How to Price Clothes in Your Shop for a Healthy Margin

Many shop owners price by feel: "the shop next door sells this for ₹699, so I will too." That works until rent, salaries, discounts and leftover stock eat the profit you thought you had. A shop can be busy every day and still struggle at the end of the month because the prices were never worked out properly.

Good pricing is not complicated. You need three numbers: what a piece really costs you, what your customers will pay, and how much you lose to discounts and unsold stock. This guide walks you through each one with simple sums you can do on a calculator or on paper.

The wholesale price per piece is only the starting point. Your landed cost is everything you spend to get that piece onto your shelf. If you leave out freight or travel, every price you set will look more profitable than it really is.

Add up the whole order, then divide by the number of pieces. For example, 30 kurtis at ₹400 each is ₹12,000. If freight is ₹600 and packing, hangers and tags come to ₹300, your total is ₹12,900, so the landed cost is ₹430 per piece, not ₹400.

On GST: if you are registered and claim input tax credit, the GST you pay on purchases usually comes back to you, so it is not part of your cost. If you are not registered or cannot claim it, the GST you pay is part of your landed cost. Your CA can confirm which applies to your shop.

These two words get mixed up all the time, and the mix-up costs money. Markup is how much you add on top of your cost, as a percentage of the cost. Margin is how much of the selling price is profit, as a percentage of the selling price.

Take a piece with a landed cost of ₹430 that you sell at ₹860. You added ₹430, so your markup is 100%. But your margin is ₹430 out of ₹860, which is 50%. Same piece, same profit, two very different-looking numbers.

Why it matters: if someone tells you "keep a 40% margin" and you add 40% to your cost instead, you end up with a margin of only about 29%. Always be clear which one you are talking about. The free margin calculator on the GarmentBazaar homepage shows both side by side, so you can check before you order.

Your margin has to pay for rent, electricity, staff, your own time, and the stock that never sells. A useful way to set a target is to look at last year: add up your monthly running costs and compare them to how much you sold. That tells you what share of every sale goes to just keeping the shop open. Your margin needs to be comfortably above that.

There is no single correct number for every shop. Fast-moving basics like innerwear and plain tees often sell on a thinner margin because they move quickly and rarely need discounts. Fashion and occasion pieces such as party wear, festive kurtis and lehengas usually need a higher margin, because some of them will end up on sale or stay on the rack.

Write down a target for each type of product you carry. It turns pricing from a guess into a quick check.

Once the sums give you a price, check it against reality. Will your customers pay it? What do similar shops nearby charge for something comparable? Is there a price point your customers are used to, such as ₹499, ₹799 or ₹999?

If the price your sums give is far above what your customers will pay, the problem is usually the buying, not the pricing. Look for a similar style at a lower wholesale price, or a brand with a smaller MOQ so you are not stuck with extra pieces. If you are working to a tight shelf price, filtering wholesale collections by price per piece helps you start from styles that fit.

Rounding to familiar price points like ₹599 or ₹999 is common and customers recognise them. Just make sure the rounded price still meets your margin target.

Very few shops sell every piece at full price. Some pieces go in the end-of-season sale, some go at a special price to a regular customer, and a few never sell at all. If you price assuming 100% sell-through at full price, your real profit will always fall short.

A simple habit: estimate what share of a lot usually sells at full price, what share goes on discount, and what share is left over. Then check that the whole lot still makes money. For example, if 20 of 30 pieces sell at ₹860, 7 sell at ₹600 in the sale and 3 are left over, your revenue is ₹21,400 against a cost of ₹12,900. That is still a healthy profit, but much less than the ₹25,800 you would get if everything sold at full price.

Buying smaller quantities more often is one of the best ways to protect your margin. Lower MOQs mean fewer leftover pieces and fewer forced discounts.

Before you place any wholesale order, run this five-minute check. It stops most pricing mistakes before they happen, because you decide the shelf price before you spend the money, not after the stock arrives.

Do it for every new style for a month and it becomes second nature. Kuch hi dinon mein aapko andaaza ho jayega which styles give you the best margin.