- Cost of Services & Goods (COSG) = Total costs for all materials & labor to make & ship the item. This does not include upfront product development costs, rent, staff, admin, taxes, etc.
- Wholesale Price = COSG X 3 (not percent). This is what a retailer like Nordstroms pays for the item.
- Retail Price = Wholesale X 3 (again not percent). This is what you pay.
I do not follow this formula, and I’ll write about why next week. (I tried to squeeze it in this time but it was a bit much.) Suffice it to say, you can keep this pricing structure in mind when shopping for clothes to gauge what you’re really paying and receiving.