File: what is the real price of a piece of clothing and what are its hidden costs?

When buying a product, the most important thing is often the price.

Sometimes it's just the price.

So much so that we often see people buying "because it's cheap", without even asking themselves what the real quality/price ratio of the product is... or if they (really) need it.

You only have to see the crazy behavior that sales generate... or the frenzy around the slightest competition to get a product for free or at a knockdown price.

Beyond this disconnect between the value of the product and its price, there is another gap: the price displayed on a product's label does not fully represent what it costs .

For example, there may be maintenance costs... or even the cost of premature replacement if the lifespan is poor (but also an environmental and societal cost that is more difficult to integrate).

The purpose of this article is not to make you feel guilty when you buy a product at a very low price, nor to force you to buy more expensive, but rather to understand what the hidden costs are and how to integrate them when purchasing.

And believe me, you will save more!

HOW DO BRANDS SET THE PRICE OF A PRODUCT?

To begin with, you should know that the selling price is not always strictly correlated with the cost of the product (you can really find everything in terms of margins on the textile market today). But I will not dwell here on the question of margins, already very well explained in this file . 1

To set its price, a brand must take into account purely numerical data (below what price do I no longer make a profit?) but must also know the "market value" of its product. And that's where you come in. Because the market value of a product is determined by the customer.

THE PSYCHOLOGICAL PRICE OF CLOTHES

• Isn't the clothing too expensive ?
• At this price, is the garment good quality ?

Here are the two questions you ask yourself when you're about to buy a piece of clothing 2.

Your answers determine a zone of acceptability, with a minimum price (below which the lack of quality is obvious to you) and a maximum price (beyond which you feel like you're being ripped off).

This is where the acceptability price (or psychological price) is located = the price you agree to spend.

The average of the psychological prices of all potential customers is then used by the brand to set its prices (after analyzing its sales, conducting surveys, etc.).

Today we even have prices that adjust dynamically thanks to new technologies (gasoline, airline tickets or the purchase price of online advertising, for example, and everything related to yield management ).

BUT IN FASHION, IT'S ALWAYS A LITTLE MORE COMPLICATED

In some industries (including fashion), brands add a dose of intuition to set prices (unless they have a ton of data and can change prices midstream, which is what fast fashion can do).

To take a concrete example, a former marketing manager at APC declared in 2012 in an article in Les Inrocks :

"We had to increase some prices in order to maintain the consistency of the collection. We couldn't sell a pair of jeans for 80 euros and a shirt for 130."

And even today, APC raw denim is a flagship product of the brand that sells very well.

The right price (the one where everyone wins) is therefore located at the right balance between a strict calculation of costs and the market acceptability price.

Note: At BonneGueule, we operate a little differently. We set a maximum selling price that we cannot exceed for a garment, because it is a price that seems fair to us.

And we then try to put the maximum quality into the garment without exceeding this maximum price, during product development.

Sometimes the margins remain acceptable and sometimes we have to accept much tighter margins (often the case with technical or Japanese materials).

But in the end it more or less balances out, especially since year after year we play on volume and cost reduction strategies (not too many clothes developed, only basics, not too much stock, no advertising, no intermediaries).

KNOW WHAT YOU ARE BUYING

That said, we cannot only criticize brands when products with totally excessive margins are selling like hotcakes (handbags, perfumes, luxury clothing).

If I buy a very expensive luxury bag, I recognize that this bag is worth that price. Maybe not for its quality, maybe only for the image it gives off or because few people have it, but the result is there.

Similarly, if I buy a shirt for 20 euros, I must be aware that my shirt is worth 20 euros = a cheap material, a poorly cut and finished, etc. From there, it is up to you to accept or not the price.

This does not mean that we have to buy more expensive, especially not!

Especially since “more expensive” does not mean “better quality”.

But it is interesting to know the value of what we buy, beyond even the price set by the brand.

A LOW PRICE... BUT AT WHAT PRICE?

Today the fashion industry is able to sell products at very high prices... but also very low ones, without being "fair" (that said, it's a matter of personal opinion). But you already know that!

As Romain Rousseau said very well in his article on the evolution of the fashion and luxury sector when referring to the fast fashion model:

"However, while it may cost little to the consumer who only thinks in the short term, purchase by purchase, there is still a price to pay."

THE HUMAN COST

We are slowly beginning to realise this cost with the Rana Plaza disaster, which occurred three years ago now. The collapse of this garment factory in Bangladesh left more than a thousand people dead - and thousands more injured - buried under the rubble .

