Exactly how much profit do brands make every time you buy a pair of pants? 

This local brand decided to show its followers – and it’s much less than you think.

With all the talk about sustainability, fast fashion, local manufacturing versus offshore manufacturing and big business profits in the fashion business, it’s easy for consumers to lose sight of exactly how much goes into each piece they purchase. Do brands make as much money as we think they do? And how does that differ between a small local label and a global conglomerate like Zara or H&M?

Well, from the small label side, Melbourne-based brand Kuwaii chose to blow any assumptions you had about fashion being a money-making business out of the water last month by sharing a revealing Instagram tile accompanied by little fanfare, which detailed an exact dollar-by-dollar breakdown of what a pair of its Beatrix Pants costs.

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The image, styled like a receipt, goes on to allocate the majority of its $279 price tag to overheads ($70) and retail expenses ($65), followed by manufacturing ($47) and raw materials ($36). But the detail that shocked the brand’s followers – and the many people who shared the post online – was the relatively small profit margin of only $25 per pair. Making a tonne of profit from this, as a relatively small local label – well, that means a lot of pant sales.

The post itself spoke to a growing trend in the fashion industry, one of radical transparency. As consumers become increasingly weary of large chains and obscured profits for rich board members protected from taxation within capitalist systems, the idea of posting such a simple, easy-to-understand guide to a business’ exact profit margin does indeed read as radical. So, we decided to ask Kuwaii’s designer and director, Kristy Barber, why she chose to post such a revealing look at the inner machinations of her popular local brand.

Can you tell me why Kuwaii chose to release an Instagram tile detailing the exact cost breakdown of one of your pairs of pants?

I had seen transparent brands revealing their costs before, for example, Everlane, but I noticed that usually when a brand reveals their costs, they are only revealing a small part of the costs that make up the whole retail price of the garment. For example, they might show just the manufacturing cost and the fabric cost etc – no one ever revealed what profit they make per piece, or what tax they paid, to add up to the full retail price of the piece. I wanted to push this a step further and show exactly where every cent goes when you purchase an item of Kuwaii, accounting for profit, tax, overheads – everything that is involved in our business.

What was the audience’s response to the post?

The response from our customer has been one of shock. I think that customers presume that when an item is considered more expensive then the profit must be large – but for a locally-made brand, this just isn’t the case. It has really helped customers understand the true cost of our clothing and just how high our overheads are, and how low our profit is.

 

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Customers have commented that they have never seen this level of price transparency from any other brands – fashion or otherwise. And we are a business that runs really lean as well. We’re super conscious of every cent we spend and where it goes, so it’s not like we’re making rash decisions on where our money goes!

Why do you think this kind of transparency is important to consumers? 

I think that with fast fashion having pushed prices of clothing to such a low level, it does really shock customers to see what is involved with making an item of clothing locally, and the complexities and huge costs involved in running a fashion business, and how much a brand needs to invest in the design, sampling and production process before they can make even a small profit. The other thing that’s not even reflected in the graphic is the intangible amounts of hard work, blood, sweat, tears, talent, late nights working, and sleepless nights worrying that’s involved with having your own independent brand.

What have you learnt from posting the report? How will it change your business moving forward? 

It’s inspired us to reveal more and involve our customers even more in our processes. To try to really educate and inform why and how we make decisions. It’s been amazing seeing other brands and businesses also rally together on our posts too because it’s something that affects all small and local brands. We want to share more!

Do you have any advice for fellow brands considering whether to do this themselves? 

If you have the resources to do it, I would say to do it! It’s been a real revelation for us and increased our level of understanding with our community.