Set the cost basis before choosing a margin
Start with a quote for the SKU your program needs: P280 is premium midweight at 8.8 oz, while the 15001 is heavyweight at 12 oz. Record blank, decoration, packaging and fulfillment costs separately before choosing a margin.
When your per-hoodie costs are fixed dollar amounts, divide them by one minus your target margin to get a price that delivers that margin. For gross margin, include only cost of goods sold. Account for marketing and other operating expenses separately when calculating profit.
The Core Pricing Formula
Gross margin is revenue minus cost of goods sold, divided by revenue. Use the same cost basis throughout your calculation and label it clearly.
With fixed costs per hoodie of C and a target margin of m, price equals C divided by (1 minus m).
A hoodie sold for $40 with $20 in cost of goods sold has a 50% gross margin. If you also allow for expenses that total r as a percentage of sales, price equals C divided by (1 minus m minus r). The denominator must be greater than zero. In the budget example below, fixed costs C are $15 and percentage-based expenses r total 27%. To leave a 35.5% margin after those costs, divide $15 by (1 minus 0.355 minus 0.27) for a $40 price.
Blank Cost
The initial investment for the undecorated garment. Cost varies by material quality, fabric weight, construction, and supplier. When evaluating blanks, look at GSM/oz, yarn quality, shrinkage specs, stitch quality, and fit consistency: blend ratio alone does not determine quality.
Decoration Cost
Whether it is screen printing, embroidery, DTG, or another method, decoration cost includes labor, materials, setup fees, film costs, and any additional processes like relabeling.
Packaging Cost
Poly bags, hang tags, size stickers, custom tissue paper, mailers, and branded elements. These add up at scale.
Desired Margin
A gross-margin target uses cost of goods sold. A target for what remains after marketing and other expenses must include those costs in the model. Any expenses you leave out still reduce your final profit.
Understanding Typical Profit Margins
Industry benchmarks for hoodie pricing:
- DTC Retail Margins: 50 to 70%. When selling directly to consumers through your own channels, higher margins account for marketing, customer service, and fulfillment. At a 50% gross margin, the selling price is twice the cost of goods sold. Deduct marketing and other operating expenses separately to see what profit remains.
- Wholesale Margins: 20 to 40%. When selling to retailers, your wholesale price needs to leave room for the retailer’s own markup (usually 2.0x to 2.5x from wholesale to retail). This is the brand’s gross margin on wholesale revenue.
Hidden Costs That Erode Your Margins
Several costs beyond direct production can erode margins if not factored in.
Returns
DTC returns include lost sales, two-way shipping, processing, inspection, and potential devaluation. Budget a percentage of expected DTC revenue for returns. Note that wholesale/custom-program apparel is often final sale, so this cost structure differs by channel.
Shipping and Fulfillment
Warehousing, picking and packing, shipping materials, and freight charges. If you offer free shipping, that cost must be absorbed into your product price.
Marketing Costs
Customer acquisition costs add up. Budget for paid ads, influencer collaborations, content creation, and email marketing. Marketing is a channel-specific operating expense: it behaves differently from a manufacturing cost and should be modeled separately for DTC vs. wholesale scenarios.
Pricing Examples: From Blank to Retail
These are illustrative DTC scenarios. Actual costs vary by decoration method, order volume, and sales channel. The label “Total Landed Cost” below is a fully loaded per-unit cost estimate, not a strict landed-cost calculation (which would also include inbound freight, customs duties, and warehousing intake).
Budget-Friendly Hoodie ($35 to $45 Retail)
| Blank cost (standard hoodie, bulk) | $10.00 |
| Decoration (1-color screen print) | $4.00 |
| Packaging (poly bag, basic hang tag) | $1.00 |
| Total Production Cost | $15.00 |
| Marketing allocation (20% of $40 retail) | $8.00 |
| Returns/shipping buffer (7%) | $2.80 |
| Fully Loaded Per-Unit Cost | $25.80 |
| Retail Price | $40.00 |
| Amount remaining after modeled costs | $14.20 (35.5% margin after modeled costs) |
Mid-Range Hoodie ($65 to $85 Retail)
| Blank cost (premium hoodie, bulk) | $18.00 |
| Decoration (2-color screen print + custom neck label) | $8.00 |
| Packaging (branded poly bag, woven hang tag) | $2.00 |
| Total Production Cost | $28.00 |
| Marketing allocation (18% of $75 retail) | $13.50 |
| Returns/shipping buffer (8%) | $6.00 |
| Fully Loaded Per-Unit Cost | $47.50 |
| Retail Price | $75.00 |
| Amount remaining after modeled costs | $27.50 (36.7% margin after modeled costs) |
Premium Hoodie ($120 to $160 Retail)
| Blank cost (heavyweight premium hoodie, bulk) | $30.00 |
| Decoration (embroidery + specialty print) | $15.00 |
| Packaging (custom box, tissue, hang tag, sticker) | $5.00 |
| Total Production Cost | $50.00 |
| Marketing allocation (22% of $140 retail) | $30.80 |
| Returns/shipping buffer (10%) | $14.00 |
| Fully Loaded Per-Unit Cost | $94.80 |
| Retail Price | $140.00 |
| Amount remaining after modeled costs | $45.20 (32.3% margin after modeled costs) |
When to Raise Prices vs. When to Cut Costs
When to Raise Prices
- Strong brand equity: Loyal customers accept higher prices based on perceived value.
- Unique differentiation: Custom features, sustainable materials, or unique designs justify premium pricing.
- Rising input costs: If blank costs, decoration expenses, or shipping rates increase, adjust retail prices to maintain margins.
- Consistent sell-throughs: If items sell out quickly, your price may be too low relative to demand.
When to Cut Costs
- Optimize blank sourcing: Negotiate volume discounts or evaluate alternative suppliers for better bulk pricing.
- Simplify decoration: Reducing print colors or choosing more cost-effective decoration methods lowers per-unit costs.
- Streamline packaging: Assess whether premium packaging is driving conversions, if not, simplify.
- Improve marketing efficiency: Focus ad spend on channels with the best ROI.
- Reduce returns: Better size guides, accurate product photos, and quality control reduce return rates.
Final Thoughts
Keep production costs separate from marketing, shipping, returns and other operating expenses in your pricing worksheet. For each margin target, label which costs it covers and check that your calculation includes them. Input costs also move for reasons outside your control, which our guide to pre-tariff inventory pricing covers in detail.
Ordering at a glance
Stock: We offer no minimum ordering from January through September. During our busy season, October through December, please order single sizes in packs of 6 (one polybag) per color, per size. Sizes and colors can be mixed.
Samples: wholesale account required, paid at standard wholesale price, cost credited on the first order
Dispatch: paid in-stock orders placed by 12pm PT ship the same day
Shipping: free at $200 or more on listed wholesale prices
Custom color on an existing style: 600 pieces per style per color for fleece, 1,200 for the 1003 and 1005 tees
New custom style: 2,400 units
Custom timing: 120 days total, 60 days production and 60 days shipping
Origin: designed in Los Angeles, manufactured at a WRAP-certified partner factory in Pakistan
Select the hoodie SKU for your cost quote from the wholesale hoodie range.