The widening valley between the Car Snoopy and Woodstock Car 176 VW Beetle 9 9 mk shirt in other words I will buy this two is compounding our confusion: If a T-shirt shouldn’t be $5, then it probably shouldn’t be $500, either. But where’s the middle ground? What’s the “right” price for fashion? The straightforward answer is that it’s probably higher than you think. Understanding where the number on a price tag comes from requires tallying every step of production—fabric, labor, shipping, packaging—and adding a profit margin. Let’s assume a designer is using quality materials and paying its garment workers an above-average wage; the materials and labor will arguably be the highest costs. The industry standard for a profit margin is between a 2.2 and 2.5x markup, meaning a dress that cost a designer $100 to produce might be sold to a retailer for $220. That retailer has to mark it up by 2.2x again to make its own profit, bringing the final price up to $484. (You can see how the math for that $5 tee becomes nearly impossible.) The average shopper doesn’t know any of that; she might assume the price is an arbitrary number the brand came up with to maximize its profits. She doesn’t know where the profits are going, either; maybe they’re covering overhead costs, like office space, employees, legal fees, and taxes, or they’ll be reinvested in future collections. And why would she know? Fashion has not been transparent historically, particularly when it comes to money and profits. Rampant discounting has trained us to doubt the price of anything, whether it’s a $2,000 dress or a $200 blouse. We know that if we wait a few weeks or months, it’s going to be marked down. And if it’s so easy for designers to slash those prices, then surely the original number was too high to begin with, right? You’d be a fool not to hold out for the sale. As a result, some retailers are actually increasing their margins to make up for the inevitable 30% or 40% loss, sometimes pushing it as high as 4x—meaning a coat it paid $1,000 for (and may have cost closer to $500 to produce) will begin at $4,000 in the store. It’s a tangled web of problems, and it’s particularly damaging for small businesses like Stanley’s. Forget trying to create ethical, sustainable clothes; how do you convince people to pay more for them? Her prices hover in the $350 range, but her customers frequently ask why she can’t go lower. While she used to avoid sales entirely, she’s felt pressured to “give in” to discounts because it’s the only way we know how to shop.
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