This is a great opportunity to test your basic mark-up and and mark-down knowledge. While this is a very simplistic way of understanding this concept–there are a lot of complex parts that go into each–it’s a great way to start thinking about the difference between cost and price. Refer to the “Making a Profit” lesson in The Fashion Basics.
Complete the following, and then respond to your classmates about their work!
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If you have a beautiful knit sweater that costs $30 USD Landed Duty Paid, what would be the wholesale price and retail price using a mark-up of x2? What would be the gross margin for the brand (wholesale to LDP) versus the gross margin for a retailer (retail to wholesale)? What if the brand sold the sweater on their website, would be the gross margin? And what operational costs might a brand or retailer need to be aware of in determining their net margin?
#2 Determining Cost
Now, choose a luxury item that you’ve been wanting for a long time (it could be a Gucci bag or a new pair of Balenciaga sneakers). Using 4x, what would likely be the wholesale price? and what would likely be the LDP?