Fabric, pattern-making, sampling, trims, sewing, handwork, packaging, duties, shipping: This is an incomplete list of what you’re paying for when you buy a new T-shirt. And that’s before a wholesale markup (i.e., the profit a brand makes on the item) or the additional retail markup if you’re buying it in a store.
Read that again, and the idea of a T-shirt being “worth” $5 might seem preposterous, if not criminal. How is it possible that all of those materials, logistics, and people amount to just dollars or cents? Many of those costs are fixed; the price of cotton isn’t negotiable, even at scale. The person who made the T-shirt, on the other hand, is a lot easier to exploit.
It would be reckless to claim that every low-priced good was made by an underpaid laborer, but it’s also just simple math. “It really blows my mind,” Ryan Roche said on a recent call. “I can crunch the numbers, and even with the cheapest fabrics, I don’t understand how it’s possible. Someone is sewing that T-shirt, and they’re being paid pennies.”
Maria Stanley, an independent, sustainably-minded designer based in Minneapolis, recalls her own experience working for a fast fashion label a decade ago in Los Angeles: “Retailers would tell us, we want 1,000 of this item for $21 a piece, and the factory would quote us $40,” she says. “But eventually, they’d come down to $21. How do you get there? Who is losing out? The fabric is a steady cost, so it’s the workers [losing out].”
Fast fashion’s exploitation and hidden supply chains aren’t new revelations, but when we talk about the mistreated workers or the environmental impact of disposable clothes, we’re ignoring a third impact on the consumer. The “race to the bottom” has totally ruined our perception of value; we literally have no idea what our clothes (or food, or anything else) should cost, and low prices have become so normalized that we don’t even second-guess them. In fact, despite statistics that suggest millennial and Gen-Z shoppers care deeply about sustainability, the fast fashion market is actually growing—and the clothes are getting cheaper. It doesn’t help that luxury is getting more expensive in tandem. The widening valley between the two is compounding our confusion: If a T-shirt shouldn’t be $5, then it probably shouldn’t be $500, either. But where’s the middle ground? What’s the “right” price for fashion?
The straightforward answer is that it’s probably higher than you think. Understanding where a price tag comes from requires tallying every step of production—fabric, labor, shipping, packaging—and adding a profit margin. Let’s assume a designer is using quality materials and paying its garment workers an above-average wage; the materials and labor will arguably be the highest costs. The industry standard for a profit margin is between a 2.2 and 2.5x markup, meaning a dress that cost a designer $100 to produce might be sold to a retailer for $220. That retailer has to mark it up by 2.2x again to make its own profit, bringing the final price up to $484. (You can see how the math for that $5 tee becomes nearly impossible.) The average shopper doesn’t know any of that; she might assume the price is an arbitrary number the brand came up with to maximize its profits. She doesn’t know where the profits are going, either; maybe they’re covering overhead costs, like office space, employees, legal fees, and taxes, or they’ll be reinvested in future collections.Maria Stanley’s new organic-cotton, hand-embroidered Sydney dress.Photo: Michael J. Spear / Courtesy of Maria Stanley
And why would she know? Fashion has not been historically transparent, particularly when it comes to money and profits. Rampant discounting has trained us to doubt the price of anything, whether it’s a $2,000 dress or a $200 blouse. We know that if we wait a few weeks or months, it’s going to be marked down. And if it’s so easy for designers to slash those prices, then surely the original number was too high to begin with, right? You’d be a fool not to hold out for the sale. As a result, some retailers are actually increasing their margin to make up for the inevitable 30% or 40% loss, sometimes pushing it as high as 4x—meaning a coat it paid $1,000 for (and may have cost closer to $500 to produce) will begin at $4,000 in the store.
It’s a tangled web of problems, and it’s particularly damaging for small businesses like Stanley’s. Forget trying to create ethical, sustainable clothes; how do you convince people to pay more for them? Her prices hover in the $350 range, but her customers frequently ask why she can’t go lower. While she used to avoid sales entirely, she’s felt pressured to “give in” to discounts because it’s the only way we know how to shop. Another designer might cut her costs by using cheaper fabrics or cheaper labor, but Stanley is committed to her family-run factory in Delhi, India, and won’t compromise on high-quality, organic fabrics. The only way she could lower her prices would be to take less profit or transition her business to a direct-to-consumer model, eliminating the retail markup. (Given the state of department stores, many of her peers are likely thinking the same thing.)An embroiderer in India spent a full day completing one of Stanley’s new dresses.Photo: Michael J. Spear / Courtesy of Maria Stanley
In the meantime, the best thing she can do is educate her customers about precisely why her new hand-embroidered organic cotton dress costs $550. Stanley openly shared the cost breakdown here: $24 covers the organic cotton and dyes; the intricate handwork comes in at $48, because it took an embroiderer a full day to make the dress; production labor, including sewing, pattern making, sampling, finishing, and packing, was $48; shipping was $8, and duties were $24. Her total cost came to $157, and in order to keep the final price lower, she took just a 1.59x margin, bumping the wholesale price to $250. (This means Stanley would earn $93 in profit when a store orders the dress.) With the typical retail margin of 2.2x, the final price tag on the rack in a boutique is $550.
