Mark-Up: The High Cost of Making Money
Posted on April 11 2014
Last night at Redlands Market Night, a gentleman and his family stopped by my booth and were admiring my work. He was quite complimentary of my designs and selection. He was polite and well spoken. We talked for several minutes regarding my different designs and what American Warrior is about.
Then he asked me the golden question, "How Much". I gave him the price and he laughed. I wasn't sure what he was laughing about.
His wife asked, "So are you going to get one?"
He said, "No way. Look at this, he's got only two color designs, three on the women's shirt and he want's $23? Are you kidding? When I had my shirt business I was doing these shirts for $5 a piece. His mark-up is way too high!"
I reminded him, "Well first of all I don't know when you ran your business but I assure you my margins are nowhere near that nice. I have over-sized print on some shirts, double sleeve prints, front pocket print and inside neck tags /care instructions all screened. All the shirts are Made in the USA AND I'm donating to charity through this business."
He wasn't convinced and politely thanked me for my time and left.
Honestly though, that kind of talk I find offensive, as though I'm ripping people off. I'm lucky enough to be my own designer so I don't have to include that into my costs, but if I did, you can easily add another $1-$2 to each shirt (at my current scale of ordering).
For those that are still skeptical, let me make a very clear comparison.
In this sample you have a Hurely top. You will notice this tri-blend top has a 2-color front design, single sleeve design and probably the neck tag as well. You will also notice this top is made in Guatemala, yet the price is $29.50. The actual cost on a shirt like this is very likely close to $3-$5 each. Let's assume for the sake of math it's $5. That equates to a 600% mark-up.
The American Warrior shirts cost me MUCH more than $5 each to produce. In fact it costs almost that much to purchase the blanks before the screen printing.
Here is a 2-color over-sized rear design (over-sized usually means higher costs), double sleeve print, front pocket logo and printed neck tag /care instructions. Although my costs are more, my final price is less. The point is that my prices are right on cue (actually less) with the big brands.
The last numbers I saw for Levi's production cost was about $3 for a pair of 501 jeans. They sell on average at about $40. That equates to a 1300% mark-up.
Truthfully I know there will never be pleasing people like that. They have their own view and I probably won't change it on my own, and that's ok. At the end of the day, I have very few people that take issue with my prices. The rest are glad to support what I'm doing. And for those people I'm very grateful.