But the worst part is that the authorities had warned the owners who ignored the evacuation order. Monsters? Well, it's even more complicated than that.

If they took this huge risk of not closing the factory, it is above all because they are subject to enormous pressure from the directors of large fast fashion brands well known in developed countries.

With the development of low-cost garment factories in China and Bangladesh , these high-end brands have enormous options for outsourcing their production to low-cost economy countries.

If a mass-market brand decides to sell a t-shirt for 5 euros because its competitor is selling it for 6 euros, it will put pressure on the factory, which will not be able to say no. Because if it refuses, the brand will find another factory to produce its t-shirt for 5 euros.

Do you find these big companies immoral? They are first and foremost amoral, which means that they do not think in terms of morality. This human cost is therefore not taken into account. Could it be?

It is extremely difficult, if not impossible, to quantify such a cost. It is an unquantifiable, abstract data, and composed of so many factors (minimum wage, working conditions, country legislation, etc.). And above all: who should bear this cost? The company? The factory? The country in question? Or even the customer? Not so obvious.

Especially since the transparency of brands on this subject still has a long way to go... But then should we boycott a product when we read "made in China" on the label? Certainly not. Hence the complexity of knowing whether our clothing was produced in good conditions or not.

In short, we are here faced with a first hidden cost. We therefore finally have:

Real cost = cost displayed on the label + moral cost .

THE HEALTH AND ENVIRONMENTAL COST

Today we produce more than 80 billion new garments per year , yes yes 80 billion. That is 400% more than 20 years ago. To keep up with the current demands of the textile sector, all resources must be multiplied.

Agriculture needs to be intensified to produce more cotton. Giant companies like Monsanto have understood this well and have had to develop technologies like Bt Cotton (GMO), which has increased yields by more than 50%, making India the leading cotton producer ahead of the United States.

But these "green drugs", mainly fertilizers and pesticides, are wreaking havoc on health and the environment. For example, the number of cancers and mental illnesses has exploded in some villages in India.

In short, yet another moral cost is added.

Not to mention the danger you yourself will run tomorrow as a human (we only have one Earth), and today as a consumer. In 2011, Greenpeace launched its Detox campaign following an alarming report: the majority of clothes we wear contain chemicals that can have harmful effects on health .

Well, there is still some positive here since 19 brands signed up in 2016 to be judged by the NGO according to three criteria:

• The implementation of a concrete action plan by 2020,
• The concrete reduction of toxic products in samples taken,
• Transparency in the information given to the NGO.

It remains to be seen whether this is not the tree that hides the forest, but it's always something.

Another problem: poor quality products in general are simply unsuitable and insufficient for proper use : walking shoes that cause you a sprain; bad insoles that cause back problems; low-end shirt fabric that causes skin irritation, etc.

A fast fashion garment is worn on average 1.7 times. Of course, not all your t-shirts bought for 10 euros are good to throw away after one wear! But on average, we will wear a quality product many more times and for much longer.

Firstly because it wears out less quickly, but also because we find it more comfortable/beautiful than our other t-shirts and finally, because of a higher price, we own fewer of them.

In short, the real cost of the product becomes:

Real cost = price displayed on the label + moral cost + health cost

Well, all this is to understand that a price alone cannot reflect the value of a garment , that there are always hidden costs that it is good to remember in order to be as close as possible to what a good is really worth.

Transparency is becoming a criterion of choice for many of you, which we can only welcome.

I recently discovered the Honest By brand: a collection and an e-commerce site whose objective is total transparency on sourcing and prices.

Knowing that margins are an ultra confidential subject in fashion, this is an incredibly courageous initiative, very few brands would have dared to push transparency this far. The world is changing, and it's cool!

Other startups say they have started doing it, but in the end it is very marketed and remains very opaque.

AND IN THE END, WE BECOME A MUSCULAR CONSUMER

The most interesting thing about understanding the value of a product is that our power as consumers is multiplied :

• We learn to avoid poor quality clothing ,
• We are beginning to understand the impact of our purchasing decisions on people and the environment and, little by little, we are buying differently.

CONSIDER THE COST OF USING CLOTHES

To understand how much a garment will actually cost you, you also need to think in terms of cost of use . To integrate this notion, there is a simple calculation to do.

We move on to the calculation moment (great!).

