Mark-ups

[sho'nuff]

not completely. but she doesnt have the typical LV logo embossed all over it like other bags do.

but that is besides the point. i dont know why or how that relates to what i said. what has LV logo being on it or being devoid of it has to do with what i said? she still enjoys the bags.

having the logo embossed on it doesnt automatically mean that she wanted it for the 'image' or to look like she has money , or whatever 'the logo' has put in people minds around here. to be fair, you dont know us. you dont know what drives us.

in fact, we are looking at a new bag near end of this year where it is the patent leather and this time it does have LV all over it. but to our eyes it looks really nice.


and lee, if you do decide one day to get your wife something from LV, go do it. you won't regret it. one tip is, the prices are cheaper the first year it comes out; they actually go up in price every year

 

[Material Boy]

If you want to know the cost of making the garment, divide the MSRP by 10.

Example: If an item with MSRP of $100.00, then the cost of making the garment is $100.00/10 = $10.00.

If you want to know how much Saks, Neiman, Barneys, Bloomingdales etc paid for these items, divide the MSRP by 2.5.

Example: If an item with MSRP of $100.00, the the cost to retailers is $100/2.5=$40.00. There are something called charge back, if an item doesn't sell as well as expected, then big retailers can ask for some of the money back.

 

[sho'nuff]

Originally Posted by Material Boy

If you want to know the cost of making the garment, divide the MSRP by 10.

Example: If an item with MSRP of $100.00, then the cost of making the garment is $100.00/10 = $10.00.

If you want to know how much Saks, Neiman, Barneys, Bloomingdales etc paid for these items, divide the MSRP by 2.5.

Example: If an item with MSRP of $100.00, the the cost to retailers is $100/2.5=$40.00. There are something called charge back, if an item doesn't sell as well as expected, then big retailers can ask for some of the money back.

nice info

 

[LA Guy]

Originally Posted by Material Boy

If you want to know the cost of making the garment, divide the MSRP by 10.

Example: If an item with MSRP of $100.00, then the cost of making the garment is $100.00/10 = $10.00.

If you want to know how much Saks, Neiman, Barneys, Bloomingdales etc paid for these items, divide the MSRP by 2.5.

Example: If an item with MSRP of $100.00, the the cost to retailers is $100/2.5=$40.00. There are something called charge back, if an item doesn't sell as well as expected, then big retailers can ask for some of the money back.

It should be noted that markdown money, the "chargeback" about which Material Boy writes, is only demanded by big retailers. Small retailers and boutiques simply do not have the muscle to demand these sorts of punitive terms. Retail used to be conventionally, 2.2x wholesale, but 2.5 has become very common. It's like the 20% tip being the new 15% tip.

 

[Dw3610wm]

I agree completely with your posts Sho'nuff in this threak..From an exclusivity point of view everything is worth what you paid for; i.e the LV you mentioned, great brand by the way, is, if you stay away from the very counterfeited products (the traditional LV monogram), you actually will have a VERY exclusive product, that somebody would have had to pay $x000 for, and if you have that much money to make a wife, yourself, girlfriend, ffs even mom, happy then I see no problem.

I doubt if you thrifted a LV she/you would get the same buzz. Going and treating your signifcant other without thinking about price or business strategies, dissecting the markup etc. for one nice day out, is a very masculine thing to do in my opinion.

 

[FidelCashflow]

Originally Posted by Material Boy

Example: If an item with MSRP of $100.00, the the cost to retailers is $100/2.5=$40.00. There are something called charge back, if an item doesn't sell as well as expected, then big retailers can ask for some of the money back.
This sounds about right. Because when they're clearing out stuff at end of season sales, usually the offers max out at 60% off unless they're really desperate to get rid of something. Usually the is their break even point or slightly above it. I worked in retail, albeit at a sports clothing store back in high school and they told me a simple rule of thumb back then. If a pair of Nike shoes cost $100, the store paid $50 for it, and Nike probably paid $25 in direct costs (materials, labour, shipping, packaging, import duties, etc.) for it. Of course there's all kinds of overhead to be dealt with, and if no one is willing to pay for that overhead, the store will close up pretty quickly. I'm sure there are stores that sell Brioni and Kiton suits with obscene markups and still lose money. At the end of the day, the fair price is what the consumer is willing to pay for it. There's some things I'll wait until I find it on B&S for 80% off, and there's some things I can't live without at any price.

 

[Valproate]

Charlie Munger (Warren Buffett's right-hand man) said there are a few ways to get more sales:
1. Lower prices
2. Improve quality
3. Advertise

All business schools teach the first 2. But Munger talks about a few more:
4. "Bribe" the buyer through kickbacks in one form or another
5. Raise prices. What?! Sure, it raises perceived value, and also increases customer satisfaction. Nobody is going to spend a lot of cash on a product and then admit that it was a bad idea.

Does an LV bag need to be $3000? Of course not. But it raises its perceived value.

 

[Nicola]

Originally Posted by Valproate

4. "Bribe" the buyer through kickbacks in one form or another
5. Raise prices. What?! Sure, it raises perceived value, and also increases customer satisfaction. Nobody is going to spend a lot of cash on a product and then admit that it was a bad idea.

Does an LV bag need to be $3000? Of course not. But it raises its perceived value.

Rebates etc are a way to hike prices without anybody noticing. The car companies have been doing this for year. They hike prices by $2k and give you a $1k rebate. Most people get all excited over the 1k rebate and don't notice the final price.

