Glossary
The words suppliers, factories and buyers use, written plainly. Where a word means two things — margin and sell-through both do — this says which is which rather than picking one.
Costing
- Landed cost
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What one unit really costs you by the time it's in your warehouse — not just what the factory charges.
Unit price plus freight, plus duty on the unit price, plus packaging and anything else. Margin worked out against the factory price alone is the most common way a product looks profitable and is not.
- Free on board FOB
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A price that covers the goods and getting them onto the ship. Freight, duty and delivery are yours from there.
The usual basis for a factory quote. Comparing an FOB price with a delivered price is comparing two different things.
- Cut, make, trim CMT
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A price for the factory's labour only — you supply the fabric and trims.
Gives you control of materials and their cost, and hands you the risk of supplying them late. A CMT price and an FOB price are not comparable without adding your materials back in.
- Price break
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A cheaper unit price that applies from a given quantity upwards.
Quotes usually come as a few breaks rather than one price. The price you should plan with is the one at the quantity you'll actually order, not the best one on the sheet.
- Minimum order quantity MOQ
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The fewest units a supplier will make. Sometimes per style, sometimes per colourway or per fabric.
Fabric minimums often bite harder than garment minimums, because the mill's minimum applies to the roll, not to your order.
- Margin
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The share of the selling price left after what the product cost you to land.
Worked out against retail excluding sales tax, because the tax was never yours. pimbo measures margin in two places, and they are not the same number. Develop plans a margin against landed cost before you buy. Analytics reports the margin you made, against what Shopify holds as the variant's cost.
- Gross margin
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What was left of revenue after what the goods cost, on what actually sold.
The margin you made, as opposed to the margin you planned. Revenue here is what items sold for after discounts, before tax and shipping.
Customers
- Repeat rate
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The share of customers who have ordered more than once.
The cheapest growth a shop has, because a second order costs nothing to win compared with a first.
- Lifetime value LTV
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What a customer goes on to spend with you in total, not just the first time.
It is what decides how much a first order is worth winning. Read by the month a customer first ordered, it shows something else too. It says whether the customers you win now are worth more or less than last year's.
- Customer segment
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Customers grouped by how recently and how often they have ordered.
Plain rules rather than a score, so you can see why somebody is in a group and what would move them out of it.
Merchandising
- Range plan
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The season on one page: how many options, at what prices, in what depth, and where the margin is meant to come from.
A range plan is agreed before anything is bought. It decides how many separate products the season carries, how deep each goes in units, and what each is meant to earn. A buy can then be checked against a plan rather than against an opinion.
- Open to buy OTB
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What is left to spend on stock for a period, after what you have already committed.
Planned sales plus planned closing stock, less opening stock and anything already on order. It stops a buyer committing the same money twice. It also makes the cost of an extra order visible before it is placed.
- Breadth and depth
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Breadth is how many different products you carry. Depth is how many units of each.
The same budget spent two ways. Breadth gives a customer more to choose from and spreads the risk thinly; depth backs fewer products harder and risks more on each being right. Most ranges get this wrong in one direction and find out at markdown.
- Option count
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How many separate products a range carries, counted before colours and sizes.
One style in three colours is usually one option, not three. Counting it the other way is how a range that looked tight on paper arrives as three times the stock.
- Stock keeping unit SKU
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The smallest thing you can count in stock: one product, in one colour, in one size.
A product with four colours in six sizes is 24 SKUs. Stock, sell-through and reorders all happen at this level, whatever the range plan counted.
- Product type and vendor
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The two ways Shopify groups a catalogue: what a thing is, and who it came from.
Larger retailers split a range further, into divisions, departments and classes. Shopify holds product type and vendor, and pimbo reports against both.
Planning
- Critical path
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The dated sequence of things that must happen for a launch date to hold.
Planned backwards from the launch date, not forwards from today. Its use is that it tells you early which date is already lost.
- Lead time
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How long a supplier needs between the order and the goods being ready.
Quoted lead times usually assume materials are already approved and in place. The clock a factory starts is rarely the one you started.
