Financial Modeling For your Shoe Company:
Before you send any orders to the shoe factory you need to build your financial models. Financial modeling and cost accounting are important calculations to show if you will make any money! This may sound complicated, but once you have a basic understanding it’s easy. First, you will need to calculate how much it will cost to buy your shoes and import them into your selling market. This is called landing.
FOB or Ex-works Purchase Terms for Shoes :
To build your shoe companies complete financial model, you are going to need to figure out your real product costs. When you negotiate your shoe purchase price, you need to set the purchase terms with the factory. Usually, your price will be quoted as FOB. The FOB price includes the cost to build, package, deliver the shoes by container truck to the container harbor and load the merchandise on the vessel. FOB means you will work with the international shipping lines to move your container and not with a local trucking company. Leave the local trucking price negotiations to the factory.
Another common shoe purchase term is “ex-works.” This means that either you or your freight forwarder are responsible for picking up the shoes from the factory. You may choose to buy your shoes ex-works if you are loading a container with other products.
Landing Costs For Shoes:
Landing includes all the costs related to moving your shoes from the factory to your warehouse. You need to add in the cost of ocean freight, inland trucking, harbor fees, insurance fees, import duties, document fees, taxes etc. It’s critical to understand these costs, as this will help you work backward from your shoes’ selling price to your factory target price. A shoe which costs $15 FOB will cost closer to $17.46 to buy, ship and import into the USA. The additional inland freight inside your home country could be $.10 to $.50 per pair. This cost will depend on your distribution center’s proximity to the landing port.
If you are using an agent, you may be required to pay duty on the agent’s fees. It’s best to consult your home country’s import regulations. USA regulations require import duty to be paid on any molds or equipment used to make the shoes.
This is a basic calculation of the landed cost. Once you get started, your freight forwarder can help detail other small fees. Some of the costs of the components are under your control, and some are not.
Once you determine the cost to land your shoes, select your sales and distribution business model. You will find footwear sales and distribution models detailed in chapter 8 of How to Start Your Own Shoe Company. Import duty for shoes is reviewed in chapter 5.
In the cold cement process, the shoe upper can be prepared with the strobel bottom. For this classic jogger style, the outsole covers the edge upper so a strobel bottom can be used to make the shoe lighter and more flexible.
The new sneaker is ready for a final QC inspection, a quick check for any loose threads, cleaning, and packing.
Italian High Quality Shoes
The typical shoe factory in China will have hundreds, even thousands of workers, but there is a new class of small factories now producing the highest quality custom and semi-custom shoes. On a recent visit to China, I toured the show room of the custom shoe maker Top Owen. Owen, the founder of the brand, learned his trade in mass production of athletic footwear, but then changed course.
With a desire to create european craftsmanship in China, Owen left his job at a huge shoe factory to build his own micro factory. Owen hired on a staff of 25 expert shoe makers to operate his new custom shoe factory. After careful study of the highest quality European hand crafted shoes, Owen and his team now offer custom hand crafted footwear for shoe connoisseurs lucky enough to find him.
Are you looking for some custom made kicks? Owen has a section of mock vulc stitch down soles, classic trainer wedge, and classic basketball sole units available. For around $400 USD you can get your own pattern custom made in full grain leather. For an extra $125 USD you can have a test pattern sent to you for fitting.
Send Owen a design for dress shoes and his team will create exactly what you want. You pick the design, last shape, leathers and any extra styling work you desire. Prices start around $400 USD – depending on your material and design requirements. For an extra $125 USD you can have a test pattern sent to you for fitting.
Are you looking for a full custom fit? For a 100% hand made last fit just for you? The full custom program brings the high end European custom made service to you at a fraction of the European price. Send Owen and his team photographs of your foot and record the critical measurements. Then, send Owen your design for the dress shoes and his team will create them to your specifications. Once again, you pick the design, last shape, leathers and any extra styling work you desire.
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