You have a winning product and design ready, but wait! Before you start manufacturing, you need your target price. It is crucial when it comes to determining your target costs. A lot of young and inexperienced entrepreneurs make the mistake of asking their manufacturing partners how much their product will cost.

Entrepreneurs sometimes make this mistake and send their designs to their manufacturing partners without confirming their ideal costs first. The repercussions can be severe. You may receive a large amount of quotes that do not make sense for your product. This is because factories price their services higher than their usual rates. The factories suggest manufacturing techniques and materials that make your product more expensive than it should be.

What is Target Cost?

What is a target cost? The target cost is the cost you aim to pay to manufacture a product. The cost typically includes everything from the fabric, materials, embellishments, trims, labels, and packaging.

The best way to determine your products target cost is to decide how much you want your product to sell for. For example, after doing market research, your product will sell competitively if priced at 100.00 USD. Ideally you want your product’s target cost to be around 25.00 USD so there is a sizable profit margin. After deciding your market price point and your target cost, your team and manufacturing partners can work together on producing and designing the perfect product for market at the correct cost.


By sending your manufacturing partner your target costs beforehand, you are saving yourself from quotes that are too high. If you do not know your target costs, your lack of preparation will stop your from selling your product at the correct price. There is a good chance your product will be priced out of the market by competitors who did do their research.

Many manufacturing partners, such as Rad Sourcing, help advise your company on which fabrics, materials, countries and manufacturing techniques should be used based on your price point. For example, let’s say it is your team’s goal is to produce affordable everyday men’s polos. You are unsure what fabric to use. Your team will send us your target price point and we will make fabric and manufacturing suggestions. If your goal is to be competitively priced, in this case 40-45 USD, then we would not suggest sea island cotton. We will find an affordable and environmentally friendly fabric for your product.

If you have any questions or concerns, please feel free to contact us anytime.