Mark-ups

Dw3610wm · Apr 1, 2010

Ello folks, I have recently been wondering the mark-ups for ultra-lux items and thought I could start a discussion here with the view to get more answers on this topic! How much are they? How much does a $6000 Kiton jacket cost Kiton? An $8000 RLPL Tuxedo does it cost them $120 or $6000 to make? Very curious!!

Holdfast · Apr 1, 2010

Most clothes carry a 200-400% markup on factory invoice, depending on item, I believe.

I would suspect that for high-end items, the mark up is in the 6-800% range, but I have no proof of that.

Scoundrel · Apr 1, 2010

I usually divide the typical Italian designer MSRP by two, and that is how much the same item of similar or better quality made by a generic company goes for. The bottom line is you're paying (at least, as the previous poster stated) 100% more than the typical cost of said item. Is this good, is this bad? Well, that's for another discussion!

sho'nuff · Apr 1, 2010

i do think the markup for a typical solid luxury brand (not prada etc) on an item with much work involved (like a sportcoat ) is 400% , right.

so let say $4000 is the msrp, but the actual cost (including everything) is about $1000.

this is where business risk and strategy comes in.

a few sell at retail, some sell at half price, and then the remaining unsold gets sold at clearances or factory stores for much less. there are including of course some collateral damage from abandoned altered orders, greyish area customer returns and such.

they will mark some of the sales at a loss and at cost, but i think the variety of sales at the 50% off to full retail more than makes up for the losses.

Dw3610wm · Apr 1, 2010

To be honest I don't mind paying 4k (if I had that much to spend) on something that I know has taken work dedication and $1000 cost to make.

A thing that bothers me is when people say "yeah well it only costs them this much to make it" - well no ****, but you would need a factory of your own equipment, very skilled tailors/leather artisans, machines, advertizing (which is why you are buying a brand or so), retail space (which is how you are led to the actual product), sales staff, the rent of both factory and retail space, the service staff you are keeping employed (where you get free alterations at the store, returns, etc.) and the transportation costs from Factory to Retail space which is how this garment is made possible for you to acquire from its birth in the factory. Oh and did I mention the high cost of fashion shows?

Do you guys agree with this or am I wrong in thinking some of the retail prices are justified in a sense (keyword = SOME)?

What about Bespoke and MTM places, what sort of mark-up do A&S carry?

Bellison · Apr 2, 2010

Generally speaking luxury brands carry a mark-up of 10 times their cost. Some brands like Louis Vuitton have mark-ups of up to 13 times. So if they charge $3000, then it costs them around $300 to make, and for a brand like Vuitton, it costs them a little over $200 to make.

Cost is just their raw materials and labor to produce the product and does not include their marketing, rent, salary, etc.

Originally Posted by Dw3610wm

Ello folks, I have recently been wondering the mark-ups for ultra-lux items and thought I could start a discussion here with the view to get more answers on this topic! How much are they? How much does a $6000 Kiton jacket cost Kiton? An $8000 RLPL Tuxedo does it cost them $120 or $6000 to make? Very curious!!

bjan · Apr 2, 2010

Don't forget about R&D and design costs. Clothes don't design themselves.

Nicola · Apr 2, 2010

Originally Posted by Bellison

Cost is just their raw materials and labor to produce the product and does not include their marketing, rent, salary, etc.

And in what world is this cost? Not to mention the retail price includes the retailers markup.

Bellison · Apr 2, 2010

I'm talking about retailers that control their distribution network themselves and don't go through other retailers.

When they do go through other retailers, they will willingly make less per product sold, but generally make up for it through volume.

Originally Posted by Nicola

And in what world is this cost? Not to mention the retail price includes the retailers markup.

alliswell · Apr 2, 2010

Not sure that Kiton subscribes to the 'Stack 'em high, sell 'em cheap' school of thought.

Dashing1 · Apr 2, 2010

Dw3610wm;3105257 said:
A thing that bothers me is when people say "yeah well it only costs them this much to make it" - well no ****, but you would need a factory of your own equipment, very skilled tailors/leather artisans, machines, advertizing (which is why you are buying a brand or so), retail space (which is how you are led to the actual product), sales staff, the rent of both factory and retail space, the service staff you are keeping employed (where you get free alterations at the store, returns, etc.) and the transportation costs from Factory to Retail space which is how this garment is made possible for you to acquire from its birth in the factory. Oh and did I mention the high cost of fashion shows?

Do you guys agree with this or am I wrong in thinking some of the retail prices are justified in a sense (keyword = SOME)?

+1000 It drives me nuts when people complain about "obscene" profits or mark-ups. In a free economy, consumers make choices, and industries with high profit margins attract capital and competitors (thereby, ultimately increasing risk). Now, we could debate whether gov't intervention has left markets truly free anymore, but that is a different discussion.

Deciding whether or not an item is "worth it" is based upon one's own definition of personal marginal utility. As my tastes have evolved, I have been more willing to shell out $ for details that I would have thought "fussy" or "non-essential" at a different stage of life. Conversely, now that I've had a kid, I view financial decisions (and the necessary trade-offs) through a different prism (e.g. the $4000 Kiton now represents a portion of my child's school tuition).

I'm a bargain shopper. I like high-quality/high-preference items at average item price. When I can find such deals, I bite. Just as I search for business deals in which I am under-worked and overpaid, I get a rush from purchases in which I feel over-satisfied and under-charged.

lee_44106 · Apr 2, 2010

If I can get an item for about 10% MSRP, I'm very happy.

RoyalPaJamas · Apr 2, 2010

Originally Posted by sho'nuff

i do think the markup for a typical solid luxury brand (not prada etc) on an item with much work involved (like a sportcoat ) is 400% , right.

so let say $4000 is the msrp, but the actual cost (including everything) is about $1000.

Your example is actually a 300% markup. Percentage change is calculated as (new price - original price)/original price. So ($4,000 - $1,000)/$1,000 = $3,000/$1,000 = 3.00 = 300%.

If a price has been doubled, for instance, it is not a 200% markup, but a 100% markup; the price has increased by 100% of its original.

*Sorry, the former math teacher in me can't pass up a teachable moment.

sho'nuff · Apr 2, 2010

youre right. but you do get my point still ?

in response to above, i do agree with Dashing about mark up complaints; it is not just material and labor that makes up a cost and which adds value to something. just because all other factors like fashion week , design , and marketing pumps it up , it doesnt mean the extra cost is 'empty calories' sort of speak, it is all in the fabrication of the exclusivity of the item. and the fun of trying to get it. (now im not talking about made in china PRada stamped items , that eventually get marked down 75% off at end of year)

i got 2 LV handbags for my wife, and as we all know, they dont go on discount. i know what goes into the pricing of these bags. im not dumb . she is not dumb either. but (within moderation) we still want to delve into this joy of owning some LV. it is a nice product. she has two items that arent ubiquitously seen.
you go into life pointing your finger at "This is marked up too high i aint going to be duped" you live a sorry life. you make your wife live a sorry life. hey , let her enjoy her things. let her have fun with the girls. just relax.

lee_44106 · Apr 2, 2010

^so are your wife's LV bags completely devoid of any logos?

Mark-ups

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