This page teaches the last two cost components that turn trims and CM into a factory's own asking price. Lessons 12.3.1 to 12.3.3 built up trims (USD 0.20 per piece) and CM (USD 1.10 per piece) for Order A's T-shirt, but neither figure alone is a price a factory can quote. Overhead covers the factory's own running costs, and profit is what the factory intends to earn, and both sit on top of trims and CM before fabric is even added.
This matters to Delta Garments' owner every time Cedar & Co. plans its own domestic run, since a factory that forgets to add its own overhead and profit on top of trims and CM is quietly working for less than it costs to keep its own doors open.
You need: Order A's own trims figure (lesson 12.3.1) and CM figure (lesson 12.3.3), USD 0.20 and USD 1.10 per piece.
By the end of this lesson you can:
Not covered here: trims and wet-process figures on their own, already covered in lessons 12.3.1 and 12.3.2, and assembling a full cost sheet for a whole order (lesson 12.3.5).
| Term | Meaning |
|---|---|
| Overhead | A factory's running costs that are not fabric, trims or direct labour: rent, electricity, management salaries and similar costs, shared across all the pieces it makes. |
| FOB (free on board) | The factory delivers the goods on board the ship at its own port. Freight from there is the buyer's cost. |
| Ex-factory price | What the buyer pays the factory for the finished goods, at the factory's own gate, before any delivery cost is added. |
| Making charge | The labour cost of cutting, sewing and finishing one garment, often called CM (cut-make) on a factory's own cost sheet. |
Trims and CM together cover only the materials and labour directly consumed making one piece. Overhead, the factory's own running costs, and profit, what the factory intends to earn, both sit on top of trims and CM before an asking price is complete. A factory that quotes only trims plus CM has quietly left out the cost of keeping its own lights on and the reason it is in business at all.
| What can differ | The shapes you meet | Why it matters |
|---|---|---|
| Export FOB framing | Order A's trims, CM, overhead and profit sit inside an FOB price, alongside fabric, quoted to Northline Apparel free on board at Delta Garments' own port. | An export buyer expects every component, including overhead and profit, to be visible inside the FOB total, not hidden. |
| Domestic ex-factory framing | Cedar & Co.'s own domestic run, in the identical T-shirt style, uses the identical trims, CM, overhead and profit figures inside an ex-factory price instead of an FOB price. | The components and their build-up method stay the same; only the shipping term around the final price changes. |
| Make to Order versus Make to Stock | Order A is made to order for one confirmed export buyer; Cedar & Co.'s run is made to stock, against its own sales forecast for its own shops. | Overhead and profit still apply the same way to a Make to Stock run, even though no external buyer negotiates the price before production starts. |
| A single style reused across two customers | The same style's trims, CM, overhead and profit figures, once built for Order A, need no rebuilding for Cedar & Co.'s run in the identical style. | Reusing already-fixed figures for an identical style saves the cost of re-costing from scratch, as long as the style itself has not changed. |
| Overhead as a shared, not order-specific, cost | Overhead covers Delta Garments' whole factory, not Order A or Cedar & Co.'s run alone, and is typically allocated per piece across the factory's total expected output. | An order's own overhead share can change if the factory's total expected output for the period changes, even if the order's own trims and CM stay fixed. |
Cedar & Co., a domestic Make to Stock brand, is planning its own next production run at Delta Garments, in the identical T-shirt style as Order A. Since the style, its operations and its trims list are all unchanged, Delta Garments' merchandiser reuses Order A's own fixed figures rather than re-costing from nothing: trims USD 0.20, CM USD 1.10, overhead USD 0.49 and profit USD 0.26 per piece.
| Fact | What it tells the merchandiser |
|---|---|
| The style, operations and trims list are unchanged from Order A | Trims and CM figures can be reused directly, with no need to rebuild them |
| Overhead and profit are also unchanged as company-wide rates | The same USD 0.49 overhead and USD 0.26 profit per piece apply |
| Cedar & Co.'s run is Make to Stock, not a confirmed export order | The asking price still needs every component; the business model does not remove any of them |
| Adding trims, CM, overhead and profit gives USD 2.05 per piece, before fabric | Fabric, already fixed at USD 1.15 per piece from Order A's own figures, is added separately to reach the full ex-factory price |
Reusing an already-fixed style's figures across two different customers, one export and one domestic, is only valid because the underlying garment itself has not changed; a different style would need its own trims, CM, overhead and profit built up from nothing.
The worked numberCedar & Co.'s own domestic ex-factory price reaches the same USD 3.20 per piece as Order A's own FOB price, since both orders share the identical style and the identical five cost components; only the price's own label, FOB for export, ex-factory for domestic, differs.
