The Margin Is There. The Job Is Demand.
An independent read of Modest April's first drop, built from Khenza's production plan, the cost sheet, the discovery questionnaire and conversations with D2C founders we work with. We did the arithmetic first, so the growth plan could stand on it.
Confirmed Inputs, and the Assumptions Filling the Gaps
Every number downstream depends on these. Where nothing was decided yet, we modelled a range and marked it.
- Drop 1: 9 styles, 17 colourways, 456 pieces
- Store opens 30 October on Shopify
- Masstige band, ₹5,000–10,000; MRPs include 18% GST
- Prepaid only, no COD; exchanges rather than refunds
- Shoot with Unnees Bees, a production house in Mumbai
- Warm audience today: close friends and family
- Kochi-based; domestic shipping first
- Four drops in the first year
- Fixed costs around ₹2 lakh a month, founders unpaid
- 15% of orders ask for an exchange
- Repeat buyers are 20% of orders in year one
- Shopify Basic with Razorpay: about 4% in fees
- Average MRP around ₹7,000 from Drop 2
If fixed costs are higher, only the break-even and cash lines move. The unit economics hold.
Four Findings That Shape the Plan
We read the production plan and the cost sheet line by line before writing a single post idea.
The bow is already a signature
Three of nine styles carry one: the bow-neck maxi, the bow-sleeve dress and the bow-sleeve shrug.
Half the line adjusts to the body
Wrap top, wrap skirt, tie-waist dress, and free sizes (S/M, L/XL) on most pieces.
About 25 pieces per colourway
Small, deliberate runs. A sell-out is realistic, and so is a stock-out in the size she wants.
Margin is not the problem
74% gross margin after GST, across the whole drop. The cost sheet is better built than most we see.
A Small Drop With Healthy Margins
| Status | From the cost sheet |
|---|---|
| Done well | MRPs already include 18% GST, and no style sits in the ₹2,626–2,950 dead zone. |
| Fix | MA 05 (C2), the black and lace wrap top, is at 69% margin, under your 70% floor.Move it to ₹5,299 (71%), or keep it deliberately as an entry piece. |
| Fix | Trim cost for MA 01 is missing.The bow-neck maxi's COGS is understated until it is filled in. |
| Decide | The same style carries different prices: MA 07 is ₹5,250 and ₹7,999; MA 08 is ₹6,599 and ₹7,999.Fine if the product page explains the fabric. Without that, it reads as inconsistent. |
| Watch | MA 10, the shirt dress: 50 pieces in one colour at ₹9,999, or 16% of the drop's value.The biggest single bet. It should get the most content. |
| Check | Packaging at ₹200 a piece is 13% of COGS.Worth it for the unboxing; get a second vendor quote. |
Where ₹6,973 Goes
The weighted-average Drop 1 piece, under the policy below: prepaid only, exchanges rather than refunds. Bars are to scale against the MRP she pays.
| Measure | Per order | What it means |
|---|---|---|
| Net revenue | ₹5,909 | MRP minus GST. The GST is collected for the government; it is never your money. |
| CM1 · gross margin | ₹4,383 · 74% | Net revenue minus the landed cost of the piece. |
| CM2 | ₹3,985 · 67% | CM1 minus fees, courier, packaging and exchanges. Also the break-even CAC: spend more than this to win a first order and you lose money on it. |
| CM3 | ₹1,985 · 34% | CM2 minus the cost of winning the order, at a ₹2,000 blended CAC. |
| EBITDA | — | CM3 across all orders, minus fixed costs: team, studio, sampling, tools. |
Break-Even Comes at 127 Pieces
What Drop 1 returns at different full-price sell-through rates, before launch and marketing costs.
| Sold at full price | Pieces | Net revenue | CM2 | Cash after paying for all 456 |
|---|---|---|---|---|
| 40% | 182 | ₹10.8 L | ₹7.3 L | ₹3.1 L |
| 60% · our target, in 60 days | 274 | ₹16.2 L | ₹10.9 L | ₹8.1 L |
| 80% | 365 | ₹21.6 L | ₹14.5 L | ₹13.1 L |
| 100% | 456 | ₹26.9 L | ₹18.2 L | ₹18.2 L |
127 pieces or 28% of the drop pays back the ₹6.96 lakh landed cost.
60% in 60 days at full price, with a waitlist on whatever sells out.
Prepaid Only Is Right. Exchanges Need a Fallback.
Launch prepaid-only. The cost sheet assumes 25% of COD orders come back undelivered, against 2% for prepaid. With about 25 pieces per colourway, each COD order in transit or returning locks up 4% of that colourway for up to two weeks.
- UPI and cards at checkout
- Exchange policy visible on every product page
- WhatsApp confirmation for every order
- Founding Circle reviews on the site in week one
At day 60, if many shoppers drop off at payment, test a ₹500 booking with the balance on delivery. Avoid full COD.
Exchanges for size and fit; full refunds only for damaged or wrong items.
- She asks within 7 days of delivery, by form or WhatsApp. A Shopify app such as Return Prime runs this.
- You book a reverse pickup. Her first exchange is free; it costs you about ₹90.
- Check the piece is unworn with tags on.
- Ship the other size or another piece; she pays any difference.
