25 Hidden Costs of Starting a Brand
Starting a brand can be really exciting, but also super scary. What do you need to do, in what order, and how much it’s all going to cost you! You don’t even know where to begin to estimate that one
Don’t worry – we’ve got you covered. In this post, we explore the hidden costs of starting a brand that is made in the UK, and give you a rough idea of how much you might need to set aside for each bit.
Whether you’re launching a clothing range or any other new product, our comprehensive guide will help you understand the true costs of starting your brand, so that you don’t come unstuck and run out of cash!
Here are the costs of starting a brand, with estimates for how much each part may cost you in your first year.
These are all based on our experience of working with hundreds of new businesses that manufacture in the UK.
Note: When giving a guestimate cost figure we’ve assumed that because you’re making in the UK the plan is to start out small and keep your initial production order quite low.
• Research Costs
Never think about starting a brand until you’ve done your research! Luckily this is one part of the process that won’t cost you much.
It can be as simple as running a poll to your instagram followers, or sending out a questionnaire. There’s plenty of information to be found online too, Facebook groups can be a great source or information as can reviews of similar products.
By researching your customer and competitors you can make sure that there is a market for your product. Developing products that no-one wants to buy is a costly mistake!
Your research costs should also take account of any money spent in travelling to trade shows, or visiting manufacturers. So don’t forget to factor those into your budget too.
Research costs: From Zero to £500
• Design Costs
When it comes to designing, you may want to employ the skills of a designer, but it is possible for you to do this yourself, even without experience.
If your idea is for a technical product which requires specialist knowledge then it would be wise to get the help of someone with that knowledge and experience – this is likely to save you from expensive mistakes.
But if you have a fairly simple product and you have an idea for how you would like it to look, then you could save a lot of money by designing it yourself. Many people are scared off by the thought of creating drawings and tech packs – but you don’t have to be an artist!
We’ve worked with many brand owners and helped them successfully create tech packs and communicate their designs to manufacturers by including simple straight forward information to get them production ready.
Design costs: From Zero to £10,000
• Raw Materials Costs
You will need to invest in raw materials, without them there simply isn’t a product!
The trick here is to source the right materials with low minimum order quantities when you are starting out. You are better off paying a higher price per metre/unit and buying less so you can test your product first.
Some raw materials may have high minimum order quantities (MOQs) that will require you to make a big investment up front, particularly if you want something bespoke. To avoid this, try going through wholesalers rather than directly to the mills to start with.
Try to limit the amount of different materials and colours that you use at first to keep your materials costs down. You can expand your range as demand grows.
Raw materials costs: From £500 to £35,000
• Component Costs
As with raw materials, it’s best to buy any components, such as trims, in as low quantities as possible for your first production run, so that you can test your product out and see how it is received by your customers.
Rather than going direct to the supplier, make use of wholesalers and retailers where you can order a few of what you need rather than hundreds.
The same applies to ordering brand and care labels. Often the break points on these can make it seem a good option to order thousands, but you may decide to change fabrics, tweak your logo and then your labels are out of date and take up space in dusty boxes!
Component costs: From £100 to £1,000
• Sampling Costs
The price of sampling will vary depending on the sort of product that you’re getting made and whether you can actually do the sampling yourself. Bear in mind, most UK factories will charge you for sampling, so you will need to allocate a budget for it. If you are making a garment you may also need to pay a patterncutter, and then someone to grade the patterns into different sizes.
Sampling costs are usually higher than production costs as it will be made as a one off piece, so budget up to four times the cost of the actual product to get each sample made. And chances are you’re going to need more than one sample made as you develop your product.
When you’re happy with your prototype you’ll want the factory that is carrying out your production to create you a pre-production sample. This is to make sure you are happy with the quality of the product and you have an agreed standard for them to work to.
Where sampling costs get out of hand is when more and more samples need to be made. So you want to make as few samples as possible. This is where preparation is essential, you’ve done your research, sourced the correct materials and components, and have a tech pack or product specification that is clear and easy to understand, containing all the information the sample maker or factory needs to get it right.