Let's take the example of buying a t-shirt:

Price of t-shirt / total number of ports = cost per port

The famous T-shirt produced according to the fast fashion model, bought for 10 euros and worn on average 1.7 times, costs 5.90 euros per use:

10 € / 1.7 = 5.90 €

While the Norse Project T-shirt that Geoffrey is wearing, he loves it, it is sturdy, and he bought it for €59. He has already worn it 5 or 6 times and he thinks he will wear it well over 30 times in his life. That is a cost of use of €1.70 !

59 € / 35 = 1.7 €

That’s 3.5 times cheaper than the low-cost t-shirt !

As long as the first is produced in better conditions than the second 8, you also reduce the moral and health cost (not quantifiable) and you end up with a t-shirt that has much more value.

This is also why we often tell you that below €150, there is no point in buying leather shoes. The same goes for heat-sealed suits under €300, etc.

To go further, I offer you a short summary of the great article 9 on the " value of a purchase " on the Psychology Today site:

• Buy a more expensive but better quality product . It is the comfort provided by this more pleasant, more beautiful, more solid product... which will reduce its cost of use by increasing your satisfaction.
• Take into account the importance of maintaining a product . No more overconsumption where we throw everything away to buy new. We must learn to maintain our goods to get the most out of them. Here too: lower cost of use.
• Stop buying products you don't use (a particularly important phenomenon in the clothing sector). You have 20 pairs of shoes but you only use 3/4 of them. You have to learn to use a product until the end of its life cycle. Cost of use = profitable.
• The key to ending this third point is to understand why we own so many pairs of shoes . The variety of brands and products offered on the market has led us to want to have choices. So we buy more and more substitutable products to satisfy our desire for freedom. It is by controlling this last habit that our cost of use per product will decrease the most.

These are the four essential keys to radically changing the way we consume and winning. Because let's not lie to ourselves, if we had no personal interest in doing so, it would be a little difficult.

In fact, more than a way of consuming, it is a philosophy of life : that of enjoying the things we have rather than always wanting new ones.

We also find " The Comfort Principle " summarized by this sentence:

“Spend your money where you spend most of your time.”

"Spend your money where you spend the most time." We spend our days in our clothes, so we invest in them to feel good.

But be careful! Again, it is not necessarily enough to spend more, but to spend better . Buy two t-shirts for €30 instead of buying six t-shirts for €10.

THE EXAMPLE OF THE TOTAL COST OF OWNERSHIP

Companies have already become accustomed to integrating the "use" criterion into the real cost of the intermediate goods they consume. This is called the total cost of ownership or TCO.

They will calculate everything that a product will cost them (beyond its purchase price) over the entire period that they will use it.

For example, if a company decides to buy a car, it will calculate:

• Its purchase price,
• Registration fees,
• Gasoline costs,
• Insurance costs,
• Maintenance costs,
• Taxation (especially for businesses),
• The resale cost.

But this only concerns the product cycle, from its acquisition to its abandonment by the buyer. We can go even further in a concern, not for profitability, but for social and environmental responsibility.

And the actual cost of the product becomes:

Real cost = price displayed on the label + moral cost + health cost + cost of ownership + recycling cost.

THINK IN TERMS OF PRODUCT LIFE CYCLE COST

To change the way we consume, we must go beyond this measure, which remains economic, to another, more ecological one: the life cycle cost of the product. 

By this we mean its cumulative cost throughout its life cycle, from upstream (design, manufacturing, etc.) to downstream (cost linked to its dismantling, recycling, etc.).

It's the same logic as a successful customer experience. The entire purchasing process counts, from upstream with advice, to downstream with proper consideration of returns. When you buy a product, you also buy this service.

But the problem here is who will bear these costs . Because while some are obvious (for example, the design is included in the final price), others are less so. Who will bear the cost of polluting a T-shirt or recycling it?

It is impossible to answer this question. Or maybe it is, by simply saying "a little bit of all of us". There is a notion of altruism behind all this.

On the other hand, on our scale, we can start with relatively simple things like learning to repair a garment yourself and avoid taking it off at the first snag or button that pops.

For this, here is a first article to learn 5 relatively common small repairs to do yourself and an infographic full of tips for maintaining your clothes .

WHAT TO DO NOW?

I hope you have a little clearer idea of ​​the real cost of a product.

And if this article raises any questions in you: do not hesitate, as usual, to ask them in the comments 🙂

Finally, don't feel guilty , we all know that it's complicated to change your habits. And there is no personal judgment in this article. We're not here for that!

We just hope that you will see beyond the material and the quality/price ratio (in the same vein as Geoffrey's article on living clothes and dead clothes ), and that these lines will inspire you to think a few things the next time you go shopping (an activity that should remain a pleasure above all, let's not forget).