KENYA · GUIDE 0254 · EDITION 4.2
Men shirt retail in Kenya: Pricing and Break-Even
Price an accepted unit, not an activity title
Start with this sale unit: shirt.
Organise men's shirts by collar, chest, sleeve, and cut, making the intended tucked or untucked style clear so buyers can select a practical fit.
A quotation needs the accepted quantity or scope, exclusions, completion point, delivery arrangement and payment schedule. Without that specification, two apparently similar prices may pay for different work.
Build the direct-cost sheet
- supplier grade
- size breadth
- pressing
- exchange costs
Include pressing, missing buttons, size-chart checking, display wear, and stock held in unusual collar-to-sleeve combinations rather than treating labelled sizes as interchangeable products.
| Calculation | How to use it |
|---|---|
| Variable cost per accepted unit | Direct inputs, labour, delivery and measured losses divided by accepted units. |
| Contribution per unit | Agreed selling price minus variable cost per unit. |
| Period operating surplus | Contribution from units sold minus fixed overhead for the same period. |
| Break-even units | Fixed overhead divided by positive contribution, rounded up. |
Count rejected output, unsold stock and correction time. Keep fixed overhead in a consistent period; a daily contribution cannot be compared directly with a monthly overhead figure. If contribution is zero or negative, extra sales do not establish a workable break-even point.
Reconcile the cash separately
A customer's unpaid balance cannot pay today's supplier bill. List actual collections, advance payments, supplier deadlines, refunds and recurring bills by date. Separate refundable deposits and money held for an uncompleted commitment from funds freely available for expansion.
A shirt can fit across the chest but fail the purchase when closing the collar feels restrictive or sleeves pull during ordinary desk work and driving.
Test a weaker outcome
Recalculate with fewer accepted units, a delayed customer collection or a higher input quotation. Change one assumption at a time to see which constraint matters. Use the actual pilot record: Record actual collar and sleeve measurements, cut description, fabric information, fitting objections, button defects, and paid demand for specific combinations when planning replacement stock.
Do not interpret the invented financial teaching exercise in the complete manuscript as a market price or predicted income. Replace its assumptions before using it for a real decision. The public planning tool can help with arithmetic; it does not validate the inputs.
Work through this business's example
Test the listed example when things change
These calculations are invented teaching cases derived from this guide's example, "Fictional order; unmarked rates are invented assumptions, not supplier quotes.". They are not observed customer results, local quotations or forecasts. They hold the listed input bill constant unless the row explicitly changes it. Excluded expenses and tax still need to be added.
| Case | Accepted / priced output | Example revenue | Listed cost | Difference before excluded costs / tax |
|---|---|---|---|---|
| Original example | 20 | KSh 32,000.00 | KSh 18,910.00 | KSh 13,090.00 |
| 20% fewer accepted units, rounded down | 16 | KSh 25,600.00 | KSh 18,910.00 | KSh 6,690.00 |
| 10% reduction in the assumed selling price | 20 | KSh 28,800.00 | KSh 18,910.00 | KSh 9,890.00 |
| 10% increase in every listed cost | 20 | KSh 32,000.00 | KSh 20,801.00 | KSh 11,199.00 |
The lower-acceptance case represents the loss of priced output, not a prediction of the actual reject rate. With 16 accepted units, the same listed bill costs KSh 1,181.88 per accepted unit. Do not divide it by the original 20 units and hide the loss. A whole-job price needs its own agreed acceptance and partial-payment treatment.
Inspect the cost that can change the decision
The largest listed line is Shirt hypothetical input, each: 20 at KSh 850.00, giving KSh 17,000.00. A 10% increase in this line alone adds KSh 1,700.00 to the example bill. Check its exact unit, scope, quotation validity and whether it is a one-off resource or a repeat input before changing the quote.
Keep every input quantity separate from priced output. A fall in accepted output does not automatically reduce already-purchased inputs. Use the itemised costing tool to change the real quantities, rather than scaling the whole bill by a sales percentage.
Connect the commercial check to quality
For men shirt retail, investigate this concrete failure: Collar feels tight despite tag 41. The guide's diagnostic check is: Remeasure button-to-buttonhole band and compare actual trial.. Proposed response: Offer another shirt; do not promise collar enlargement..
Record what was actually found and rechecked; do not mark a corrected item accepted until the agreed buyer checkpoint has passed. Any rework materials, transport, labour or credit must be added to the actual cost/result record.
A cash-timing exercise using the same example
Assume solely for arithmetic practice that opening cash is zero and the entire listed input bill of KSh 18,910.00 must be paid before handover. With no advance, that amount must be funded before any sale is collected. This deliberately simplified case does not establish when your actual suppliers need payment.
If a buyer hypothetically pays a 30% advance on the example revenue of KSh 32,000.00, cash received would be KSh 9,600.00. Paying the listed bill then leaves KSh -9,310.00. The additional cash needed to avoid a negative balance at that point is KSh 9,310.00. The unpaid remainder is KSh 22,400.00; it is a receivable, not cash already in the business.
The 30% figure is an invented teaching assumption, not a recommended or agreed customer term. Check whether deposits are refundable and which commitments they can actually fund. Do not count the advance again when entering the final collection. Add equipment payments, tax, owner drawings and unlisted operating bills to the dated cash plan as appropriate. The 13-week planner in file 10 shows week-end funding gaps; inspect intra-week dates for a large payment.