Sampling costs: From £200 to £20,000
• Testing Costs
You’ll want a sample to be able to test its performance, and if your product is to be worn, you’ll also need samples to get the fit right. So you’ll want to have a sample in each size.
You can employ fit models to test the fit or save your budget by getting the help of family and friends to try your products for you. This is a great way to test your product and get feedback. Just make sure you ask them to be honest with you!
Lots of products you can test yourself for things like fit, colour fastness and laundering. But there may be some instances when you’d be better to employ the services of a testing house, for example if you had a waterproof product and wanted to make claims about its performance in keeping water out.
Testing costs: From Zero to £1,000
• Stock Costs
The next thing to factor in is the cost of buying stock. One mistake I see people making all the time is investing too much in stock when they are starting their brand. If I can give you one piece of advice it’s don’t put all of your money into stock right at the beginning.
The trick is to not over complicate things, particularly when you have a limited budget to spend on production. So keep your range tight and in limited sizes and colours.
Starting small, or launching just a few new products at a time, allows you to see how your products are received by your target customers and how well they sell. If you have too broad a range and too many unique products you’ll have to invest heavily in stock before you’ve tested the market. And cashflow is the killer of small businesses. Particularly product-based ones.
Stock costs: From £500 to £50,000
• Equipment Costs
If you are using sample makers and manufacturers for all your production, you may not need to invest in any equipment. However, depending on your product and circumstances, sometimes investing in your own machinery might save your money or make your supply chain easy to manage. For instance, if you choose to buy an embroidery machine so that you can personalise products for customers.
You may also want to make some of your own prototypes for speed, and want to invest in some equipment to do this, like a sewing machine or a cutting knife. Some equipment can be expensive, so it’s worth shopping around for reconditioned and secondhand to save some money.
Equipment costs: From Zero to £100,000
• Quality Control Costs
Quality control is one of the biggest hidden costs of manufacturing, and often something that new brands tend to skip – until it’s too late. Most manufacturers will quote you a price including the cost of quality control i.e. inspecting the product before it leaves the factory to make sure that it meets the required quality standards. But if quality is paramount to your brand, I advise you to carry out your own quality control as well, just to make sure that everything is up to scratch before it leaves the factory.
If you fail to make sufficient quality checks and you discover an issue with the products once they’ve left the factory, there will be costs associated with putting the issues right. Even if the manufacturer agrees to correct the mistakes, there will be logistics costs associated with getting the products back to the factory. You will also have the cost of missed sales whilst the issues are being fixed.
You can hire a third party quality control expert to act on your behalf and check the stock at the factory, and this may cost you up to £1,000 a day.
Quality control costs: From Zero to £1,000
• Packaging Costs
Ordering large volumes of expensive packaging can be one of the biggest mistakes you can make and is a guaranteed way to blow your budget. It’s important to keep a really close eye on all those little extras.
Of course you want your customer experience to be fantastic when they receive your product, but are there other ways you can do that other than by using expensive packaging? For instance, could you have a beautiful branded sticker on plain tissue paper, rather than printing the tissue. Is a large box going to be kept by the customer, or thrown away? Would a handwritten note be a better gesture?
Think also about the size of the packaging, what impact does this have on the delivery cost as you’ll have to absorb that into your overheads or pass it onto your customer.
Packaging costs: From £100 to £2,000
• Storage Costs
This is something that is often overlooked, but you will need somewhere to house your stock. It needs to be kept safe and clean to avoid damage. If you’re not lucky enough to have a spare room you may want to consider paying for warehouse or storage space, or the use of a 3PL (third party logistics) company who can store and send out your products to customers.
You can keep costs (and inconvenience) down by making sure you buy in small quantities. This is a big advantage of manufacturing in the UK. We’ve matched thousands of brand owners with UK manufacturers who will produce small quantities with short lead times, meaning your cash is not tied up in lots of stock taking over your spare room!
Storage costs: From Zero to £1,000
• Logistic Costs
Another thing that is often overlooked when it comes to budgeting is logistics. But getting your materials and components to your manufacturer, and your finished product to you from the factory, will cost money, and needs to be factored in.
