Sunday, February 19, 2012

Pricing Fashion: Costing a New Shirt


The Wall Street Journal recently ran an article that detailed the journey one new fashion start-up went through to produce their initial product: a polo shirt. What they found were costs that resulted in a $155 price tag.

The new business owners are Katherine and Jared MacLane, both entered the manufacturing arena after sufficient experience in retail. It was their goal to create a company that offered the most perfect polo shirt: in fit, style, comfort and performance.

The article follows their journey to source the best textile, trims and labor to produce their design. This wasn't easy, as simple cotton became expensive cotton, and performance issues were many in the selection of that textile and the trims to put on it. Would you believe that the knit cotton yardage they wanted was $9.00 per yard, and mother of pearl buttons were $1.00 each? Clearly, adaptions had to be made.

Another hurdle was locating a manufacture in the U.S. This turned out to have its own barriers to entry. After that were the little details, hang tags, garment tags and packaging: each one requiring costs beyond what you might imagine.

As for that $155 price tag: The cost to actually produce the top was $29.57, with labor costs just a fraction over $11. The retail price is a bit more than double that, $65. The profits are used to cover other expenses, such as marketing, shipping, product development and the owner's salaries. The retail store more than doubled that cost to cover their expenses, so the final price the consumer pays is $155.

Right now, fashion is an easy 'whipping' child for several groups who feel their viewpoint is politically correct. There is the 'why is fashion so poorly made?' group, and the 'Why can't I find ____ made in the US?' and finally 'Fashion is so overpriced, those designers are making huge profits' group.

If anything, this article dispels any notions of grandeur on the part of the higher priced manufacturer. Good quality materials, local labor, manufacturing and retail have their costs. The consumer has recently been treated to apparel at costs far below any in the history of the peopled world. With this has come an expectation that everything should reflect this cost downturn.

Part of turning around the consumer's way of thinking, along with their buying habits, is educating them to see that US made products will cost more. Having them accept that reality is another thing entirely! As a start, this article is a great intro to costing and product pricing.

The full Wall Street Journal article, "Polo Puzzle: What Goes Into a $155 Price Tag?", Feb. 2, 2012 by Christina Brinkley is HERE

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