This post is from my store website but I thought I would post it here as well>

This post is intended to be an informative piece on the costs involved in developing an Australian clothing label. Not mass produced, Asian made, rebranded garments that are available in discount stores, but an actual clothing brand whereby the majority of product development takes place here in Australia.

When trawling through various forums, especially discussions on clothes shopping, a common theme seems to be value for money. Quite often posters will share information on sales, specials, and store offers. There is the occasional lament about the cost of goods and the seemingly huge mark-ups of goods manufactured in Asia for a fraction of what they are sold for in Australian stores. Also, why are similar goods so much cheaper in countries like the US and UK, even with added postage costs. What with the high living costs in Australia, maximising the value of hard earned dollars is perfectly understandable.

Despite the questions, there is very little information on the expenses involved in the development and manufacture of an Australian clothing label. So let’s review some of the reasons why clothing seems to be so expensive in Australia. Before we begin, I would like to make it clear that I am in no way attempting to justify prices. My purpose is to explain the costs of manufacturing garments and especially Australian designed garments which are manufactured off shore. My knowledge comes from my own personal experience with owning a clothing label.

Firstly, Australia’s population is a fraction of that in the US and UK and, as such, our purchasing power from Asian manufacturers is considerably lower. With our smaller purchasing quantities, the price of garments is significantly higher per piece.

However, the setup costs of producing a garment style is the same, regardless of quantities ordered. Such setup costs include patternmaking, fabric design and print fabric testing, sample making, bulk fabric printing, possible product revisions if the initial samples are not to expectations, and associated administrative costs. These costs need to be absorbed into the wholesale pricing of a garment. The proportion of setup costs in each garment is higher if production is in smaller quantities than in larger quantities. So when you are shopping for brand name products, and compare them to cheaper products from the discount stores, you are also paying for quality control measures that may not be available in cheaper products.

The wholesale cost of a garment also needs to incorporate sales agent fees – most labels use independent agents in each state to pre-sell their products as this works out to be a better fiscal practice than sending staff around the country. Agent commissions are normally around 10-15% of the wholesale price of a garment.
Importing into Australia is not a cheap exercise. Aside from a numerous handling charges and freight costs, there is a 10% Customs duty imposed on all imported goods where the bulk value is above $1,000. Over this is the 10% GST charge – GST is calculated on the value of the goods plus customs duty. All these charges add approximately 40% more to the value of the goods and must be paid before the goods are released.

Hypothetically speaking, a garment that costs $10 from China, may easily become $30 before it even leaves the designer or wholesaler. The wholesaler then applies a small margin – very little in most cases (wholesalers rely on bulk sales to make their profits rather than per garment) – and retailers have their own markup – usually 100%.

I have also read comments of the high mark-ups and how retailers have had it “good” for so long. Unfortunately, the costs of running a retail store in Australia can be exorbitant – rent, wages, insurance, utility costs, advertising/marketing, banking costs, store setup costs. I think most Australians would agree that Australia is a high cost country to live in but those costs filter through all sectors of the community. Where exchange of money occurs, there is a indirect or indirect impact on transactions occurring elsewhere. At the end of the day, most retailers make very little out of a 40-48 hour working week. If they manage to take home a salary that is similar to what they would earn as a paid employee in a retail store, most would likely consider that as a good measure of retail success. Sadly, I think those opportunities are few and far between.

So why haven't labels gone back to manufacturing in Australia? To keep the answer simple, it's because of the demand for cheaper goods that so much of our manufacturing is now offshore which in turn has been detrimental to available jobs, skills and modern garment making technology in Australia. Also, with our higher labour costs, domestic production still costs more than offshore production. It means Australian produced goods with a higher retail price but with lesser refinements in the finished product.

Lastly, I am going to  comment about sleepwear. For whatever reason, sleepwear does not hold the same value, from a consumer point of view, as outerwear. Let’s say, hypothetically, you purchase a cotton tee and a short for $35 each. You would consider these to be of average cost. However, a pyjama set retailing for $70, that uses the same amount of fabric and takes the same amount of labour to produce, would be deemed over priced by many. The reality is that a sleepwear item from a brand label is comparable in manufacturing costs to an outer garment. Both branded sleepwear and outerwear follow the same development, quality control and manufacturing processes. Sleepwear from discount stores cost less because they void many of the steps used by the brand labels. Going from comments I’ve heard regarding fabric shrinkage, dye leech, poor stitching and overall fabric quality, my guess is that there is very little or no quality control measures in place for these garments. So next time you purchase a branded Australian sleepwear label, you should be confident of receiving a quality product that should last much longer than a cheaper product from a discount store.