Pricing a First Collection for the UK Market
By The Velocity Wear Team
Pricing is where new brands are most likely to make an irreversible mistake, because a price is very hard to raise once it is published and extremely easy to set too low out of nervousness. Working it from the bottom up takes an hour and lasts for years.
Start with true cost per unit
Not the quoted unit price. Everything: the garment with decoration, labels and packaging, freight, duty, and the per-shipment costs divided by the number of sellable units in that shipment. Sellable is doing work there — anything damaged or in a size you cannot move is cost, not stock.
Then add the costs of selling one: payment processing, outbound postage if you absorb it, and an allowance for returns, which in apparel is not a rounding error. A brand ignoring returns in its unit economics is over-estimating its margin on every sale.
Then work up, not across
The instinct is to find a competitor, price slightly under, and reverse into a margin. It produces a price that reflects somebody else's cost base, which you know nothing about, and it starts you in a race you cannot win with lower volumes than they have.
Work up instead: true cost, then the margin you need, then check the resulting number against the market. If it is out of line, the answer is usually a product or cost change rather than a margin cut.
Leave room for the three things that will eat it
- 1VAT, if you are or will be registered. A price set before registration that has to absorb VAT afterwards is a 20% margin cut arriving in one day. Model it in advance even if you are below the threshold.
- 2Discounting. If you will ever run a sale — and you will — the full price has to survive it. A price with no headroom means every promotion is loss-making.
- 3Wholesale. If you ever want stockists, your wholesale price is roughly half the retail, and your cost of goods has to sit comfortably below that. Brands that price direct-only and later try to add wholesale frequently find they cannot.
Where the volume tiers come in
Your cost per unit falls as quantity rises — our tiers run from base pricing at 20 to 49 pieces through to the largest volumes. That means your achievable price point improves with scale, which is a reason to plan pricing against the quantity you will realistically reach rather than the one you are starting at.
What it is not is a reason to price today against a cost you have not achieved yet. Price on your actual current cost, and let improving costs improve margin rather than justifying a launch price you cannot sustain.
Price points and psychology
UK apparel has fairly well-established mental brackets, and a price sitting just above one performs noticeably worse than the same product just below it. This is not a reason to shave margin to hit a round number, but it is a reason to know where the brackets are for your category before setting a price two pounds above one.
And display prices inclusive of VAT for UK consumers. It is expected, and a price that grows at checkout is a well-documented way to lose the sale.
Do not compete on being cheapest
A small brand cannot win on price against businesses buying at volumes it will not reach for years. What it can win on is specificity — a fabric weight competitors do not publish, measurements for every size, a design nobody else has, and the ability to actually answer an email.
Price for the margin that lets you keep doing that. A brand that survives at 60% margin is worth more than one that dies at 25%, and customers who bought on price alone were never going to be the ones who came back.
