What causes the exorbitant prices of designer labels?

[Ghost]

is it most of them are from monthly advertising in famous magazine like vogue and style, the catwalk and spokeman by top models and celebrities, and inviting the stars for the front row (i heard they are paid millions to come there) ?
and i think if all these are left out, the price will be drastically reduced.
Are the best fabrics they claimed really that expensive that they have to put on a ridiculous price tag? i understand the prestige and glamour and jealousy and quality the brand brings and what are the other factors?????
the salary of karl largefield, john galliano, marc jacob?????

if there is anyone working in dior or chanel, can u kindly explain the process?

 

[Whitelinen]

I'm not working in fashion, but I do think that those things you already listed do add to the price.

I think that designer labels usually (not always) have better quality, many of their things last from mum to daughter. And quality costs. Some designer houses, for example Chanel, include free repairing service after you have once bought f.e a clutch from their collections.

The brand name also adds up to the price, of course. If they would be cheaper, they wouldn't have such a high profile.

I'm not sure but I think there has been a thread about this.

 

[rach2jlc]

There have been a number of threads on this, but in general:

One must remember that most luxury brands are selling an "image" as much as they are selling clothes. And, that "image" cost LOTS and LOTS of money to mainting. So, for something like Gucci (for example), keep in mind that there are huge flagship boutiques, runway shows, models, and all of the other things you mentioned in your original post. Those huge flagship stores cost millions of dollars a month to maintain (just think about the locations... NYC, Tokyo, Paris, all in the best neighborhoods).

It is perhaps one thing to conjecture that these brand would cost much less if the "overhead" weren't there, meaning the little frills here and there, but then again, how would we ever hear of those brands? Would you necessarily be as interested in buying them? It is too easy to say "I wish Gucci would charge less by cutting out the waste" because, more than likely, if they cut out that waste, you would no longer be interested in them or you wouldn't even know who they were in the first place.

There are MANY tiny, exquisite Italian and European brands out there that NOBODY has ever heard of outside of a select few because they don't "advertise" themselves as much as Prada, Gucci, and the big guys.Does that mean that they aren't as good? In terms of quality, they are probably better, because they don't have that overhead. A $500 pair of Crockett & Jones shoes is heads and tails better than Gucci or Prada in terms of quality, just because perhaps $150 of Gucci or Prada's cost is added just for overhead that C&J doesn't have.

John

 

[Ghost]

btw have u guys seen this website?
http://www.dior-finance.com/en/home.asp

it's amazing how dior makes money.

 

[PrinceOfCats]

'Design costs: 0'...

At least we know what profits are not being spent on then.

 

[rach2jlc]

'Design costs: 0'...

At least we know what profits are not being spent on then.

Yeah, they just keep Galliano supplied with pills and liquor and he's happy as a clam. He's long since stopped taking part in the real world anyway.

John

 

[Spike413]

Believe it or not there is a lot more to the cost than just the label and farbric. Keep in mind that when you're buying a designer garment, you're paying for precision as well. You have to look at how the clothes are sewn and finished, the cut, the fit, you're paying for a higher level of quality then your basic jeans and t shirt. Of course this is subjective because there are some designer labels out there that are poorly made considering the price.

Then factor in the fabric type, quality and amount used for the garment and any kind of detail or decoration like pleats, drapes, embroidery etc. Time is also a factor, how much time the sewer or the designer put into making the garment impacts price. If it took a long time to make, it's going to cost more. The amount of handwork involved is also something that will raise a price because a) it takes more time and b) it takes more skill. Also remember that you are buying a designers idea, I know that sounds pretentious but whether the designer is Galliano himself or someone on his team you're paying for that original thought.

So like I said, there is a lot more in the price of a garment then the label. A lot of the time, I feel the prices are pretty justified, then there are some things like that rediculous Dior Homme t-shirt with the bee that is just rediculously priced.

 

[tricotineacetat]

show production, advertising campaigns, pr agents, showrooms, sales agents, delivery, unprofitable flagship stores - all these add immensely to the mere production costs of a high-end garment. Just to say that it´s the superior quality alone would be naive, you don´t want to know what it costs to organize a sales campaign for a big brand, even the tiniest of gallery spaces in paris cost a ridiculous amount of money to rent during fashion week. to get all these famous girls walking down the runway is another factor and don´t forget Guido Palau´s and Pat McGrath´s fee as well as those for show stylists, lighting, set design, casting, catering, after show party, invitations (normally sent by courir to the buyer´s hotel), blablabla.

