Prepare of price quotation for buyers

Prepare of price quotation is the most important part in apparel industry. It’s very important for both buyer and seller. Manufacturer or exporter should be more careful, when they are going to apply the price quotation of the product. Here manufacturers of products are the seller of the products. Price quotation is the business proposal which is made by seller for the interested buyer who wants to buy fashionable goods as specific prices for certain terms and conditions. Manufacturer of the products or sellers always likes to offer better opportunity for his buyer. Most important, the quotation letter should contain all the information which is required for understanding all the points of dealing.

For price quotation letter, few important point should be follow before apply the letter of price quotation for garments products. They are-

• Should concern type of quotation.
• The quality of product offered for sale
• Per unit selling price of the garments products.
• Total value of the products
• Payment mode like cash or credit, cash discount (penalty) or any other allowances
• Shipment mode like Sea, Air or Sea-air & TOD (Time of delivery), Place
• Labeling & packing details
• Full instruction of insurance
• List of country destination and documentation details

In additional, there may be lots of points should be maintained in the price quotation of garments products. Actually, additional requirement depends on buyer requirement. At last, we will see a simple sample format of price quotation letter.

An introductory sample letter to a prospective buyer:

"Dear Jon,

XYZ Apparels Ltd. Manufactures a wide variety of ready-made garments and is already exporting to major buyers of the USA, Canada, UK, France and Germany.

We are interested in expanding our trade in Japan and believe that your company already imports the line of products that we produce.

We are enclosing a copy of our brochure and price list for examination at your convenience and we would be pleased to forward samples of any item of garment that may be interest to you.

Thanking you and looking forward to your positive response.

Best regards

Name

Marketing Manager / Merchandiser "

As we know, price quotation is the most important factor in apparel industry for merchandiser. Price quotation is the mutual agreement between buyer and manufacture or seller. There are many types of quotation considered for exporting products during price quotation. Those are in the following:

• LOCO: The lowest quotation of price is called LOCO. It means on the spot. When buyer will carry his product or goods from seller or manufacture factory to own factory or warehouse. In this case, all carrying cost will be bearded by the buyer.
• FAS: Means Free Along Side Ship. It determines that seller or manufacture will bear the carrying cost from his warehouse to the ship and rest of the destination cost will bear buyer. That means buyer will provide the expenses from ship loading to the buyer warehouse.
• FOW: FOW means Free On Wagon. It determines that manufacture or seller will bear carrying cost from his warehouse to the nearest railway station and rest of the carrying cost will bear by the buyer.
• CIFE: Full meaning of CIFF is Cost, Insurance, Freight and Exchange. Manufacturing cost, insurance charge, carrying cost and exchange cost will be included in price quotation of the product.
• CWO: It means Cash with Order. It determines that buyer will send money along with the order. In this case, order will not be executed without receiving the order.
• COD: Means Cash On delivery which is determine that buyer will pay cash after receiving the desired order goods to the desired destination.
• FOR: It means Free On Rail. It determines that the seller or manufacture will bear all expenses from his own warehouse to the railway station. Also seller or manufacture will bear the loading cost and rest of the cost will bear by the buyer.

In apparel industry, there are mainly four systems of calculation for price quotation which are as under:

1. FOB (Free on Board)
2. CFR / C & F (Cost of Freight)
3. CIF (Cost, Insurance & Freight)
4. CMT (Cut make and trims)

1. FOB (Free On Board):

FOB means ‘free on board’. Now most of the garments industry price quoted on FOB. It determines that seller or manufacture will bear all costs which required reaching the goods from his own warehouse to the board of ship at the port of shipment. That means manufacture or seller will include the cost of fabric, accessories, cost of making, overhead, C&F and transportation cost (from factory warehouse to shipment port) for making the price of product quotation. Here also seller will be bearded product loading expenses. Exporter does not bear the cost of freight of ship or air. It is buyer (importer) who himself bears the freight of ship or air.

