Mark-up is how you price your product relative to cost. Definition Mark-up = Retail price ÷ Cost So if something costs £50 and you sell it for £150 then that’s a 3x mark-up. Why it matters Mark-up determines your potential margin but there’s an important distinction: - Mark-up is set before the market reacts - Margin is what you actually keep after discounting So yes you can have a strong mark-up… and still end up with weak margins if you discount heavily. What most people miss This is the trap. A lot of brands think pricing high automatically means profitability but it doesn’t! Because once discounting starts, your pricing architecture begins to weaken. And over time, you train the customer to wait. That’s how brands actually lose pricing power. Bottom line Strong brands protect mark-up at all costs because pricing discipline is brand discipline. Discussion - What mark-up structure are you currently working to? - Are your current price points truly sustainable without discounting? - Where are you seeing the most pressure on pricing?

Customer Lifetime Value (LTV) is how much a customer is worth to your business over time. Definition LTV = Average order value × Purchase frequency × Customer lifespan Why it matters LTV tells you the real value of your customer base. Not just a single transaction but the relationship. - High LTV means loyal customers, repeat purchases, strong brand connection - Low LTV means one-off transactions, weak retention What most people miss LTV is what justifies CAC (and we covered CAC in the previous post) If your LTV is high the. you can afford to spend more to acquire customers. If it’s low then your growth model breaks very quickly. This is where most brands get it wrong: they will focus on acquisition and ignore retention. Bottom line Strong brands build lifetime value because repeat customers are where profit compounds. Discussion - What is your current repeat purchase rate? - How long does a typical customer stay with your brand? - Where are you actively increasing LTV (product, experience, community)?

Customer Acquisition Cost (CAC) is how much it costs to acquire one customer. Definition CAC = Total marketing spend ÷ Number of new customers If you spend £10,000 and acquire 500 customers then your CAC is £20. Why it matters CAC tells you how efficient your growth is: - If CAC is rising then you are paying more for the same customer - If CAC is falling then your marketing is becoming more efficient What most people miss CAC means nothing on its own. You have to compare it to what that customer is actually worth. If it costs you £20 to acquire a customer… but they only spend £15... well, you don’t have a business sadly. Bottom line Strong brands control CAC relative to value. Discussion - What is your current CAC by channel (paid social, search, etc.)? - How does it compare to your average customer value? - Where are you seeing CAC increase and why?

Gross Margin is where your business actually starts to make money. Definition Gross margin = (Revenue − Cost of Goods) ÷ Revenue If you sell a product for £100 and it costs £40 to make, your gross margin is 60%. Why it matters Gross margin is what funds everything: - Marketing - Team - Rent - Growth So if your margin is too low, your business has no oxygen. What most people miss Too many brands focus on revenue instead of margin. But revenue doe not equal profit. You can scale fast and still lose money. (This is exactly what we covered in Part 1) Bottom line Strong brands protect margin first because margin gives you control. Discussion - Do you know your gross margin by product or just overall? - Which products in your range are weakening your margin? - Where are your biggest cost pressures right now (production, logistics, discounting)?

Sell-Through is one of the clearest indicators of demand in fashion. It measures how much of your stock actually sells. Definition Sell-through = Units sold ÷ Units received If you produce 1,000 units and sell 700 then your sell-through is 70%. Why it matters Sell-through tells you whether your product is actually working. - High sell-through → strong demand, clean execution, minimal waste - Low sell-through → overbuying, misjudged demand, or incorrect pricing What most people miss Sell-through drives markdowns. So if product doesn’t sell, it gets discounted. And once discounting starts, margin disappears quickly. This is where most brands lose control: they attempt to chase volume… and end up destroying profitability. Bottom line Strong brands protect sell-through by any means necessary. Because demand is always more valuable than volume. Discussion - What is your current sell-through by product or category? - Where are you seeing weak demand and why? - Are you solving the problem at product level… or relying on discounting?