11.2.12

the wage and pricing dilemma...


There is a lot that goes into creating a selling clothing that most people don't see, and a lot of factors that I have really struggled with in trying to keep my brand affordable, but also ethically produced.  I wrote this post while going through the pricing process for my Autumn/Winter 2012 collection, and it brought up a lot of the fundamental ideas behind my business and why I am spending my life designing and selling clothing.
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This morning I'm trying to finish my sales packet to mail out to a few special boutiques I really love, and I'm having to finalize my pricing calculations. This is probably the most cringe-inducing part of the design and production process for me. I've kept track of how long it takes to cut and sew each design, and the yards of fabric and other notions for each, and I have to plug in the actual dollars into my formula to get the wholesale and retail prices. Here's the formula I use, and you get to have a special preview of my Fall 2012 collection because I'm going to use the numbers for my Charles dress in the picture above. It feels kind of revealing, but I have nothing to hide:


Add up:
Hrs. of cutting x hourly rate: .75 x $13= 9.75
Hrs. of sewing x hourly rate: 1.33 x $13= 17.29
Yards of fabric x price per yard 2.5 x $10= 25
Thread- about $1 per piece 1
total costs: $53

Multiply by 1.3 for my wholesale pricing: $69

Multiply wholesale price by 2 for retail price: $138

The markup for my wholesale pricing theoretically covers the costs of designing and developing my patterns, which actually takes weeks to do, and the cost and time of putting together my sales packets. It also helps cover the cost of your production equipment- sewing machines, sergers, and other necessary tools and supplies. This is also where you would make any profit, unless you factor that in a separate percentage.

My markup is quite low- typically cost of making one garment is doubled to get the wholesale price.

The retail markup varies, but STARTS as double the wholesale price. For some boutiques, it can be even 3 or 4 times your wholesale price. There really are a lot of expenses in just getting your products accessible to people. In a store, this includes the cost of rent, employees, store fixtures, office equipment, advertising, etc. For an internet based boutique, like etsy, this covers the expenses of high quality photo shoots that accurately represent your products and also re-enforce your branding and style. I don't think most people know how much money and time even that part requires. You also need to pay for internet services, your computer and other basic office equipment, packaging supplies, printed materials, and rent and utilities for your studio/office space. Just running the business end of things takes a lot of time. You can't just snap some pics with a plain little camera, throw them on the internet, and start raking in the sales. There's a lot of problem solving, creativity, and tedious work involved in putting a brand out there that even looks credible. Other expenses I've had that would fall in this category are festival booth fees (hundreds of dollars a show), travelling expenses, and booth setup supplies.

I feel like I'm trying to build a case for why my prices are so high. It's true, I suppose I am. I'm trying to explain this to you so that you understand what the numbers mean, and furthermore, so that you realize the prices you are used to seeing on basic clothing are nothing less than insane and exploitative.

As you can see, there are real expenses to running a business, and the prices on your actual products have to factor those in, but are centered around the cost of your materials and manufacturing. If you want to keep your prices competitive, it's a no-brainer that you want to use the cheapest labour and materials you can find!

What if that means you can have your clothing made for a few dollars a piece in an overseas factory where their workers are willing to work for impossibly low wages that in no way allow them what we would consider a decent life? I'm not talking about a NICE life, I'm saying not even decent. How do you feel about wearing something made that way and in fact, investing in those business practices? If the clothing you buy says made in China, India, or any other developing or third world country, odds overwhelmingly state that's exactly what you're doing. Target, Forever 21, Urban Outfitters, even Anthropology and Free People all manufacture their products in low wage factories. Really, it's hard to find anywhere that doesn't. And if you do find it, you'll know, because it will be a small, independent business that is driven to provide an alternative to the mainstream clothing industry. And they'll let you know exactly why they're doing what they do.

Unfortunately it's really hard to compete as a small, visionary designer or team. The advantage is that most of us care about this so much that we won't stop trying until we do or die. There are a few Austin-based companies in this category that I'm really proud of: Good and Fair Clothing, Raven and Lily, and {r}evolution Apparel

Here's the problem- we want:

Clothes that look good
Clothes that are made ethically
Clothes that are not expensive

You can pick two.

Our idea of "not expensive" is based off of what we think is normal, which unfortunately is clothing made with indecently cheap labour.

I've talked before about this problem in my post on organic cotton.

This time the deal is about the manufacturing price. Right now I sew everything in my own studio and don't take any money out of sales to pay myself for my own time. It's all gone into other expenses to keep growing the business. I hope that changes this summer- I'm hoping for enough wholesale orders that I actually have to pay someone to help me sew them. And my goal eventually is to be able to provide living wage jobs for single moms and immigrant women.