2. C&F (Cost of Freight):

CFR / C & F means ‘Cost of Freight’. That means

FOB (Cost) + Freight = C & F

In the case ship or air freight is carried by the exporter while quoting price, the exporter quotes price a bit higher than FOB. The whole responsibility including the sending of goods to the selected port of the importer is shouldered by the exporter ship or air. Freight may vary from place to place and shippers to shippers. Also note that, seller will not bear the insurance cost in this quotation.

3. CIF (Cost Insurance & Freight):

CIF means cost insurance & freight. In this case in additional to the bearing of freight the cost of insurance is also born by the exporter or manufacture. The exporter, while quoting CIF price, quotes much higher than C&F value. That means

C&F + insurance = CIF

Normally we can add 1-2% insurance charge with CIF price.

4.  CMT (Cut Make and Trims)

CMT means ‘Cut make and trims’. Making cost, accessories and trimmings cost of garments has included in the quotes of garments which is provided by seller or manufacturer. In this case, buyer provides all the required raw materials to the manufacturer and exporter gets only the making cost, accessories and trimming cost of the product.

During the fixation of FOB price following notes are to be followed carefully:

• Cost of fabric/Doz. Garments (Woven/Knit) or cost of yarn /Doz. Garments (in case of sweater)
• Cost of accessories / Doz. Garments
• Cost of transportation from factory to sea port or airport
• Clearing and forwarding cost
• Overhead cost
• Commission/Profit

The notes above are applicable in case of sending goods aboard on FOB basis. 

Sample steps for garments export order

In apparel industry, sampling is one of the most important part in garments which has a vital role in attracting the buyers. Buyer has placed the order after satisfying with the quality of samples. So, sample is a product which represents a group of product, in order to assess their quality, design or style or any other characteristic of the product. Buyer has given approval comments or any correction based on sample design quality. As its importance on garments industry, we can say that sample will reflect the quality and workmanship of the manufacturer or exporter.

1^st Pattern -> 2^nd Pattern /Fit Sample -> Size Set Sample -> Counter Sample -> Salesman Sample ->Photo Sample - > Approval Sample (Size Set) -> Pre-production Sample -> Production Sample -> Shipping Sample

First Pattern:

The first physical version of any garment as per the artwork done by designer or developer.

Purpose: See the design work and test the fitting.

Materials: Development merchandiser can use available material for processing sample.

Price: Not yet confirmed price.

Quantity: Sample provide 1 pcs for customer and 1 pcs for merchandiser reference.

Delivery: As per buyer requirement & urgency.

Fit Sample / Second Pattern:

Usually designer/developer always asks for some changes to the first pattern. As per comments, development merchandiser takes necessary action for fitting sample based on buyer comments. Fitting sample should be made by following buyer provided measurement sheet. Can be made by using similar fabric, closer GSM and any color or closer color. In fit sample, sample should be accurate as per buyer provided measurement and stitching. For color, buyer can be compromised but stitching and measurement should be followed as per tech sheet.

Purpose: To see the measurement deviation & stitching quality.

Material: Can be used available for processing fit sample.

Price: Not yet confirmed.

Quantity: Manufacturer keep one pcs sample for himself and 2-3 pcs garments send to the buyer for approval comments purpose. 

Size Set Sample:

After getting approval fit sample from buyer, all the other sizes sample should be graded and make pattern for different sizes based on fit sample pattern. After that, garments merchandiser will make 2-3 pcs each size of that order. Merchandiser will keep 1 pcs sample for reference purpose and send 1-2 pcs samples to the buyer for bulk cutting approval purpose. As we know that, bulk cutting will not start without size set approval. 

Counter sample:

Where first pattern is made on designers’ artwork, in counter sample is to make not on designer’s artwork, has to follow another sample (Color Selection Sample or Size set sample) given by the buying merchandiser.

Purpose: See the workmanship & also check the factory skill

Materials: Merchandiser can use available accessories to make the sample. (But H&M buyer: counter sample has called tag sample (seal). Manufacture can start production after getting counter sample approval from buyer. It will be better, if we use actual material to make the counter sample)

Price: Price confirmed  

Quantity: One pcs reference sample for merchandiser & buyer will take as per their requirement.

