The Cost of a VETTA Garment
The price of garments can be confusing – a blouse can cost $8 or $800-- how can that be? Savvy shoppers are often wary of being taken advantage of, paying more than something’s actually worth. More recently, consumers have started thinking about whether the cost of an item is so low that garment workers and the environment are actually the ones being taking advantage of. But how do we know what to pay for clothing when we don’t know what goes into making a garment? This can be challenging to navigate, especially as the cost of a garment is very complex and depends on a lot of different factors. We hope to shed some light on this by sharing some of the behind the scenes details that go into the cost of a garment at VETTA.
In order to understand the cost of a garment, we first need to talk about the history of fashion prices. While the price of consumer goods have steadily increased over the past 40 years, due to inflation and other factors, somehow the average price of clothing has actually gone down. Unfortunately it’s not because someone found a new technology to make clothes cheaply – it’s still people making clothes with sewing machines much like it was many years ago. So what is the cause for this change?
Photo from our NYC family owned factory
In 1980, 70% of clothing sold in the U.S. was actually made in the U.S. That number is only about 2% today, due to trade liberalization policies that encouraged outsourcing to other countries. But instead of providing fair and equitable jobs to people in developing countries, many apparel companies who moved their production overseas began the “race to the bottom” where they moved production to the cheapest location, caring little for the wellbeing of factory workers. According to the Worker Rights Consortium (WRC), the prevailing wages in popular apparel manufacturing countries like China, India, Bangladesh, and Vietnam don’t cover even half of workers’ basic living needs. In fact, From 1989 to 2010, there was a 73 percent drop in the rating for workers’ rights, while multinational corporations paid 42 percent less for the apparel they imported. In addition, clothing made from synthetic petrochemical-based materials has been increasing at alarming rates.
This trend became even more destructive and prevalent with the rise of fast fashion. Companies like H&M and Forever21 drove prices down to previously unseen levels, with other retailers lowering prices to compete. Clothing that once sold for $100-$200, that a person would save up for and wear often, now costed $10-$20. Even if people didn’t shop at the fast fashion retailers, they felt the effects of this industry shift and came to expect lower and lower prices. People started viewing clothing not as an investment, but as something disposable. Companies made more money, people bought more clothes, but the ones that suffered and paid the price for this were garment workers and the environment. If you haven’t seen the documentary The True Cost it does a great job summarizing these issues, so definitely check it out.
In recent years, more consumers are recognizing that exploiting garment workers and polluting the earth is not something they want to participate in. More and more sustainable brands have entered the market, selling their clothing at a range of prices - but it’s always much more than the prices we’ve gotten used to. So how much should a sustainable garment cost? That’s a tricky question, as there is so much that goes into it – the quality of the fabric, the sustainability of the fabric (not necessarily the same thing), the location of the factory, the level of pay and benefits given to factory workers, the size of the brand (and ability to leverage economies of scale), whether a brand sells wholesale (which basically doubles the price), and other factors. These varying factors explain how one sustainable brand can charge a lot more than another. Even though we at VETTA work really hard to keep prices down because it’s something we’re passionate about, we also understand that some brands need to charge higher prices for these various reasons.
At VETTA, we really care about making sustainable clothing accessible to as many people as possible – while still maintaining the highest standards of quality and sustainability – so we work hard to offer our products at the lowest prices possible. Many brands will price their products higher, knowing that they will need to eventually mark them down, or just because they need more money to run their business, etc. But we make small collections of things we really believe in, at the lowest possible price upfront, with the understanding that this means we can rarely go on sale. Generally if something costs $50 to make and ship for example, we need to sell it for about $100 to cover our business expenses (like rent, salaries, website, etc) and have a tiny bit leftover to reinvest into the business.
Price Breakdown for The Belted Blazer Dress
To give you an example of the specifics, we've broken down the price of The Belter Blazer Dress above. We spend about $89 to manufacture and ship this garment. That includes about $60 in labor (paying the factory to cut and sew the garment), $16 in materials (including fabric, buttons, zippers, etc), and $13 to ship (packaging, postage, fulfillment costs, etc). This breakdown will be different for different products. In this case, the “out the door” cost of the garment is about $89. But if we sold the garment for $89 we would be in trouble – we still have to pay someone to answer customer service emails, pay rent for our warehouse and office, pay for the website and the product photography, etc. So in order to cover all of those things, we typically double the cost of the garment to get to the retail price (in this case it's $179). The difference between the cost of the item and the retail price is what we call “gross margin,” which in this case would be $90. Of our gross margin, 45% is spent on operating costs and 5% is profit. The small amount of profit we make, we’ve been reinvesting back into the business. This lean approach can be tough in challenging times (like a global pandemic!), because you have less money saved away for a rainy day and you also have less flexibility to put things on sale. In the future, to be responsible and to make sure we stick around long term, we need to increase this profit percentage. But for now, by keeping a very lean team and keeping expenses low, we’ve been able to make it work.
Because we only sell online and don’t sell wholesale to other stores, and because we operate with a lower gross margin, we’re able to charge $179 for a blazer instead of $360-$600. When you sell to retailers, typically they at least double the wholesale price, if not more. The brands that manufacture in our same factory sell their blazers for $500-$600. They’re sold at Saks Fifth Avenue and other high end retailers, so you can get an idea here of the prices. We’ve chosen not to sell wholesale, in order to keep our prices as low as possible. We would love for more people to be able to afford sustainable fashion, and it’s something that we’re really passionate about!
What This Means for You, the Consumer
Pricing can be confusing, and it’s not always clear why something costs so much or so little. The more you can understand about a garment’s cost the better, and we hope that this blog post has been helpful. In addition to price, we encourage you to filter your purchase through two other lenses – whether you really love an item and will get a lot of use out of it (a low cost per wear), and whether the item reflects your values.
All this being said, many of you may be thinking, $179 is still more than you could afford to pay. The explanation of what something truly costs is a different issue than whether a person can afford it. We understand and recognize that not everyone can afford sustainable fashion, and in many ways it is a privilege to be able to make these kinds of purchases. If you still are interested in supporting sustainable fashion on a smaller budget, some alternatives might be to shop second hand or to buy less items and wear them more often. Either way, this is a no judgement zone.
We’re grateful for all the people that have been able to support us over the years – we quite literally wouldn’t be here without you. We can say first hand that your purchases really do matter, and we hope that this has provided a little more insight into where your money goes when you shop with us. We’ve seen the fashion industry start to shift towards empowering people and protecting the environment, rather than abusing and exploiting them, and it’s because consumers like you have been voting with your dollars. We believe this shift will be better for everyone – for the planet and for your wardrobe too – and it’s just the beginning.