That brings me to the Living Wage. Spend some time looking around at the Living Wage Calculator website. That's where I've been doing my research.

In the US, a living wage for a single mom with one child starts at around $13 an hour. It's usually more. In Austin, it's $13.68 according to the Pennsylvania State University. They've estimated $662 for a 2 bedroom situation. Having just been apartment searching, I can tell you right now that's a low estimate for something decent.

Is it any wonder that people working any kind of minimum wage jobs would need to live in subsidized housing or be on welfare? Listen up Republicans and Capitalists! Do your math!

I've come to the conclusion that it's just not right to pay someone less than a living wage. But is it also right to charge someone $138 for a basic nice dress? Well, maybe they could afford it if they made $13 an hour or more, and if it's a versatile and high quality enough dress that they can wear it for many occasions and for a long time! (Cheers, {r}evolution Apparel!) I understand a small wardrobe can be boring, but there are plenty of solutions to that, including trading clothes with your friends, or donating and buying second hand. Good quality clothes can hold up to that.

From now on, I'm basing my labour costs on a baseline living wage. It's just not right to do anything else. I also promise to make the highest quality and best designed clothing I can so that it is genuinely worth its price, and I want my customers' input and feedback to help me do it.

Please think about how you are investing in the world when you buy clothing. If you want to see a different clothing industry, you can bring that into existence by supporting the small, brave businesses that are trying to stand up to the challenge.


p.s. I do my best to keep costs as low as possible while keeping creativity and quality at my highest. The photo above was created using a into level interchangeable lens digital camera bought on a drastic sale, using a tripod and modeling myself, and used free photo editing software. It took about 4 or 5 hours total for the shoot and editing of that one look.

9 comments:

Megan Winn The Binding Bee said...

Two things: 1. You are a strong, bold woman with a brave business. It's great to read your thoughts and know your process. Your thoughtfulness at every level shows and I believe it will lead to exuberant success for you. 2. What's my prize?

Megan Winn The Binding Bee said...

P.s. That dress is gorgeous!

Jdubbs said...

:)

katastrophic said...

Your prize is an etsy code for 20% off: ireadkatsblog !!
Although of course, Megan, I will give you any prize you ask for. :)

Joshua e.v. Cosimo said...

The problem with the fashion industry is the same as the problem with the food and building industry. We as a society have chosen the quantity over quality. A plurality of luxury. More crappy clothes more crappy houses and more crappy food. When we start to consume with quality in mind we are less damaging to the enviroment and we tend to get a better quality of life. McMansions McDonalds and Mcfashion. Keep doing what you do and our generation can create a amazing beautifully crafted world, kuddos.

katastrophic said...

You're completely right, America is obsessed with excess (without most of us even realizing it). It's ironic that excess is seen as luxury- as you clearly realize, a simpler, more carefully crafted life is so much more satisfying, and better for us! Thanks for the response!

Anna Hayes said...

Really interesting to see the price breakdown. As a nerd/in-my-spare time student of econ, the living wage discussion is certainly relevant and worth having. Any particular books/articles to suggest? I'm nearly finished reading Economic Facts and Fallacies, which is extremely nerd-tastic, but still a page turner. Haha. Oh dear. I don't think I'm cool enough to even read this blog. <3

katastrophic said...

Anna that is ridiculous. This blog is for nerds too. Honestly I don't even know where I've been educated on this exact subject... it began for me when I worked a job waiting tables- how frustrating it felt to provide a service to other people that I couldn't really afford myself. (Consider house keepers, care givers, and factory workers all over the world who help make products they don't make enough money to buy.) Moving to Ukraine was probably the most significant factor in shaping my world view and developing a sensitivity to economic and social issues. I probably don't even know as many facts about this stuff as you do- my rational comes mostly from my own observations and convictions, and is enforced by snippets I discover and turn up here and there.

Mary Margaret Quadlander said...

Melissa, I completely understand your dilemma. It hits every designer who wants to manufacture in the US. At this very moment we are watching shows on the manufacturing practices of Apple...entire cities in China, complete with bunk beds and suicide nets to keep the assembly line human robots from jumping to their deaths. But does that stop people from buying an IPhone or an Apple computer?
As as designer, I struggled with this dilemma over how to price my clothing; how to compete with those who had their clothing lines sewn in the Philippines, Hong Kong, Lithuania.
The answer is all in how you market yourself...validating your prices and finding those buyers who understand and are not afraid to buck the system of "instant-wear-one-day-into-the-landfill-the-next."
You absolutely must include your decision in your marketing...it is part of the package of who you are as a designer and manifestation of that in your garments. Don't sell the dress...sell the idea of you! Mary Margaret