A cost sheet is a column of numbers. The skill is reading it as a story about margin — where it lives, where it disappears, and whether the final retail price makes sense for the market.
FOB: the factory's number
FOB (Free On Board) is the price the factory charges to deliver finished goods to the port of export. It includes fabric, CMT, trims, labels, packaging, and the factory's margin. It does not include shipping, insurance, duties, or any cost that occurs after the goods leave the factory. For a mid-weight cotton sweatshirt made in Portugal in 2025, FOB typically runs €12–22 depending on construction complexity and order volume.
Landed cost: what you actually pay
Landed cost = FOB + freight + insurance + import duties + customs clearance fees + delivery to your warehouse. For EU-to-EU production there are no import duties and lower freight, but for Asia-sourced goods the duties can add 10–20% to the FOB price. Add a quality control allowance and landed cost is usually 120–135% of FOB.
The wholesale margin calculation
Wholesale margin = (Wholesale price − Landed cost) / Wholesale price. A 50% margin means your wholesale price is twice your landed cost. This is the absolute floor for a sustainable business. Many emerging brands price to 40–45% margin thinking it is close enough. It is not — the gap between 45% and 50% is the gap between barely surviving and having runway to grow.
Retail and DTC
Standard wholesale-to-retail markup is 2.5–3×. At 2.5×, a €24 wholesale price becomes a €60 retail price. Work backwards from the retail price you want and check that the numbers hold. If they do not, the problem is either the COG (reduce it) or the design (simplify it). Changing the retail price to make the math work is the last resort, not the first.