022 – Is Making in the UK Really More Expensive?
Is it really more expensive to make in the UK? Or is there a reason that some of the most profitable retailers are using more local manufacturing?
In this podcast episode I dive deeper into prices. More specifically – how you can sell a garment made in the UK and still make as much profit as you would do by making the same product overseas.
It all comes down to gross versus the net margin, something that is rarely taken into consideration.
I break down what some of the hidden costs are with manufacturing overseas, and explain why buying product made locally can drastically increase profitability.
Cost price comparison of a T-Shirt made overseas versus Made in the UK
This is the calculation I used on the podcast to demonstrate the profit on two T-Shirts where one has a 100% sell-through rate and the other has a 60% sell through.
This is for demonstration purposes only – other factors, such as some of the hidden costs as discussed on the podcast, should also be taken into account if you are looking at a true picture of the net profit.
If I buy 100 T-shirts and sell them at £12.50 each, which will be more profitable?
The T-shirt made overseas for £5 or the T-shirt made in the UK at £8?
Assuming the T-Shirt made overseas and bought 12 weeks in advance has the average fashion retailer sell-through of 60% and the T-shirt made in the UK sells out because it’s bought 2 weeks before it hits stores.
The results may surprise you…
T-Shirt made overseas
Cost Price = £5
Cost of 100 T-shirts = £500
60% sold at full-price = 60 x £12.50 = £750
40% sold at cost-price = 40 x £5.00 = £200
Total Revenue = £950
Profit = £950 – £500 = £450
T-Shirt made in the UK
Cost Price = £8
Cost of 100 T-Shirts = £800
100% sold at full-price = £1250
Total revenue = £1250
Profit = £1250 – £800 = £450
Business Design Centre, London N1
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