Delivery: Sample should be delivered as per customers’ request date.

Salesman Sample (SMS):

Sample is made when price is confirmed and orders are on speculation, usually in M/L (Medium/Large) size in all color combination of expected order. Buyer held a meeting with its customer and record their response on order quantity per color, size etc. and finally place order to their vendor. The main objects of SMS sample are to check the market status, customers’ feedback etc.

Purpose: Sales Meeting by retailers & also market appraisal demand/order forecast

Status: Final stage of the order confirmation

Material: Sample must be made with actual materials for approval purpose

Price: In this stage, buyer has confirmed their price for the goods

Quantity: Buyer has given minimum quantity per color combination

Delivery: At this stage, sample is very important to meet the delivery date as per client request. 

Photo sample: 

Samples are made with actual color and material to be worn by the models on the event of shooting for catalog. Sample has prepared according to the buyers’ specification & also buyer wants to see that how its look like after applying new design on it. Manufacturer keep one pcs sample for his reference and 3-5 pcs (based on buyer requirement) sample sent to the buyer. 

Approval sample:

In any discrete period of time, whenever it required any revision in the sample, a new sample is made (sometimes mock-up is workable too) as per new specification. It is sent to the buyer for his approval of the conformity that the revision is done correctly.

• Mock-up: Any part of the garment to make for particular purpose, not complete garment 

Pre-production sample (PPS): 

When material for bulk production arrived, factory merchandiser makes a sample with actual material and send to the buyer. In this stage of a garments order where any sample may be approved or rejected. If sample has approved, then can be go for the rest of the process of that order. If sample rejected, then manufacture must be sent revised PP sample to the buyer for approval purpose. In this stage, planning production and control department is involved. So there’s no way for accepting of any style change. Pre-production is the very critical stage than other’s stage. So, extra care must be needed to confirm an order correctly.

Production sample (PS):

It is a reference to the buyer that the bulk is being produced as per specifications. Buyer wants to be assured that correct material is sourced and line workmanship conformed with the quality level. 

Shipping sample: 

A sample is kept from every pre shipping inspection to be referred, if required, after the order has been delivered. It is sample that reflects what buyers will receive down to Q.C, folding, tagging, labeling and final packaging included. Usually for any claim shipping sample is important. 

Merchandiser role between Buyer & Seller

A garments merchandiser is the key person in ready-made garments industry. Where merchandiser plays an important role from its order receiving to shipment. Merchandiser is the bridge between the industry and the buyer. Merchandiser is the responsible person to make the product and export the goods on time. So, he has to look after the raw materials which are required to find the goods, making the garments, finishing the goods, documentation and finally shipping the goods. The main job of a merchandiser is to co-ordinate with the entire department in the office (like stores, cutting, production, finishing etc.) as well as the buyers.   

• Merchandiser’s role is to build up relationship with buyers and acts as a seller
• Merchandiser plays a vital role in his organization in a sense that the bears more responsibility than others in regards of order execution
• He represents factory as a buyer
• He represents buyer as a seller
• He inspects quality as buyer from buyers’ point of view
• He negotiates a price for the sellers
• He looks at the deal from seller’s point of view
• He looks after the business so as to develop more in future
• He tries to offer the deal more competitive by not compromising the quality
• His object is to satisfy the buyer to progress more in future business
• His aim is to impress the buyer by means of:

                            **Right product
                            **Right quality
                            **Right quantity
                            **Right time
                            **Undamaged condition

Job description and job analysis of merchandisers and merchandising department

• To prepare price quotation of different inquiry letters as per buyers’ requirements
• To develop samples as per buyers’ requirements
• To submit samples as per buyers’ requirements
• To negotiate price with buyers
• To confirm price with buyers
• To receive purchase order sheet from buyers
• To prepare and issue pro-forma invoice for buyers in order that buyer can open master L/C
• To receive master or export L/C from buyers
• To source and select garment factory for bulk production
• To make production plan for execution of purchase orders
• To hand over purchase order file to the selected factory, related sections and persons.
• To collect the color swatch and trims & accessories from buyers and develop them from vendors or from own units
• To communicate buyers with all updates about latest production process and developments
• To ensure goods delivery on time with buyers
• To take approval from buyers for style sample, fit sample, pre-production sample and accessories sample for bulk production
• To prepare yarn, finished fabric and accessories booking order sheets for bulk production and distribute to related sections and related persons
• To prepare costing break down sheet and put up the respective buyers’ order files
• To follow up, monitor and coordinate the purchase order until shipment
• To receive payment of L/C against shipment of goods from buyers
• To earn profit by exporting garments from abroad
• Merchandisers has to report their activities to the managing director of their respective company.