- Drop
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A group of products launched together — a season, a capsule, a release.
Products in a drop share a launch date and usually a story, which is why one late product can hold up a dozen others.
- Gate
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A point where someone decides whether a product goes on to the next stage.
A gate exists so that a decision is made deliberately rather than by default. Each has things that must be true before it can be taken, and a named person to take it.
- Spec lock
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The point after which the specification cannot change without a formal request.
Locking is what makes a quote meaningful: a price agreed against a specification that then changes was never a price for this product.
Pricing
- Markup
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Profit as a share of what the goods cost you — not of what you sold them for.
Markup and margin describe the same profit from different ends, and mixing them up is the most common way a range is underpriced. A 50% markup is only a 33.3% margin. To convert: margin = markup ÷ (1 + markup).
- Keystone
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Pricing at double the cost: a 100% markup, which is a 50% margin.
An old rule of thumb from before anyone could compute margins per line. It is a starting point rather than an answer — it ignores freight, duty, markdowns and the cost of carrying stock that does not sell.
- Initial markup IMU
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The margin a product is first put on sale at, before any reduction.
Original retail less cost, over original retail. It sets the room you have: everything a product is later marked down by comes out of this.
- Recommended retail price RRP
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The price a maker suggests a product sells at. MSRP is the same thing, said in North America.
A suggestion, not a rule, in most markets. Where a product is also sold wholesale, it is what the wholesale price is set as a share of.
- Full price
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Sold with no markdown and no discount.
The share of sales taken at full price is the plainest measure of whether a range was right. Everything else was bought with margin.
Quality
- Acceptable quality limit AQL
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The agreed level of faults in a batch: inspect a sample of the shipment, and pass or fail the lot on what you find.
Set before production, not after. Faults are usually counted in three grades — critical, major and minor — with a different allowance for each. An AQL agreed in advance turns a disagreement about quality into arithmetic.
- Final inspection
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A check of finished bulk against the sealed sample and the spec, before it ships.
The last point at which a problem is the factory's to fix rather than yours to live with.
- Tolerance
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How far a measurement may differ from the spec and still be acceptable.
Written as plus or minus a figure at each point of measure. Tolerances that are too tight get ignored on the factory floor; too loose and the size run stops meaning anything.
Samples
- Proto sample
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The first physical version, often in stand-in materials, to test the design.
- Fit sample
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The base size in near-final fabric, measured against the spec until it’s right.
- Size set sample
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Several sizes in final fabric, to check the grading holds.
- Lab dip sample
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A dyed swatch for colour approval.
- Strike-off sample
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A trial print or embroidery on the real fabric.
- Approval sample sample
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One finished product, for a bought-in product with no fit rounds.
- Photo sample sample
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A true-to-final copy for the shoot, before bulk arrives.
- Pre-production sample
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Made on the production line in real materials; approving it releases bulk.
- Top of production sample
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From the first bulk output, checked against the approved pre-production sample.
- Sealed sample
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The approved sample, signed and kept, that bulk is judged against.
Sometimes called a gold seal. Once sealed it is the physical standard — an argument about whether bulk is right is settled against this, not against memory or a photograph.
Stock
- Days of cover
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How many days the stock on hand will last at the rate it has been selling.
The most useful stock number, because it is in the same units as a lead time. Stock that will last 20 days, from a supplier who needs 60, is already late.
- Overstock
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More stock than the rate of sale can clear in a reasonable time.
Overstock is not idle money, it is money that will usually leave at a markdown. The earlier it is seen, the shallower the markdown needs to be.
- Stock turn
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How many times in a year you sell and replace your average stock.
Cost of goods sold over average stock at cost. Two businesses with the same margin and different turns are not equally profitable, because the slower one has its money tied up for longer.
- Gross margin return on investment GMROI
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The margin earned for each unit of money tied up in stock.
Margin over average stock at cost. It answers the question margin alone cannot: whether a product earns enough to justify the money it occupies. Around 2.0 to 3.5 is healthy for most apparel and speciality ranges.
- Committed stock
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Stock that is spoken for by orders placed but not yet sent.