- If her size is sold out, issue store credit valid for six months. With two sizes and ~25 pieces per colourway, this will happen often.
Each exchange costs about ₹165, roughly ₹25 an order at a 15% exchange rate. Have the final policy reviewed before launch and show it at checkout.
Six Months, Four Moments That Matter
The months are not worth the same. Launch lands just before Diwali; the biggest modest-wear window of the year arrives in February.
Twenty days to build demand.
No audience yet beyond friends and family. Every day before the 30th goes into the waitlist.
Opening into Diwali.
Diwali on 8 November. Gifting intent is high; gift cards should be live from day one.
Weddings and visitors.
Wedding season, then families visiting from the Gulf. Occasion styling and gifting.
Ramadan, then Eid.
Eid falls in early March 2027. Drop 2 should be live before Ramadan starts, with no faith messaging.
EBITDA Can Look Fine While Cash Runs Out
Four drops in the year. Pick a scenario, then move the inputs to test your own numbers.
| Scenario | Conservative | Base | Stretch |
|---|---|---|---|
| Drop sizes, pieces | 456 · 350 · 400 · 450 | 456 · 550 · 650 · 800 | 456 · 800 · 1,000 · 1,300 |
| Full-price sell-through | 50% | 65% | 80% |
| Ordersper month | 828 (69) | 1,596 (133) | 2,845 (237) |
| GMV at MRP | ₹58 L | ₹1.12 Cr | ₹1.99 Cr |
| Net revenue | ₹49.1 L | ₹94.7 L | ₹1.69 Cr |
| CM2 | ₹33.2 L | ₹64.0 L | ₹1.14 Cr |
| MarketingAds, TFC, shoots | ₹25.2 L | ₹29.4 L | ₹38.4 L |
| Fixed costs | ₹24 L | ₹24 L | ₹36 L |
| EBITDA | −₹16.0 L | ₹10.6 L · 11% | ₹39.6 L · 23% |
| Unsold stock at cost | ₹12.7 L | ₹13.2 L | ₹10.9 L |
| Cash result | −₹28.7 L | −₹2.6 L | ₹28.7 L |
| Blended CAC | ₹3,804 | ₹2,302 | ₹1,687 |
Inventory eats the profit
In the base case the business makes about ₹11 lakh of EBITDA and still ends the year slightly short on cash, because unsold stock holds the money. Fashion brands rarely run out of margin. They run out of cash.
Plan capital for the slow case
If year one goes slowly, the business needs ₹25–30 lakh beyond Drop 1. The break-even line sits at about 110 orders a month.
Earn the next drop
Size each drop at 1.3 times the full-price pieces the previous drop sold in its first 60 days. Growth follows demand, not hope.
What the model ignores
Founders' salaries. Leftover stock sold later at a discount. Fixed costs of ₹2 lakh a month cover two team members, sampling, studio, tools and accounting.
What to Measure Against
| Metric | Category benchmark | Modest April target | Why |
|---|---|---|---|
| Gross margin, after GST | 50–70% for apparel D2C ¹ | 74% | Already in the cost sheet |
| Customer returns | 20–35% in apparel ¹ | Exchanges under 15% | Free sizes, fit concierge |
| RTO on COD orders | 25–40% in fashion ² | About 2% | Prepaid only |
| CAC | ₹600–1,200 for apparel D2C ³ | ₹1,500–2,300 blended | A ₹7,000 order costs more to win |
| LTV to CAC | 3:1 to 5:1 ³ | 3:1 by month 12 | Repeat buying from Drop 2 |
| Repeat customers | 30%+ as a strong D2C target ³ | 20% of orders in year one | Four drops, four reasons to return |
| Full-price sell-through | 50–65% ⁴ | 60% of Drop 1 in 60 days | Scarcity and a warm list |
| Marketing spend | 25–35% of net revenue, year one ⁴ | About 31% | Base case |
1. base.com, Contribution Margin D2C Benchmarks by Category (2026). 2. Industry range noted in your cost sheet. 3. base.com, CAC vs LTV Benchmarks for Indian D2C Brands (2026). 4. TFC estimate. Category figures mostly reflect lower price points; at ₹7,000 we expect a higher CAC and fewer returns. Pressure-tested with founders at Yuri Skinscience, CHK, Underlyn and Ateliers London.
What We Still Need From You
- BlockingCapital set aside after Drop 1The slow case needs ₹25–30 lakh. For Saeed.
- BlockingShoot dates and deliverables with Unnees BeesImagery must exist by the 30th. Ask for raw vertical clips as well as the film.
- AskMonthly fixed costs, and when founders draw a salaryMoves break-even and the cash line.
- AskWere free sizes chosen with changing bodies in mind?If yes, it becomes a core message.
- AskHow much of Khenza on camera feels rightHands and sketches, voice, or face.
- AskStock unsold after 90 daysArchive sale, carry into next season, or hold.
- AskDrop 2 funding, and appetite to raise in 18 monthsFrom Drop 1 sales, or fresh capital.
- AskWho answers DMs and WhatsApp after launchDecides how much community work sits with us.
- AnsweredCOD, returns, warm audience, photographyNo COD; exchanges only; friends and family; Unnees Bees. Thank you, Khenza.