A common mistake is a merchandiser, under pressure to quote quickly, presenting trims plus CM (USD 1.30 for Order A's style) as if that figure already were the factory's asking price, forgetting that overhead and profit have not yet been added. A price that stops at trims and CM alone leaves the factory's own running costs unfunded and its own profit unearned, and once quoted, is difficult to correct upward without the buyer or brand assuming the correction is a hidden increase rather than a completed calculation.
Making a garment costs more than its materials and its sewing labour. A factory also has its own bills to pay, rent, electricity, salaries, and it needs to earn something for being in business at all. These two extra amounts, overhead and profit, sit on top of the trims and labour cost before the factory has a real price to offer anyone. The same four amounts, trims, labour, overhead and profit, apply whether the order is going overseas or staying in the same country, and whether it is a single confirmed order or the factory's own stock production. Only the label on the final price changes.
Omar, the owner of Cedar & Co., is reviewing Delta Garments' quotation for his own next domestic production run and notices the ex-factory price, USD 3.20 per piece, exactly matches the FOB price Northline Apparel pays for Order A. He asks whether this means his domestic order has been quoted the export price by mistake.
Omar's message reads:
Is Omar's domestic run being incorrectly charged an export price? Decide before opening the answer.
No, this is not a mistake. The prices match because the underlying costs are identical, not because Omar has been charged an export rate.
First, the components are the same because the style is the same. Trims, CM, overhead and profit are all built from the T-shirt's own construction and Delta Garments' own running costs, none of which change based on which customer is buying.
Second, the price label, not the amount, is what actually differs. Omar's price is correctly called an ex-factory price, since he collects the goods domestically with no export shipping term attached, while Northline's identical amount is correctly called an FOB price, since it includes Delta Garments delivering the goods on board a ship. The dollar amount happening to match is a direct result of both orders sharing the same style, not evidence of an export rate applied by mistake.
Delta Garments' merchandiser should explain to Omar that matching prices reflect matching underlying costs for an identical garment, and that a genuinely different domestic price would only be justified by a genuinely different cost, not by the order's own domestic or export label.
Framed against Cedar & Co.'s own run, quoting only trims plus CM, USD 1.30 per piece, instead of the full USD 2.05 per piece that includes overhead and profit, would leave Delta Garments underfunded by USD 0.75 per piece before fabric is even considered.
Across a domestic run at the same scale as Order A, 15,000 pieces, this shortfall totals USD 11,250.00 (15,000 × 0.75), an amount that would need to come from somewhere else in the factory's own accounts if the mistaken trims-and-CM-only quote were ever honoured at that price.
Open the Trims, process and CM cost sheet calculator. On its trims-and-CM sheet, enter overhead and profit alongside trims and CM as their own rows; the share-of-subtotal column calculates automatically for each component, and the subtotal row sums all four with a formula. Check the subtotal against any already-agreed asking price before it is quoted to a buyer or brand.
[Download the Trims, process and CM cost sheet calculator](../../templates/T12-C03-trims-process-cm-cost-sheet-calculator.xlsx)
Download the Trims, process and CM cost sheet calculator (Excel)
1. What two components must be added on top of trims and CM to reach a factory's asking price?
2. A factory's trims and CM total USD 2.00 per piece. Its overhead is USD 0.60 and its profit is USD 0.35 per piece. What is the resulting subtotal before fabric?
3. Why can Cedar & Co.'s domestic run reuse Order A's own trims, CM, overhead and profit figures without rebuilding them?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| Overhead | التكاليف العامة | Frais généraux | Genel giderler | A factory's running costs that are not fabric, trims or direct labour: rent, electricity, management salaries and similar costs, shared across all the pieces it makes. |
| FOB (free on board) | تسليم على ظهر السفينة في ميناء المصنع | FOB (franco à bord) | FOB (gemide teslim) | The factory delivers the goods on board the ship at its own port. Freight from there is the buyer's cost. |
| Ex-factory price | سعر خروج المصنع | Prix départ usine | Fabrika çıkış fiyatı | What the buyer pays the factory for the finished goods, at the factory's own gate, before any delivery cost is added. |
| Making charge | تكلفة التصنيع | Coût de façon | İşçilik (fason) maliyeti | The labour cost of cutting, sewing and finishing one garment, often called CM (cut-make) on a factory's own cost sheet. |
You can now add overhead and profit on top of trims and CM. The final lesson in this course brings every component together into one complete cost sheet for a whole order. Back to the course map