It is especially difficult for a small designer to drop prices to a reasonable level as they are likely receiving small quantities from their clients, which makes both the fabrics and production much more expensive than for the global players, such as Prada, Gucci or Dior (ever noticed how Prada shoes are less expensive than those from an independent designer?).

 

[kLm]

I think it can be simplified even further--by limiting supply, which raises demand, they use very basic mathematical forumale to determine what the highest price per unit they can afford to sell, before their profits begin to drop on the other side of the curve. (the curve being price/units, with more units being sold at lower prices for x profit, and less units being sold at higher prices for y profit, and somwhere in the middle is z profit, where the max price and the amount of units shifted meet).

That is the bottom line, and although all these other factors play in--value of the label, quality of the materials, advertising budgets--it all comes down to a standard business equation--what's the most money we can make?

 

[Lena]

show production, advertising campaigns, pr agents, showrooms, sales agents, delivery, unprofitable flagship stores - all these add immensely to the mere production costs of a high-end garment. Just to say that it´s the superior quality alone would be naive, you don´t want to know what it costs to organize a sales campaign for a big brand, even the tiniest of gallery spaces in paris cost a ridiculous amount of money to rent during fashion week. to get all these famous girls walking down the runway is another factor and don´t forget Guido Palau´s and Pat McGrath´s fee as well as those for show stylists, lighting, set design, casting, catering, after show party, invitations (normally sent by courir to the buyer´s hotel), blablabla.

It is especially difficult for a small designer to drop prices to a reasonable level as they are likely receiving small quantities from their clients, which makes both the fabrics and production much more expensive than for the global players, such as Prada, Gucci or Dior (ever noticed how Prada shoes are less expensive than those from an independent designer?).

much deserved karma for tricotine's post here..
i totally second his view on designer pricing
i also agree regarding indie designers who should actually wholesale double the prices of 'luxe' labels

 

[tricotineacetat]

i also agree regarding indie designers who should actually wholesale double the prices of 'luxe' labels

I´m not sure if this is the way to go, because with the increasing prices, fashion is becoming very undemocratic - it´s certainly not as easy anymore to sell prices with a Balenciaga or Lanvin pricetag, yet every brand wants to play in the same league of luxe. I am somewhat sorry that the people that actually appreciate the clothes best (as with a lot of fellow TFSers) can often not afford to pay the pricetag, and I appreciate those that are doing an effort to put the prices on a reasonable level... I think the worth and appreciation of a garment is not reflected in the pricetag, but that´s maybe just my own naive point of view.

 

[Lena]

I think the worth and appreciation of a garment is not reflected in the pricetag, but that´s maybe just my own naive point of view.

agreed..
of course i was just trying to stress the point 'why indie designer's collections as expensive as those of established luxe labels' ..as you said already, an indie designer will pay more for the same fabric than Lanvin or Marni will pay.. ans os on
of course i understant the recent enlarged problems in the EU retail environment... but see, its middle and low income class that has a real money issue at the moment, rich people still buy well, actually they buy better than two/three years ago.
strange but true, most lux groups have posted double digit positive results for 2005 and 2006 seems to be heading strong for the luxury market

rich are getting richer, middle class is seriously getting nouveaux-poor

 

[tricotineacetat]

rich are getting richer, middle class is seriously getting nouveaux-poor

Yes, I agree with you on all points that there will always be a solid upper-class that is willing to pay, question is just, which brands they are attracted to, are they going the safe way and invest in classic luxury goods companies such as Hermes or anybody else that is doing "timeless with superior quality", or are they going the tasteless, trashy direction (á la Christian Dior). It´s mostly these types of people that I see - not only in my hometown but also in Paris.

It´s probably going a bit too far over what this topic was usually meant for, but I see that a lot of (established) brands are losing touch with their customer base - PR people, artists, graphic designers, etc. - all these people that traditionally used to buy into brands like Helmut Lang, Martin Margiela, Demeulemeester, Yamamoto or Comme des Garcons - they simply cannot afford the clothes anymore (or if so, only end up buying few pieces every season) and I see a lot of shops having difficulties to sell the goods. It´s not as in the 1980ies where people would just literally snatch up anything with a designer label tag on.

