The Willow Price Breakdown
We’re taking a break this week from our series on fabric specs to talk about value – otherwise known as, “why are your pants so expensive?” And you’re right, $270 is crazy to pay for a pair of cheaply made sweatpants that nobody ever sees you in and that you’ll throw away in six months because they disintegrated.
But the Willow pant is not that.
I know, every retailer says their products are different: “Trust us, give us your money and our product will change your life.” That’s partly why we have this blog and why we provide free swatches – so that you don’t have to trust us. You can learn about the textile and apparel industry for yourself, and make your own informed decisions.
So maybe you’ve been following along, and maybe you agree the Willow pant is great. But you don’t believe $270 is a fair price to pay. We can’t blame you, because we haven’t told you the price breakdown until now. Here it goes:
- We made 100 units of the Willow pant (50 in Cloud, 50 in Slate), divided between 6 sizes (XS to XXL)
Materials required for the above: $6826.64
- 120.7 yards of the merino French terry (for the body), at $43.68/yd plus a $20 cut fee from the mill. Subtotal: $5,292.18
- 22 yards of merino jersey (for the pockets), at $27.93/yd plus another $20 cut fee. Subtotal: $634.46
- 150 yards of 4-in elastic (for the waistband), at $4/yd. Subtotal: $600
- 100 printed hemp apparel labels (required by U.S. law), at $3 each. Subtotal: $300
- Thread was provided by factory; thread cost is included as part of the factory’s cut and sew labor cost
Cost required to ship the above materials, including import customs duties and courier fees: $1991.71
- To ship the merino French terry and jersey from the fabric mill in Japan to the sewing factory in Chicago, IL (including duties and fees): $1,618.20
- To ship the elastic from the supplier in Hong Kong to Chicago, IL (including courier fees): $118.71
- Duties/tariffs to import above elastic from Hong Kong (25% value of goods plus an additional 5.8%): $184.8
- To ship the apparel labels from supplier in Tampa, FL to Waxwing Labs in Fort Myers, FL: $70
Cost to produce 100 units of the Willow at the garment factory: $2276.71
- Size grading for production: $225
- Cut and sew labor cost at $18.25 per unit. Subtotal: $1825
- To ship 100 finished pants from Chicago to Fort Myers: $226.71
Product packaging costs: $337.55
- Cost for 100 mailer bags plus shipping (from supplier in Illinois to Fort Myers): $91.52
- Cost for custom stamp, ink pad, and ink to brand above mailer bags, plus shipping (from Palm Beach Gardens to Fort Myers): $203.76
- Cost for 100 custom printed thank you notes plus shipping (from supplier in California to Fort Myers): $42.27
- Internal clear protective bags are provided by factory and included in factory’s labor cost
Operating expenses required to sell 100 Willow pants: $4800
- Waxwing Labs Employee at $20/unit. Subtotal: $2000
- Assumes 1 hour spent to prepare and ship 1 Willow garment (hand sew apparel label; stamp, assemble, and address packaging; deliver package to local courier), at a wage of $20/hour
- Selling/Operating costs for 100 Willow pants: $2800
- Marketing: $15/unit. $1500 subtotal
- Software (Shopify, Illustrator, Gsuite): $2/unit. $200 subtotal
- Storage and fulfillment: $1/unit. $100 subtotal
- Product shipping to customer at $10/unit. Subtotal: $1000
- Waxwing Labs Employee at $20/unit. Subtotal: $2000
Product Development expenses to create the Willow pant (before production): $1460.27
- Materials and shipping: $789.88
- Pattern development and prototyping/sampling: $670.39
This gets us to a total cost of $20492.88 to develop, produce, and sell 100 Willow pants (our total business expenses), or $204.93 per unit. This means that Waxwing Labs makes a profit of $65.07 for each pant we sell, resulting in a net profit margin of 24.1%. As a side note, net profit margin is calculated by finding the difference between net sales and total business expenses, divided by net sales: ($27,000 in sales - $20,492.88 total expenses)/($27,000 in sales) x 100 = 24.1%.
What does this all mean? At first glance, a net profit margin of 24.1% is a lot – the average is 4.5% for an online retailer. But this is assuming that we’ve sold out of the Willow pant and haven’t restocked, added new sales, or otherwise grown our business. Assuming we’ve sold all 100 units of the Willow pant, we’ve now made $27,000, of which our net profit would be $6507. We’ve made our money back, plus a little more. At this point, we could do a few things –
- Stop while we’re ahead, and shut down this experience $6507 richer than when we started
- Produce another 100 units of the Willow, and pocket the $6507, continuing this cycle indefinitely (and probably rather slowly)
- Produce another 100 units of the Willow, and use the $6507 to develop and produce a new product (say, a men’s pant or a women’s top). Now, given the expenses to produce the Willow, $6507 will only cover the development costs of a new product. We’ll have to sell a few rounds of the Willow and save the profit before we could produce a new style. But it’s all about balance at this point – while we’re developing product #2, we’re still selling product #1, and hopefully by the time product #2 is ready for production, we’ll have sold enough of product #1 to fund that production of product #2.
We’re going with option #3. We want to grow this company and – going back to our mission – celebrate fabrics. We plan to reinvest our profit into Waxwing Labs – that means our 24.1% net profit margin is going to turn into 0% (or maybe 1 or 2%, for a rainy day fund :) ). We’re here for the love of fashion and fabrics, not to get rich.
So to answer the question, “why is your pant so expensive,” well, it’s because it’s because quality, ethical, small run products are expensive to make – but well worth the experience.