Why the same garment can cost differently for two different orders

This page explains why two orders for a similar garment can carry two different total prices, for anyone who compares costing sheets across orders

The same five-component method builds every costing sheet: fabric, trims, making, overhead, profit. That does not mean two orders costed by this method must reach the same total price. Order A's FOB price is USD 3.20; a domestic order for a similar T-shirt can land on a different total entirely, without either sheet being wrong. This lesson shows why: each component's own drivers, a fabric price, a consumption figure, an overhead rate, a chosen margin, can differ from order to order, even when the method that combines them never changes. This lesson mainly teaches the money flow: how the same method can honestly produce two different prices.

What you need, and what this lesson does not cover

You need: the three cost families from the first lesson of this course and the reading method from the second.

By the end of this lesson you can:

• name at least three reasons two orders' costing sheets can reach different totals under the same method;
• compare an export FOB total with a domestic ex-factory total without treating one as simply "the same price, different name";
• explain why a lower total price does not automatically mean a lower-quality garment or a worse deal;
• read Order B's own fixed total FOB price, the jeans order, as a second real example of a different order, different price, without inventing its component breakdown;
• state which cost drivers a merchandiser should ask about before comparing two orders' prices.

Not covered here: common costing mistakes that erase margin (lesson 1.4) and building a costing sheet from a blank page (lesson 1.5).

Words you will meet in this lesson

The five-component method never changes, but each component's own driver can differ between two orders, so the same method can honestly reach two different totals

Fabric, trims, making, overhead and profit stack up on every costing sheet, in the same order, for every order a factory ever prices. What differs between two orders is never the method; it is the driver behind each component. One order's fabric may be a finer, more expensive grade than another's, even in the same garment shape. One order's making charge may reflect a factory running near full capacity, spreading overhead thinly, while another's reflects a quieter season. One order's profit margin may be set higher to compensate a factory for a new, less-proven buyer relationship. None of these differences means either costing sheet is wrong; they mean the two orders are genuinely different orders.

The same garment shape can carry different total prices for reasons that have nothing to do with one order being better costed than another

Delta Garments' finished costing sheet for Order A is compared with an illustrative domestic sheet for a similar T-shirt sold to Cedar & Co.

Order A's own costing, fixed already in Course 7, sells the T-shirt export FOB at USD 3.20 to Northline Apparel. To show how a domestic sale of a similar T-shirt shape can reach a different total, this lesson uses one clearly labelled illustrative change: a domestic buyer such as Cedar & Co. sourcing the same construction from Delta Garments but at a locally available fabric price of USD 5.20 per kilogram, rather than Order A's own fixed USD 5.60 per kilogram. Every other figure below keeps Order A's own fixed values, so the comparison isolates one driver at a time.

A single fabric-price difference of USD 0.40 per kilogram moves the illustrative domestic total down by USD 0.08 per piece

Compare two orders' costing sheets in five steps, without assuming either is wrong

1. Confirm both sheets end in the same kind of total: an FOB price and an ex-factory price are not the same figure and cannot be compared directly.
2. Line up the five components side by side, order against order.
3. Identify which components actually differ, and by how much.
4. Ask, for each differing component, what real-world driver explains the difference: a fabric grade, an order size, a buyer relationship.
5. Conclude only after the drivers are named; a bare total-price gap explains nothing on its own.

A common mistake is assuming a lower total price on a similar-looking garment always means a worse deal or a lower-quality product

A buyer comparing Order A's USD 3.20 export FOB with a domestic quote of USD 3.12 for what looks like the same T-shirt shape can wrongly conclude the cheaper quote must be cutting corners somewhere. The real explanation can be as simple as a different, locally available fabric price, with every other component identical, as shown in the worked example above. Treating a price gap as automatic proof of a quality gap skips the one step that actually explains anything: asking which driver moved and why.

• The five-component method never changes; the drivers behind each component can.
• An export FOB total and a domestic ex-factory total are not directly comparable figures.
• A larger order often spreads overhead over more pieces, lowering overhead per piece.
• A new or riskier buyer relationship can carry a higher profit margin than a trusted, repeat one.
• A price gap between two similar orders always has a real driver behind it, worth naming before judging.
• Order B, the jeans order, has its own fixed FOB price of USD 9.80, a second real example that different orders carry different prices.

Omar at Cedar & Co. assumes Delta Garments is offering a lower-quality fabric because its domestic quote is cheaper than what Northline Apparel pays

Omar, the owner of Cedar & Co., is quoted USD 3.12 ex-factory by Delta Garments for a T-shirt of the same construction Order A uses for Northline Apparel, whose own FOB price he has heard is USD 3.20. Omar assumes Delta Garments must be using a cheaper, lower-quality fabric for his order, since his price is lower.

Here is what Omar is comparing:

Does Omar's lower price necessarily mean a lower-quality fabric? Decide before opening the answer.

Cost build-up sheet: compare two orders' rows side by side before judging a price gap

Open the Cost build-up sheet workbook linked below. Its one sheet, "Cost build-up", lists Order A's five components with their own drivers noted. To compare a second order, copy the sheet and change only the driver you believe differs, such as fabric price, leaving every other row at Order A's own value. The resulting total shows exactly how much of the price gap that one driver explains, before you look for any other cause.

[Download the Cost build-up sheet](../../templates/T12-C01-cost-build-up-sheet.xlsx)

Download the Cost build-up sheet (Excel)

Lesson 1.4: Common costing mistakes that quietly erase a factory's margin

You now know why two orders can carry two different total prices even under the same five-component method. The next lesson looks at the mistakes a merchandiser makes when applying that method, and how each one quietly erases margin without anyone noticing at the time. Back to the course map