20; cutting and stitching ₹90; overhead ₹40; packaging ₹10 → total ₹490. With a 20% margin, price = ₹490 × 1.20 = ₹588, rounded to ₹599. If a buyer offers ₹520, the margin falls to about 6% - decide whether volume justifies it.
Traps
- Forgetting overheads and the owner’s own time.
- Pricing only from competitors’ prices.
- Ignoring wastage and rejections.
- Keeping no written records, so costs cannot be traced.