It is still on the shelf and it is not available. Counting it as sellable is how a product oversells.
- Oversold
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More sold than there was to sell.
Shopify records this as negative stock. It usually means stock was counted wrong, or two channels sold the last one at once.
Tech pack
- Tech pack
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The specification a factory builds and quotes from: drawings, materials, measurements and construction, in one document.
A tech pack turns a design into instructions precise enough that two factories on different continents build the same garment. It is not a mood board or a sketch — it is an engineering document. Everything a factory would otherwise guess at should be written in it. Whatever is left out gets decided by someone who has never seen the product you have in mind.
- Technical flat
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A plain line drawing of the product from front, back and side, with a label pointing at every seam, pocket and detail.
Drawn flat, as if the garment were laid on a table, and to proportion rather than to flatter. It is a drawing to build from, not to sell with — the fashion illustration belongs somewhere else.
- Bill of materials BOM
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Every material and component in the product, each with its composition, colour reference, supplier and quantity.
Fabric, lining, interfacing, thread, zips, buttons, labels, care labels, hangtags, polybag — all of it. A BOM that says "button" rather than naming the button is how a product arrives with the wrong one. Costing is only as accurate as the BOM it was worked out from.
- Point of measure POM
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A named place on the product where a measurement is taken — chest width, sleeve length, hem sweep.
Each point of measure carries a target for the base size and a tolerance either side of it. Naming the points matters as much as the numbers: "chest" measured at a different height is a different garment.
- Spec sheet
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The measurement page of a tech pack: every point of measure, its target and its tolerance.
One page of a tech pack rather than a substitute for it. It is what a sample is checked against, so it decides whether a sample passes or goes back.
- Grading
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The rules that scale a base size up and down into the rest of the size run.
A garment is specified in one size, then graded. Grading is not uniform scaling. A chest might grow 4cm a size while a neck grows 1cm, and a pocket does not move at all. Grading errors show up as a product that fits in the middle of the range and not at the ends.
- Construction notes
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How the product is put together: seam types, stitch density, thread, and how edges are finished.
Two garments with identical measurements and materials can still differ entirely in how they wear, because of how they were sewn. This is the section that decides that.
- Revision log
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A dated, numbered record of every change to the tech pack, and who approved it.
The reason a factory does not sew last month's specification. Once sampling starts, a tech pack changes: comments come back, a trim is swapped, a measurement moves. The version number is what keeps five different readers looking at the same product.
- Trim
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Anything on the product other than the main fabric — zips, buttons, thread, labels, elastic, cord.
Trims are a common cause of delay. They come from different suppliers with their own lead times and minimums, and bulk cannot start until they are all in.
- Colourway
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One colour combination of a style. The same product in navy and in sage is two colourways.
Each colourway has its own colour approvals and often its own minimum order. Adding one is not free, even though the pattern and construction are already done.
Trading
- Markdown
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A permanent reduction to a product's own price, to sell stock that is not moving at what you asked.
A markdown belongs to the product and applies to everyone. A discount belongs to the order. Reporting them together hides which of the two is costing you margin.
- Discount
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Money off an order: a code, an automatic, a manual reduction, or one applied by a script.
Applies to a basket rather than to a product, and can land on top of a markdown. Depth matters as much as frequency — a small discount taken by everybody can cost more than a deep one taken by few.
- Sell-through
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How much of what you had has sold.
The trade usually measures it as units sold over units received. pimbo measures units sold as a share of units sold plus the stock still on hand. Stock is not kept over time, so what is left today stands in for what did not sell. Read it as a rate, not an exact history.
- Average order value AOV
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What an average order came to.
Moves for two quite different reasons: people buying more things, or buying dearer ones. Worth reading beside basket size, which tells you which.
- Basket size
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How many items an order held.
The other half of average order value. A rising average with a flat basket means people are buying dearer things, not more of them.
- Order value band
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Orders grouped by what they came to, so you can see where the money actually comes from.
A handful of large orders and a long tail of small ones are two different businesses, and an average hides which one you are running.