What is a floor price in wholesale textile trade? How do suppliers set it?

A floor price (or minimum selling price / MSP) is the lowest price a supplier will accept for a product — below which they cannot profitably sell. Understanding how floor prices work helps buyers negotiate more effectively.

How suppliers calculate floor price:

Floor price = Raw material cost + Processing cost + Labour cost + Overhead allocation + Minimum acceptable profit margin

Components in a typical Surat kurti:

• Fabric: ₹80–₹150 per piece (depending on fabric type and GSM)
• Stitching and finishing: ₹30–₹80 per piece
• Embellishment (if any): ₹20–₹150 per piece
• Packaging, label, tags: ₹10–₹25 per piece
• Minimum profit margin: ₹30–₹80 per piece

Why this matters for buyers: When you negotiate, you are pushing against the floor price. A supplier who quotes ₹280 for a kurti and drops to ₹240 on volume is sharing their margin — below ₹200, they are likely losing money and the arrangement is unsustainable.