Starting a backpack business is a tough nut to crack. You will be up against strong competitors and giant manufacturers with an established customer base. To make your way in and stand out, you can use several strategies, and one of the main ones is to price your backpacks correctly. But how do you know what price tag to put on your products?
All this comes down to is the cost of producing a backpack. The cost of churning out a specific number of backpacks varies depending on your chosen supplier. Some companies have high product prices, while some retail sellers keep the backpacks at only a few dollars.
Before you get your hands into this business, setting the cost of producing the backpacks is a task you should attend as a priority. To make this easier for you, we have a general cost breakdown you can expect to bear when producing backpacks. Keep reading to know all the inside details.
What Goes Into The Cost Breakdown Of Backpacks?
The cost of producing backpacks depends on several different factors. The supplier you choose will greatly impact the cost of your products. But there are other essential factors involved as well.
The materials you choose for the backpack will significantly impact the cost. Materials come at varying prices, some higher than others. Common materials for making backpacks include polyester, nylon, canvas, PU leather, and more. For example, generally, nylon is more expensive than polyester, so using it for backpacks can cost you more than using polyester.
The backpack’s design is another essential factor that can influence the cost. Backpacks are available for various purposes. For example, there are backpacks for trekking and hiking or daily use. The product’s design will vary depending on the purpose you are targeting. Trekking backpacks need to have more zippers and compartments, and it needs to have more strength. Laptop backpacks need better build and cushioned /padding insides.
You may also want to include customized design details, such as extra pockets. The overall design can be as complex or as simple as you want, and the cost will vary accordingly. The minimum order quantity also affects the cost. If you order in higher numbers, you will be able to get better costs. Producing more units lowers the cost for the supplier and you.
There are many other small and nig details that are checked before giving out a cost estimate. But keep these major ones in mind before placing an order.
The Cost Breakdown Of Making Backpacks
To understand the cost breakdown, let’s take an example of a recent case we dealt with. The cost estimation process starts with the customer submitting an inquiry. Our loyal customer from Spain sent us an original sample in March and asked for an estimated cost quote. We received the sample in 3 days and immediately got to check the size, material, stitching, sewing, design, and other details. We sent the cost estimate after two hours of careful examination.
The sample of the customer was made with 100% nylon material. The size of the backpack was 40*30*14 cm. The sample design included two side pockets for water bottles, one front zip pocket, and one back zip pocket. A nylon zipper was to be included. The backpack was meant for laptops, as a 15″ padded laptop compartment was to be included inside.
While several other details had to be checked, some of the main ones are mentioned in the chart below.
The end cost does not include profit. About 10% of the cost is mostly added to the end amount. The chart shows that most of the cost is to cover the sewing expenses or labor costs, which is the highest.
Another important factor to note here is that FOB cost will vary with the order quantity. The higher the order quantity, the lower the cost of backpacks. So, if you order more pieces in one order, you will likely save more on the batch. You can ask your supplier to send you cost quotes of different quantities such as 500 pcs, 1000 pcs, a 20 ft container, etc. Compare the prices and choose what best suits you.
How To Price The Backpacks?
There are a few important considerations for pricing the backpacks accurately. You might run into some issues with pricing if you don’t know the cost breakdown completely. If you do not know the cost structure, you can end up overpricing the backpacks or underpricing them. Both of these can leave the business in shambles.
Overpricing can lead to an expensive product that might not be able to compete with other companies that are offering lower prices. It can quickly wipe out your products. Underpricing can have drastic effects as well. You may be tempted to price the backpacks low to sell them in higher volumes, but if you cannot meet the minimum requirement for sales to cover the cost, the business can end up bankrupt. I’d like to share with you some examples of the markups of other customers I am familiar with. For most of the European brands, markups lie between 5-7 times. With our FOB price of $7.5-$9.5, their markups of 5-7 times yields them $37.5-$65 per bag.
So, you must strike the right balance of pricing, which is possible only after you have grasped the complexities of cost breakdown for producing a backpack.
Conclusion
If you are struggling to find the right bag supplier for your business from China, stop here. Miya Fashion Bags has a range of products, from luxury handbags to practical backpacks; we supply them all.
Miya Fashion Bags has worked in the supplier industry for more than 10 years, and this huge experience has allowed us to streamline our services. This has brought more efficiency and allowed us to lower our costs. So, we come with transparent and some of the best prices in the market. Don’t get us wrong. We are still making a profit, but not at the cost of unreasonably expensive services.
With controlled profits and a strong focus on customer service and the production process, we can offer you highly reasonable prices. All this is brought to you without an inch of compromise on quality, management, or services. So, if you have any questions about the cost of backpacks or any other bags, leave a message, and we will get back to you very soon.
Contact us now and avail our free consultancy services.
