Very occasionally I get a comment on a post about our clothes being so cute but too expensive and I have to admit it gets to me a little bit. I totally get not everyone can afford to spend $30 or $40 on a piece of clothing for their child but it sometimes makes me wonder if people think they're being ripped off. Not just by me personally but small business in general.
Maybe some people have been conditioned to believe $3 is a normal price for an item of kids clothing because of places like Kmart, Best & Less, Target etc so instead of questioning the $3 price tag they tend to question when it costs more, I know I was 1 of those people. "They're just selling that tee for $40 because they can" is something that would've gone through my head in the past.
In saying that I wanted to be completely transparent & give you an idea of the cost of production for an ethically made piece of clothing in Bali, Indonesia where our clothes are made. This is just an example of our business costs so please take it as a guide. Whether you're thinking of starting up a small business yourself or just interested in what goes into running one hopefully this will give you a little insight.
The 2 main costs in production are the cost of fabric & the costs of paying a fair wage to the people who make our garments. This involves pattern making, cutting, sewing, dyeing & printing.
*Our manufacturer is fair trade certified.
Fabric costs (depending on the cotton we use) range from approximately $5 - $10 per metre.
Garment production wages range from approximately $6 - $12 per garment.
Shipping costs per item work out at between $2 & $3 per garment.
Duties + taxes add another $2 - $6 per garment.
Total Production cost = $15 - $31 per garment.
The most common/basic business model is 4 times the production/shipping price & allows for the extra costs in running a business, marketing, wages, wholesaling, reduced stock, sales etc. If I used this model my products would cost between $60 & $124 per garment, all of my products are priced between $29 & $80. This works out at around half the standard recommended retail price.
On top of the manufacturing costs there are also additional business costs that need to be factored in, including:
Transaction fees - Afterpay, Paypal
Packaging - stickers, mailers, drawstring bags
Sew in labels
Market stall fees.
These costs add about an extra $5-6 per product.
Final cost per product (including running costs above) = $20 - $37 (& then add 10% GST on top 🤯)
So what I'm paying is already about 5 times what you're paying at Best & Less or Kmart!
This means at the prices I choose to retail at, wholesaling sometimes might only make a couple of dollars profit per item if anything at all. I also have to try to take a wage for myself after all of that as I work full time on this business. Basically I have to sell a shitload of clothes to get paid.
I’m not sure if business minded people look at these numbers & think they're crazy (coz I’m not business minded 🥴) but this is the way I've chosen to run my business. I chose the best manufacturer I could find, not the cheapest. It is definitely no 'get rich quick' scheme but our production aligns with my morals & ethics. Keeping the prices as reasonable as I can for the people who have supported me & made this possible (you guys) is also really important. I didn't choose this business to get rich, I chose it to give me a creative outlet & hopefully make enough money to have the freedom to be with my children when they need me. It might seem like a lot of fun (& some parts definitely are) but it's also a lot of sleepless nights & sacrifice. I know many other Mama run small businesses who are in the exact same boat.
If you got through all that (you're crazy) but thank you & I hope it's given you a little insight into the costs of ethical clothing production & running a small business.
Most of us are not just slapping on some huge price tag because we can, we're actually cutting back our profits to give you the best possible price. Running my own business has definitely made me question the price tag on that $3 tee a little more, unless it's from Vinnie's then I'm down with it!
Sidenote ~ this isn’t me having a whinge about running my own business, I’m SO grateful to be able to call this my job! More just to give you a lil insight into why things cost what they do.
Liza (NU) xx
Here is a link to the blog that inspired this one discussing costs of ETHICAL MANUFACTURING IN AUSTRALIA by Gather & Moss.