“I’ve been trying to make it a point to tell the story of my clothes, but it’s hard to be honest and say, ‘This is my cost, this is how much I make on this piece, this is why you should support my brand and the people who made it,’” Stanley says. “I love going to a store, and I have friends who have boutiques and work so hard. They deserve to make that margin, but the retail markup is really why clothes get so expensive. That’s where I get stuck.”
If you’re of the “buy less, buy better” mentality, it isn’t hard to justify the higher price. Plenty of Stanley’s customers are investment-minded and care about her commitment to ethical, sustainable, small-batch production, but some still need to be convinced that it’s “worth” buying one of her dresses instead of five cheaper versions. Lucette Romy, the founder of The Wylde, an organic label handmade in Bali, has had similar conversations with her customers about the higher price of organic cotton, botanical dyes, and dignified labor. “But it often isn’t enough to change their minds,” she says. So she found another way to get the point across: Every item on her site comes with a cost-per-wear breakdown. Her new organic cotton dress goes for $260 AUD, or $178, but if you wear it 10 times, it’s $18 per wear. By the time you’ve worn it 50 times, it’s under $4. If you intend to keep it for years, as you should, that number would come down to pennies. Suddenly it’s a bargain.An organic, un-dyed cotton dress by The Wylde.Photo: Courtesy of The Wylde
Longevity and quality are Ryan Roche’s bread and butter, too, and they’re best exemplified by her cashmere sweaters handmade in Nepal. “We always try to tell the story of our brand, and from the beginning, the first thing that ever came out of my mouth was about the materials, where our clothes are made, and who had their hands on it,” she says. “When you purchase our sweater, we want to have it forever. The price is not going to be the same as somewhere else, because it really will last a lifetime. The key is to communicate that [to the customer], so people see why the sweater is $800, and why you’d rather buy that than the $89 sweater with a questionable path.”
Roche says her factory partners in Nepal are “like family,” and that she hasn’t found anyone anywhere who can match their skill and quality. But some customers may not realize that “made in Nepal” is just as virtuous as “made in Italy.” The Western tendency to value European and American production over Chinese or South Asian is another problem entirely, but Roche is dedicated to making it clear. “I don’t think people realize that in Nepal, the knitters use hand looms, and literally every row of our sweaters is made by hand,” she adds. “It’s a very special product that comes out of there.”
Her business model looks a lot like what the industry has preached as a sustainable path forward: small scale, with timeless designs, fewer collections, quality materials, and fair labor. It’s the very opposite of fast fashion and, more broadly, the notion that clothes exist purely to convey status or adhere to trends. Roche doesn’t design clothes that are highly identifiable or even of-the-moment; as she puts it, they’re meant to “sit in a woman’s wardrobe and treat her right.” It’s fair to assume that while many of her customers simply appreciate the product, most of them also care about Roche’s values and mission. They aren’t interested in just accumulating more stuff.
Those women also understand the importance of supporting modest businesses instead of massive corporations—and that “shopping small” comes at a higher cost. Scale is the other elephant in the room: Typically, the more units of a garment you produce, the lower the price per unit gets. That isn’t an explanation for dirt-cheap clothes, because labor should be a steady cost, but sewers may be able to work a bit faster as a result of repetition. The price of fabric changes at scale, too. If Stanley, Roche, and Romy could triple the size of their businesses, perhaps their prices would come down a little, but that isn’t their goal. The larger a company gets, the more difficult it becomes to keep track of the supply chain; we all remember how certain well-known brands didn’t even know their clothes were being produced in the collapsed Rana Plaza factory.
Understanding scale also explains why a higher price doesn’t always equate to better fabrics and fair labor. A polyester dress might retail for $400 because the label produced it in small quantities and paid its workers—but it’s still polyester, and you shouldn’t waste $400 on something so environmentally damaging. Or maybe the brand made it in huge quantities and used cheap labor, but hiked the price to convince you it’s an elevated product. There’s always going to be confusion when it comes to price, and some brands are always going to value “brand equity” over their workforces. The only way you’ll really know if a price is worth your hard-earned cash is by digging deeper and demanding transparency from the brands you support.
On the luxury side, designers and retailers are actively discussing how to become open and honest about price and quality. By explaining the origin of their fabrics, how their clothes are made, and who makes them, the hope is that customers will shop more confidently and will be motivated to invest in the story, not just the product or trend. In theory, that concept of mindful consumption could eventually trickle down to the high street. It isn’t going to fix climate change or fashion’s murky supply chain, but it’s the best way we can begin to make a difference—and by “we,” I mean those of us in the privileged position of having money to spend and the headspace to refine our shopping habits. The common rebuttal to the “fewer, better” approach is that some people can’t afford to pay more for clothes, and that’s absolutely true. But lower-income shoppers aren’t the ones creating the mess; they aren’t buying a new dress every week and then throwing it out. The people abusing the system are the ones who could afford to buy fewer, higher-quality items, and it’s our responsibility to use our power and influence to raise the bar for everyone else.
Optimists have suggested that the pandemic has started reorienting our priorities around family and health rather than material goods. The Primark shoppers who camped out overnight in advance of reopening tell a different story—but those value shifts take time, and there’s still hope for our industry to lead the way and change course. “It would be so beautiful to think people are calming down and the industry is uniting to set some new boundaries,” Roche says. “To be more sustainable, to think about our environment and humankind and decency towards others… All of those things seem so basic and fundamental.”