How to calculate embroidery costing

In present day, embroidery is common term in apparel industry. Embroidery used to make garments more attractive and fashionable. Now it has come more popular and widely in garments manufacturing sector. In other way, we can say embroidery is the art or handicraft of decorating fabric or other materials with needle and thread.

Embroidery costing for garments

Costing of embroidery are based on a “Per stitch” count. After prepared the design, producer will run a stitch count to determine the cost of the embroider. Before starting the costing, garments merchandiser should consider of few factors to determine embroidery costing. Factors are:

• Stitch number.
• Embroidery type
• Estimate time to complete one batch. 
• Color of thread.
• Cutting of applique.
• Place of embroidery.
• Resource involves in doing embroidery. 
• Any restriction on selection on embroidery machine
• Any lab test requirement
• Any restriction on use of embroidery thread

Calculating Embroidery costing:

We know embroidery stitch unit is 12000 stitch but maximum time embroidery factory didn't accept any order on stitch. Because applique, patch etc. has taken too much time that's why embroidery factor doesn't know actual how much time consumed to complete one batch. 

1-unit embroidery = 12,000 stitch

For calculating, the cost of embroidery we need to know below details:

• Stitch quantity of  the design.
• Rate of per unite. (It depends on embroidery design, size & factories ability).     

Suppose, a design have 9000 stitch & per unite price is $0.30 in unit. Let's find the the costing of embroidery. 

Rules: (Rate of Unit / 12,000 X Stitch quantity) x 12

        = ($0.30 / 12,000 X 9000) X 12

        = $ 2.7 / dzn

So, 2.7 USD need for 1 dzn garments if garments design has 9000 stitch. 

Calculate Collar length for Polo shirt

In apparel industry, garments merchandiser need to develop knitted polo shirt. For developing polo shirt, we need to measure correct collar size to make the photo shirt. So, we can say that garments merchandiser need to know correct way to measure collar measurement for sample development or bulk production. If any mistakes come in development stage, then garments merchandiser must be correct those mistakes before start the bulk production. Otherwise factory will face huge lose for lack of communication between internal department.

Collar Length calculation for Polo shirt

Before we start to calculate collar measurement, garments merchandiser should find out the below requirement information for calculating correct collar length;

• Neck width of the polo shirt
• Neck drop front

There are many ways to calculate collar length:

Option-1: Collar Length calculation = [{(Neck Width + Neck drop front) X 2 - 3} - 12.5%]

Suppose, A polo shirt has Neck width 13.75 cm and Neck drop front 6 cm. Now we need to find out collar length of polo shirt.

Solution: Collar length calculation = [{(Neck width + Neck drop front ) X 2} - 3] - 12.5%

                                                  = [{( 13.75 + 6 ) X 2 }- 3 ] - 12.5% 

                                                  = [39.5 - 3] - 12.5%

                                                  = 36.5 - 12.5%

                                                  = 31.94

                                                  = 31.5 cm 

Finally, we have found the result, we need 31.5 cm length for this polo shirt. For bulk production, merchandiser need to check with technician for smooth production. 

Option-2: Collar Length calculation: {(Neck width + Neck drop front) x 3} / 2
                                                  = {(13.75 + 6) x 3 } / 2
                                                  =29.63
                                                  = 29.5 cm or 29 cm

Note that, for collar length calculation we always used minus tendency. Because we can't reduce collar length after getting the final collar pcs. So, make sure that your collar length should be fit for the garments. For bulk secure, don't forget to re-check with garments technician.

