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Size vs. Cost

Discussion in 'Classic Menswear' started by swiego, Dec 17, 2011.

  1. marblehouse

    marblehouse Senior member

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    I don't think you've seriously thought this through. Pricing is clearly more sophisticated than a reflection of actual material costs.

    Moreover, there is example of this: tailors charge by the yard for suits and much taller larger members will have to pay (slightly) more for their materials.

    On a macro level, the marginal difference in material costs is more than made up by not having to deal with the potential backlash of charging more for "plus" sizes. If you don't think so, I suggest you approach an airline and ask them to start charging for tickets based on passenger weight.
     
    Last edited: Dec 18, 2011
  2. sns23

    sns23 Senior member

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    I wish airlines did. It costs an airline 30,000 per year for every extra pound they carry on each flight
     
  3. phoenixrecon

    phoenixrecon Senior member

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    you sound like you know a lot about business and retail in general. I will be subscribing an RSS feed to your posts for future economic topics.
     
  4. bubbleboys

    bubbleboys Senior member

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    ^good post

    Pricing is completely not dependent on actual cost.
    It's based on how much someone is willing to pay.
    Competition drives the price people are willing to pay down.

    It really boils down to, how many people are going to stop buying from any brand that doesn't differentiate pricing based on size?
    That number is really small. For the most part, people prefer simplicity in pricing.

    For the lower quality/cost materials, the material cost is such a small part of the actual cost of the garment

    Here's a short and incomplete list of the additional costs incurred in bringing that product to you
    Fabric
    Labor
    Shipping
    Packaging
    Overhead for the factory
    Opportunity cost of using that floor space to display and sell the product
    The interest cost of holding X amount in inventory (unsold inventory sitting on a shelf or in the backroom is literally money sitting there depreciating in value faster than the rate of inflation, compare that to what you could make if you even let that money sit in an interest bearing savings account, those two things added together are the interest cost, the actual term eludes me for the time being)

    Those additional costs for the product don't go away just because the material is more expensive. It just shifts the numbers around, but you'd be surprised how much all these additional costs add to the price of the product.

    Not to mention, if you're picking the really expensive fabric for use in, say for example, a custom suit, I highly doubt you're going to care about saving $20 on a $1000+ suit.
    You have enough money to buy such expensive and nice things, you stop caring about the cents and start focusing on the dollars.
     
  5. ballmouse

    ballmouse Senior member

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    Having customers realize that the manufacturer can make prices cheaper is not the mindset the manufacturer wants its customers to have.
     
  6. saiyar1

    saiyar1 Senior member

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    You're thinking of this all wrong. Regardless of whether it's clothing from a low end or high end brand, almost everyone has thought of how to strategically get the most out of any material they buy.

    Lots of companies employ strategy consultants to maximize the use of cloth and other materials. This is not like a tailor on saville row.... you don't bring him a 5 yard roll of cloth and he uses it to make YOUR suit and the rest if thrown out. If a piece of clothing is being designed, then each inch of cloth is being used to make whatever piece can possibly be made. Remember they are making hundreds of the design, so they can figure out how to strategically place the pieces to cut out of the roll of cloth (which they probably order thousands of yards of). Anything else is bad business and flat out stupid. This is not a hobby.that companies do out of the love. They are trying to make a dollar. It's sometimes hard to step back and look at reality when we're so caught up in a personal interest/hobby of clothing.

    Besides that, unless we're talking about a truly truly bespoke or handmade experience, the material is a small part of the final cost. A lot of these brands charge a premium for brand, even if they make very good quality stuff.
     
  7. saiyar1

    saiyar1 Senior member

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    Not not really. But I see the people in charge of marketing for the Italian sweaters have done a good job. And yes, the reputation they have is most definitely marketing... marketing isn't just a tv commerical and a celebrity wearing your product.
     
  8. swiego

    swiego Senior member

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    Then so has this forum, which is replete with statements about well-made clothing being expensive because they use "higher quality materials." But now these higher quality materials aren't really a factor in the cost? Which is it? When someone here says you have to pay a minimum $400 to get a good quality cashmere sweater, and how the $100 sweater will pill horribly, are they talking about the seams being the cause of the pilling? The label? The bag it shipped in? Or are they talking about the fabric? If so, is the fabric really that much more costly, or are the people on SF who insist that only a $400 sweater will last nothing but a bunch of uneducated liars?

    Please, educate me, how much does the fabric cost?
     
    Last edited: Dec 18, 2011
  9. mlongano

    mlongano Senior member

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    A typical retailer may price a suit with higher grade wool $500.00 or more above the price of a suit made from the "standard" fabric. The additional cost of that wool is most likely less than $50.00.

