What is cut rate in fashion wholesale?
Cut rate is the share of booked wholesale order quantity that a brand cancels or cannot deliver, usually expressed against the original order book.
In short
Cut rate measures how much of the booked order quantity a brand cuts before delivery, for example because a style did not reach its production minimum. It is usually shown as a percentage of the original order book per season, account or style. A low cut rate signals a reliable supplier to retail buyers.
How does it work in practice?
After a sales campaign closes, the brand consolidates orders per style and colourway and compares them with factory minimums. Styles that fall short are often dropped, and all orders for them are cut. Further cuts follow if raw materials are late or a factory delivers fewer units than planned. The cut rate is then calculated as cut quantity divided by booked quantity.
- Style drops after the order campaign
- Colourway consolidations to reach minimums
- Production shortfalls and quality rejections
- Credit holds on individual accounts
Why does it matter for fashion businesses?
A buyer plans an assortment and open-to-buy around what was ordered. Every cut leaves a gap on the shop floor and in the budget, and repeated cuts push buyers to over-order or to shift budget to more reliable brands. For the brand, high cut rates mean lost revenue and wasted sales effort on styles that never ship.
How is AI changing it?
Predictive models can estimate early in the campaign which styles are unlikely to reach minimums, so the range can be edited or the sales team can focus on those styles in time. Combining booking trends with supplier capacity data also helps planners anticipate production shortfalls instead of discovering them at shipment.
Common pitfalls
Reporting cut rate by reason helps teams see whether the root cause lies in range planning, sourcing or customer credit.
- Measuring cuts only in units, not in value or by account
- Not separating brand-driven cuts from retailer cancellations
- Communicating cuts too late for buyers to replan
- Launching ranges too broad to hit minimums
Frequently asked questions
What is a good cut rate in fashion?
There is no universal benchmark because it depends on range breadth, order minimums and supply chain. What matters is the trend over seasons and the comparison between accounts and categories.
How can brands reduce their cut rate?
Brands reduce cuts by editing ranges to fewer, stronger styles, setting realistic minimums with factories and tracking bookings during the campaign. Early communication with buyers about at-risk styles also helps them adjust orders rather than lose them.