How to Calculate Zipper Length

Zipper is one of the common item in garments industry. Zipper teeth are usually made of brass, aluminum, plastic or nylon which do not shrink when washed. Therefore, the zipper tapes must be made of materials which do not shrink when washed otherwise the shrinkage will make the zipper fail to function. In most cases, the zipper tapes are made of nylon or polyester which do not shrink and are colorfast. 

Zipper Length calculation for Garments

Zipper measurement calculation is the most important part for garments merchandiser. So, garments merchandiser should more careful to calculate zipper measurement for bulk production. However, zipper calculation is very easy but sometimes it becomes a matter of big trouble for us. Zipper depends on fabrics and zipper properties. So, we need to take some idea about the body fabric shrinkage and zipper tape. Today we will discuss about the front long zipper of sweat shirt and hoodies or as like that. 

Zipper Calculation: 

Let’s check out, how to find out zipper measurement by using formulas;

• If the garments body length measure from HPS, then

Formula: Body length - (Front neck drop + Back neck drop ) - (2 to 3 %) 

Suppose, A sweat shirt has body length 70 cm, front neck drop 7 cm and back neck drop is - 3 cm, Now find out the zipper length?

Solution: Body length - (Front neck drop + Back neck drop ) - 2 to 3%

              = 70 - ( 7 + 3 ) - 2%

              = 58.8 cm = 58.5 cm 

Finally, we got the result, we need zipper length 58.5 cm 

• If the garments body length measure from CB, then formula will be;

Formula: (Body length - Front neck drop) - (2 to 3 %)

Suppose, a hoodie has body length 67 cm, front neck drop 6 cm. Now find out the zipper length ?

Solution: (Body length - Front neck drop) - 2 %

              = (67 - 6) - 2% 

              = 59.78 cm = 59.5 cm 

Finally, we have got the result, we will use zipper length 59.5 cm 

• If the garments have high neck and zipper goes up to high neck drop from bottom. 

Formula: (Body length - Front neck drop) - (2 to 3 %) + Height of high neck 

Suppose, A hoodie garments has body length 68 cm, front neck drop 6 cm, height of high neck 5 cm. Now find out he zipper length?

Solution: (Body length - Front neck drop ) - 2 % + Height high neck

              = (68 - 6 ) - 2% + 5 

              = 65.76 cm = 65.50 cm

Finally we have got the result, we will use zipper length 65.5 cm 

How to Calculate Carton CBM & CBF

In garments sector, it’s a known term for all merchandiser. Freight forwarder charges the freight cost on the basis of CBM. CBM means cubic meter. To find out accurate CBM, it will help for merchandiser to reduce shipping cost. When cargo has FCL (Full container Load) then we have to pay the freight charge in full container load basis, if the cargo has LCL (Less container Load) then we have to pay the freight charge in less container load basis.

Calculate carton CBM & CBF for Garments

Before starting the CBM, we should find the below information at first;

• Carton length;
• Carton width;
• Carton height;
• And carton quantity for an order; 

We need to use centimeter to find out the CBM. If we found Length, Width and height in 'Inch' then we need to convert into "centimeter" by multiplying 2.54 ( we know 1 inch = 2.54 cm).

Example of CBM calculation with Formula :

Formula: Length (cm) X Width (cm) X Height (cm) / 10,00,000 

Suppose, A carton have length 22.845 inches, width 15.75 inches and height 15.75 inches. Now find out the CBM for 150 cartons ?

Solution:

• Length 22.845 inches = So, 22.845 X 2.54 = 58 cm         [ 1 inch = 2.54 cm]
• Width 15.75 inches = So, 15.75 X 2.54 = 40 cm 
• Height 15.75 inches = So, 15.75 X 2.54 = 40 cm

Formula: Length X Width X Height / 10,00,000 X 150          [ 1 CBM = 10,00,000 square cm ]

              = 58 X 40 X 40 /10,00,000 X 150

              = 13.92 CBM

Finally we know that, we need 13.92 CBM cargo for 150 cartons.