You may make savings by collecting your products yourself. And this is a great opportunity for you to carry out your quality control before your goods have left the factory.
Logistics costs: From £100 to £1000
• Branding Costs
Having a strong brand identity is important, and you may want to employ the skills of a designer to help you create your brand identity.
Remember – branding is more than a logo and your brand colours! It’s also about your values, your tone of voice, your audience and your purpose. No-one is going to understand those better than yourself as the founder of the brand.
If you do employ someone to do your branding for you, you are going to need to make sure that you are clear about all of those things and are able to communicate that to your designer so that they can create a logo and brand guidelines that successfully communicate your brand. You might find that by doing that you are able to come up with the branding yourself!
Branding costs; From zero to £5,000
• Website Costs
Having a website these days is pretty much non-negotiable. You could employ someone to create a website for you, or you can do it yourself, either way you will still need to budget for software and hosting. There are a number of website platforms now which are ‘drag and drop’ and you don’t need to be able to code to use them. Be mindful of hidden charges though, you may need to pay for apps and add ons for certain features, themes and, of course, transaction fees.
Website costs: From £200 to £10,000
• Photography & Video Costs
Photography and the look and feel of your site is really important. And if you can’t do it well yourself, then that is one thing that it’s worth spending money on for someone else to do. Your website and digital presence is like your shop window, and first impressions count. Your images need to be enticing enough for people to want to find out more, and clear enough to show details, to help potential customers feel confident enough in the product to make the purchase.
Will you need to pay for models, or to use the location? Are there any post-production costs? If you are going to invest in a professional photo shoot make sure to cost it out fully so there are no hidden surprises. Also be prepared by briefing your photography properly with the style of images you want, as well as the formats. You want to make sure you get all the images you need from your investment.
Alongside product images you may also want photos of yourself as the founder, and behind the scenes images for engaging content. It’s less important for these to be professional images. Depending on your brand, informal photos of this type can work better, so you could take these photos yourself.
Photography & Video costs: From Zero to £4,000
• Event Costs
Within your marketing budget, you may want to allocate some towards doing various events. That might be pop-us, local fairs, consumer shows, or trade shows if you plan to wholesale your products. You’ll need to budget for the stand at the show, but also your travel, accommodation and any help you might need to employ (it’s very tough to do a show by yourself – you will need to take a break!).
Do you need to print signs of flyers? Do you need to buy tables or shelving? Are there extras for lighting or electrical sockets? It’s worth doing your research before committing to an event. Work out what the time and cost implications are against the benefits. Will your ideal customer be attending, what is the footfall, are there similar brands showing?
Event costs: From £100 to £10,000
• PR Costs
Another way that you could get your brand out there is through PR. This is something that you might be able to do yourself. If you have good images already, and you are prepared to put in the time to research who to reach out to and the types of content they create, then this is something that you can do yourself for zero cost (apart from your own time).
Otherwise you could employ a PR person or agency who already has the connections and can help you get publicity quicker. There are also online platforms you can upload your images and press releases to which journalists use to find content.
PR costs: From zero to £5,000
• Digital Marketing Costs
A social media presence is expected from brands nowadays. If you are relying on social media as part of your marketing and social media strategy you might want to consider hiring someone to help you manage it. Social media content can be time consuming to create and algorithms are constantly being updated so you need to stay on top of it. It may be better to pay someone to help you so you can use your time in other areas of the business.
Having said that, we are seeing the brands we work with moving away from relying on social media for their sales. It is not the easy route to reaching your customers that it once was. Although it’s best to have some presence to showcase your brand on social media, it may be best to concentrate only on the platforms you know your customer is on, and simplify your social media strategy so you can invest your marketing budget more effectively elsewhere. We’d recommend taking a look at our ‘Selling Without Social Workshop’ here.
You may also want to consider setting aside some budget for paid advertising as part of your digital marketing costs. Depending on whether you use an agency, or run the adverts yourself, your budget for paid advertising in your first year could be up to a six figure sum!