    This is one of the major reasons I like to use a custom tailor who will quote a CTM price while I supply the fabric. I've had suits made from Fox Flannel, Huddersfield, Minnis, Harrington, and others. I don't believe I've ever paid more than about $250.00 per suit for the fabric, and in some cases it was less than $100.00.
     
    Last edited: Dec 18, 2011
  10. bubbleboys

    bubbleboys Senior member

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    These are a few reasons why that $400 sweater costs more than that $100

    • Craftsmanship (I have no idea what pilling is, but I suspect it has something to do with needing more skill to sew or use a more intricate and involved sewing method)
      If it takes more time, you pay extra. If it takes more skill, you pay extra.
    • Small overall quantities being manufactured (people usually go into business to make money, while the high quality sweater may only cost an extra $50 to make, they may need to charge an extra $300 to make a comparable profit)
      100,000 JC Penney sweaters manufactured x $50 profit each = $5,000,000 of profit
      1,000 High end sweaters manufactured x $300 profit each = $300,000 profit
      If they sold the high end sweater at $50 profit each, the business owners would only make a measly $50,000 (which really is chump change when you get into any sort of manufacturing)
    • The company's motto is selling luxury. Luxury is inherently linked to the price you pay for goods and also the rarity of said good. If Lamborghinis were suddenly to start selling for say $40,000, people would probably start thinking it wasn't a super luxury vehicle. If I can find this business case study, I'll post it up for those interested; it's about BMW and how they are starting to lose their previous "luxury" status. Long story short, BMW has had a hell of a time maintaining their luxury status with the very success of their company and their products, namely the 3 series. Every Tom, Dick, and Harry has a BMW 3 series car to the point where their status as a luxury car is really in question.

    Ultimately, the $400 sweater costs $400 because that is the market price for that particular product. There are enough people out there who will buy a $400 sweater because SF approves of it, as a status symbol, etc. or even just because they have the money.

    The beauty of a free market is that if you feel that $400 for a non-pilling sweater made with the finest cashmere is way too much money, then start up a company and sell that $400 sweater for $200, or even less.
    I'm sure what you'll find is that you either won't be able to make a healthy profit off the sweaters, you'll have difficulty selling it as a high quality item/luxury, or you'll simply start feeling you should be paid more for your hard work and thus the price will raise.

    PS This wasn't a long explanation; I could easily write a 10 page analysis on why a $400 sweater costs that much without even needing to rely on any sources and just using logical business concepts, some of which I've described.
     
  11. sns23

    sns23 Senior member

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    except lamborghinis cost hundreds of thousands to make
     
  12. bubbleboys

    bubbleboys Senior member

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    All right, fine I will spell it out since I didn't do so in my original response.

    All numbers are placeholders.
    They aren't to be taken at face value.
    They exist purely to make the logical business concepts I am trying to convey, hopefully, easier to understand.

    Does that answer your question?
     
  13. anginaprinzmetal

    anginaprinzmetal Senior member

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    the op sounds a lot like Reev... :satisfied:
     
  14. jamesny

    jamesny Senior member

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    for more luxurious items - size does matter when it comes to cost.
     
  15. mcbrown

    mcbrown Senior member

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    To take denim jeans as an example, because it is a simple case (all denim jeans, even the fanciest of the fancy, are made primarily from cotton):

    http://www.ccgga.org/cotton_information/how_much.html

    So 1 pair of jeans consumes about 1.5 pounds of cotton. Let's be generous and assume that the variation in cotton consumed varies from 1 pound for a "small" to 2 pounds for a "large". How much does that extra pound of cotton cost for the large at the current cotton price?

    87 cents.

    That is your total materials cost savings for a small size available "in the system" to be split up amongst the farmer, cotton trader, denim weaver, jeans manufacturer, and retailer. And that is why a small costs the same as a large.
     
  16. bubbleboys

    bubbleboys Senior member

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    If you add in the additional costs associated with having a more complicated pricing structure (extra time, additional chance in pricing it wrong, "theft" by switching labels, extra headache, etc.), you'll find that you spend several dollars trying to increase profits by a few cents.
     
  17. Achilles_

    Achilles_ Senior member

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    Not all XXL are fat you know ;)

    In fact, I had a lower body fat percentage when I did wear XXL than I do now wearing L. :laugh:
     
  18. bubbleboys

    bubbleboys Senior member

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    Beefcake? :laugh:
     
  19. Axel Ferguson

    Axel Ferguson Senior member

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    Also telling your customers to pay up because they are big is not a way to endear them to your brand.
     
  20. Patek

    Patek Senior member

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    This question has come to mind when buying a cashmere overcoat. Why is the size 36 the same price as the size 46? I know the craftmaship is the same, but the amount of pricy material used varies.

    Maybe that is yet another reason why most retailers focus on woman's clothing: (for the most part) less raw materials.
     

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