Example of CBF (cubic feet) Calculation with formula:

 Formula: Length (inch) X Width (inch) X Height (inch) / 1728     

Suppose, carton have length is 14 inches, width 12 inches and height 8 inches. Total quantity 200 pcs. Now, find out the total CBF (cubic feet)?

Solution:

Formula: Length (inch) X Width (inch) X Height (inch) / 1728 X carton qty            

              = 14" X 12" X 8" / 1728 X 200                          [ 1 CBF = 1728 square inches]

              = 1344 / 1728 X 200

              = 155.55 CBF

Finally, we have found the result, we need 155.55 CBF for 200 cartons.

Carton Consumption and Pricing

Carton is a very important factor in readymade garments industry. Every textile engineer (merchandiser) should have clear and brief idea about it. Although, many garments merchandisers not have correct idea about carton consumption. Basically carton box is made by ply board. Ply board can be 3 ply, 5 ply or 7 ply. It’s needed to deliver the finished goods to buyer without any damages. Buyer may complain if there is any damage in the goods during transportation because of bag quality carton box. At present, buyer ask to do busting test of carton box to ensure the quality of carton box. For kind information, every carton boxes should have minimum two ply boards to insure product security.

Carton Consumption and Pricing

In terms of carton consumption means “consumption of ply board”. We know that, carton box is made by using ply board. Before started to calculating ply board consumption or carton consumption, a garments merchandiser should confirm the below information:

·         Length of the carton box

·         Width of the carton box

·         Height of the carton box

By using the below formula, a garment merchandiser can easily calculate ply board consumption or carton consumption in apparel industry. Let’s see the below equation with example;

Carton Consumption :

Formula of CBM (Cubic Meter) : Length X Width X Height / 10,00,000

Formula of carton measurement in square :  ( Length + Width + Wastage) X ( Width + Height + Wastage) X 2 / 10,000 X Carton quantity

Formula of carton consumption and costing: { (Length + Width) X (Width + Height)} X 2 + Wastage percentage 

Q.1: Suppose, a carton has Length 58 cm, Width 35 cm & Height 40 cm, total carton 200 pcs. Now find out the cargo measurement for 200 cartons?

Solution: Length X Width X Height / 10,00,000 X Carton Qty

              = 58 X 35 X 40 /10,00,000 X 200

              = 16.24 CBM

Q.2: Suppose, a carton has 5 ply, Length 60 cm, Width 45 cm, Height 50 cm, total carton qty 150 pcs. Now find out the carton measurement in square meter?

Solution: ( Length + Width + Wastage ) X ( Width + Height + Wastage) X 2 / 10,000 X Carton qty  

              =  (60 + 45 + 5) X ( 45 + 50 + 5) X 2 /10,000 X 150

              = 110 X 100 X 2 / 10,000 X 150

              = 330 square meter

(Note: If you don't want to add wastage, then avoid wastage value. For safety purpose, should be add wastage )

Q.3: Suppose, a 5 ply carton's per square (100 X 100) meter's rate is USD 0.85. Carton Length is 58 cm, Width 26 cm , Height 40 cm. Now find out the carton price?

Suppose: ( Length + Width + Wastage ) X ( Width + Height + Wastage ) X 2 / 10,000 X Price

              = ( 58 + 26 + 5) X ( 26 + 40 + 5) X 2 /10,000 X $ 0.85

              = 89 X 71 X 2 / 10,000 X $ 0.85

              = $1.074 / per pcs

Q.4: Suppose, a 7 ply carton Length is 58 cm (0.58 meter), Width 35 cm (0.35 meter), Height 40 cm (0.40 meter), price $0.90 per square. Now find the price per carton?

Suppose: {(Length + Width) X (Width + Height) } X 2 + Wastage Percentage

              = {( 0.58 + 0.35) X (0.35 + 0.40)} X 2 + 5%               [ 1 cm = 1/100 meter ]            

              = { 0.93 X 0.75 } X 2 + 5%

              =  1.4675 square meter

              = 1.4675 X $0.90                                                        [1 square meter = $0.90]

              = $1.320/ carton