The second is a well know economic theory. Higher prices leading to higher demand. If you want the opposite example look here. How often do people complain stuff is over priced because they found a mark downed item? It's a reason some companies would rather destroy items then mark them down.

 

[Material Boy]

2.5 rule applies to designer brands: RL, Armani, Prada, Versace.....

The markup for Nike is lower, ~ 2. So if you find a pair of Nike shoes with MSRP $100.00, the store probably paid around $50 for it. However, the cost of making the Nike is lower, using $100.00 MSRP as an example, Nike paid less than ~$10 for it, somewhere between $5 - $8. Does that mean we should all sell our house and buy stocks in Nike? Of course not! If you examine Nike's income statement, you will find Nike has an unusually high expense in marketing (cost of goods sold). Nike paid top dollar for MJ, Lebron, Kobe, Tiger, Rafael....

At the end of the day, when you purchase something from Nike, you are really paying for Lebron, Kobe, Tiger, Rafael Nadal... That is why I rarely purchase anything from Nike.

In marketing, Nike is using the "pull" strategy. If works really well, especially on kids, the emotional shoppers. Hopefully most of us on this forum are rational shoppers.

Rebate, Buy one and get a second one at 50% off, etc is what marketing people call the "push" strategy.

2.5 rule also doesn't apply to house brands (Saks Fifth Avenue at Saks, Neiman Marcus at Neiman Marcus, The Mens Store at Bloomingdales, Taso Ellba, Club Room at Macys...). The markup is much higher. That is why Department stores realy push for their house brands.

 

[lasbar]

Originally Posted by lee_44106

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

Louis Vuitton is the ultimate status symbol for a lot of women..

I remember walking in the streets of London with the LV's carrier bag and most women were staring at it with obvious curiosity/envy...

If I come back with a suit ,I might only get a few looks eve if it's a big SR name on it...

My wife is not a designer freak but she loves her Louis Vuitton stuff..

 

[Dw3610wm]

Originally Posted by lasbar

Louis Vuitton is the ultimate status symbol for a lot of women.. I remember walking in the streets of London with the LV's carrier bag and most women were staring at it with obvious curiosity/envy... If I come back with a suit ,I might only get a few looks eve if it's a big SR name on it... My wife is not a designer freak but she loves her Louis Vuitton stuff..
Yes, I find girls REALLY cute when girls strut their LV and feel like they are a princess... If thats what makes them happy, fair enough... The same thing with other luxuries is how you feel not neccasarily whether people perceive it... A jacket that makes me feel great is a logoless, white one by Bottega Veneta, which retailed for $2000 but I got it at the Harvey Nichols clearance... Bottega is famously without logos but when you it you feel like you are part of their "when your own initials are enough" world... not particularly a brand whore per say, but thats just the power of marketing, exclusivity, fine materials and percepted value..

 

[lasbar]

Originally Posted by Dw3610wm

Yes, I find girls REALLY cute when girls strut their LV and feel like they are a princess... If thats what makes them happy, fair enough...

The same thing with other luxuries is how you feel not neccasarily whether people perceive it... A jacket that makes me feel great is a logoless, white one by Bottega Veneta, which retailed for $2000 but I got it at the Harvey Nichols clearance... Bottega is famously without logos but when you it you feel like you are part of their "when your own initials are enough" world... not particularly a brand whore per say, but thats just the power of marketing, exclusivity, fine materials and percepted value..

The logo snobs are very common and easy to spot in our streets but there is also an undercurrent of anti-logo sentiment which can also be seen as snobbery ...

I have bought clothes ,20 years ago, because of a certain logo ,brand and the values attached to them...Lacoste, Adidas,Nike ,Ralph Lauren,Armani,Versace and so on..
I was not completely aware of my relationships with these logos...

Nowadays, being older and wiser ,I tend just to wear logos when justified like on a Lacoste shirt for example if i'm playing tennis...

 

[Dw3610wm]

Originally Posted by lasbar

The logo snobs are very common and easy to spot in our streets but there is also an undercurrent of anti-logo sentiment which can also be seen as snobbery ...

I have bought clothes ,20 years ago, because of a certain logo ,brand and the values attached to them...Lacoste, Adidas,Nike ,Ralph Lauren,Armani,Versace and so on..
I was not completely aware of my relationships with these logos...

Nowadays, being older and wiser ,I tend just to wear logos when justified like on a Lacoste shirt for example if i'm playing tennis...

Yeah that makes sense, tbh if I DO wear logos I make sure its quite a cheap brand, because I find it uncomfortable to impose your 'wealth' or expensive taste in clothes on to other people, and + if Mr. Armani doesn't pay me to do free advertising for him on my body I won't do it. (as much as I love Armani very much)

 

[JATPrototype]

I work at RL that 8000 PL Tuxedo you speak of costs them about $600 to make.

 

[rohde88]

Originally Posted by JATPrototype

I work at RL that 8000 PL Tuxedo you speak of costs them about $600 to make.

where in RL do you work?

and what cost? the landed cost? there are a ton of ways to measure cost and generally ( I worked in the corporate office for A&F) the markup depends on the item. Denim and other bottoms, don't have nearly as high a markup as fragrance or accessories.

For retail math, the cost includes, fabric, stitching, trim, packaging, shipping costs from factory and also shipping to the store. It doesn't include any designers, merchandisers, any overhead of the corporate office...