Digital marketing costs: From zero to £100,000
• Staff Costs
Will you need to employ some help to run your brand? Launching your own business will require you to wear a lot of different hats, from product developer to marketeer, bookkeeper to copywriter, and everything in between.
Many of the tasks can be done by yourself, but no one will have every skill, and depending on your circumstances you may not simply have the time to do it all yourself. In this case you might want to employ some part-time help, even just on a hourly basis.
Begin by recognising what you can do and what you want to do, and where you will need the help of others. Sometimes the most efficient thing to do is employ someone to help you, but make sure you are clear about what you need and the scope of work you want them to do. You could reach out to students in relevant subjects at local colleges and universities, or find freelancers on site like people per hour or fiverr.
Be wary of shiny agencies, promising to do it all for you, especially on retainers. Where this can seem like a simple solution at first, often it’s an expensive option to get work that isn’t quite right, as they simply won’t have the same passion and knowledge of your brand as you do yourself.
Staff costs: From Zero to £15,000
• Legal Costs
You might want to include legal costs in your budget. This could cover registering your company, Non-disclosure agreements (NDA), and trademarking your brand.
Depending on the complexity of your business model and product you may be able to do this yourself, or not need it at all. In other cases you could save yourself time, worry and money by taking legal advice, but this can get expensive.
Legal: costs: From Zero to £100,000
• Insurance Costs
Insurance is not to be missed from your budget. It’s essential to make sure you have the necessary insurances in place. That may be for public liability, employer’s liability, professional indemnity, commercial property.
Make sure you find out what you are required to have, and make sure you are covered! This is not one to skimp on.
Find an insurance broker who understands the market you are in and has previous experience of working with your type of business. This will mean you are more likely to find the cover you need for a reasonable price.
Insurance costs: From £200 to £1,000
• Rent Costs
Are you going to have to rent an office or studio space? A lot of people now start a brand from home, and it’s wise to do this at first before you commit to a lease.
But you also need to make sure you have the space and facilities you need to make sure you are productive. Do you have that in your home? If not you will need to allocate funds for rent.
Rent costs: From Zero to £50,000
• Bookkeeping Costs
Bookkeeping and accounting is essential. If this is not an area you are comfortable with then it’s definitely worth employing someone to help you with it. And having sound advice from an accountant could potentially save you money.
That’s not to say that you can’t do it yourself if you are confident with figures. There are lots of subscription software services available now, like Xero, Sage and QuickBooks that can help you manage your accounts. You may find that these are provided for free or a reduced fee with some business bank accounts.
Bookkeeping costs: From £100 to £5,000
• Learning & Development Costs
No small business owner knows everything when they first start out. There is a lot to learn, and a lot of expensive mistakes can be made if you get it wrong.
That’s where investing in coaching and courses can really come into its own. Having support and advice is a worthwhile investment in yourself and your business as it can help you avoid costly mistakes.
It may seem like investing in business advice can be a big outlay at first, but the return on investment that you will get from having the support from someone with more experience will pay dividends in the long run.
Learning and Development costs: From £300 to £5,000
The cost of starting a brand vary massively
As you can see from this list, the cost of starting a brand can vary massively. You could spend as little as £1,500, or way over a six-figure sum.
Many of the costs listed above can be boot-strapped, to avoid your startup costs spiralling out of control.
The worst thing you can do is to have not thought about your budget at all, and then realise you’ve spent all of your money on stock and you’ve got nothing left to actually use for marketing to get the word out there about your brand!
But, I assure you, it is possible to keep your costs right down. It’s a case of understanding where your potential hidden costs might be, and making sure that you don’t go over budget.
My advice to my clients is always to start small and get a minimum viable product out there to test it. Keep your costs low by doing what you can yourself and play on the strengths that you have. Where you lack skills, sometimes it’s best to pay a professional to take it off your hands and do it quickly and more efficiently, leaving your time better spent on the areas of the business you can do.
It’s also worth investing in coaching to help you make sure you don’t make some of the common mistakes that so many start-up brands make.
We work with small businesses to help them manufacture in the UK, and avoid many of these hidden costs.