Albeit the decreasing quality, people are still buying brands like Dries Van Noten, as well as people like Isabel Marant or Vanessa Bruno who are often lower-priced than the well-known luxe PAP brands (which are turning most of their profits with accessories collections, as seen with Frida Giannini´s appointment as head of womenswear design at Gucci).

 

[Lena]

PR people, advertising and artist related professionals that used to burn cash on mmm etc, they are entering the nouveaux poor section now trico.. so their client base is expiring big time..
the 'real rich' will stay divided between 'old values' eg Hermes, Burberry etc and discovering 'new values' eg Martin Grant, Charles Anastase etc

Isabel Marant and Vanessa Bruno are 'middle class' labels very much at the PAP range really, as a buyer i know you know that this is certainly not where the money is at the moment..

(believe it or not, i've heard that Lanvin are not selling too well at the moment, somehow the 'ladies' dont seem too taken by Elbaz effords.. for the uber rich clientelle, no frills/timeless is rule number one, i bet they find Elbaz too MartinMariella-ish for their own taste..)

 

[renferme]

No one mentioned Shareholder Value. Has anyone here see the huuuge profits the likes of LVMH make after they have payed for everything mentioned above?

At this level fashion is about making money and the big luxe labels ar all bout extracting as much money as possble from those who can afford it.

 

[tricotineacetat]

PR people, advertising and artist related professionals that used to burn cash on mmm etc, they are entering the nouveaux poor section now trico.. so their client base is expiring big time..
the 'real rich' will stay divided between 'old values' eg Hermes, Burberry etc and discovering 'new values' eg Martin Grant, Charles Anastase etc

Isabel Marant and Vanessa Bruno are 'middle class' labels very much at the PAP range really, as a buyer i know you know that this is certainly not where the money is at the moment..

(believe it or not, i've heard that Lanvin are not selling too well at the moment, somehow the 'ladies' dont seem too taken by Elbaz effords.. for the uber rich clientelle, no frills/timeless is rule number one, i bet they find Elbaz too MartinMariella-ish for their own taste..)

that´s an interesting approach that you´ve got there, Lena.

I wouldn´t have thought that that the really rich people (let´s face it, they are often not of the youngest of age) would be turning towards independents such as Charles Anastase, are they really that well informed or are they more likely to discover more well-established, "young" designers such as Alexander McQueen, Sophia Kokosalaki, Roland Mouret or Matthew Williamson?

I am somewhat left with doubts if people are already that fast to discover really new talents, because:

1. You can count by hand how many stockists there are worldwide for people like Charles, it´s really not a lot and mostly it´s in the Japanese market where young people are still spending their saved pocket money on designer clothes, unlike in Europe or the US. I wouldn´t really call these customers as representative of the "really rich".

2. There is also a very limited amount of media coverage for independent designers as these, you are likely to find just a single piece of clothing in a freaky editorial here and there, instead of getting end customers known about the designer´s identity etc.


I know very well as a buyer that the customer that is likely to buy Vanessa Bruno or other, less expensive "designers" is probably not spending as much per season as the one that is going for Balenciaga etc. - yet on the salesfloor, these are the brands that overall generate much better sell-throughs than the big brands, because they cater to a wider clientele, it´s likely that BOTH the super-rich and the middle class buyers are finding something with them, so there really is a sort of diversity of clients. Buyers these days are not willing to take big risks in buying only the uber-expensive designer key items, as with 3000 € oversized Chloé dresses or equally expensive Balenciaga blazers in brocade (which is why Balenciaga introduced the less expensive capsule collections), it´s only the tip on the cake, not where the money is being made with.

 

[tricotineacetat]

At this level fashion is about making money and the big luxe labels ar all bout extracting as much money as possble from those who can afford it.

Agreed. If you look on expansion plans for these big corporate brands (which are by the way, often to be seen in by the public), they are often announcing to grow their accessories/footwear businesses, instead of ready-to-wear. Nobody wants to speak of cheap licensing deals anymore, but the ready to wear alone rarely ever guarantees you a profitable business these days.

Companies like Chanel are having a ridiculously high mark-up on accessories, it´s not a rare thing that they add 600% on top of the production costs of a piece...

 

[*sayan]

600%!!! o damn
Well it sure sounds like fashion is a gloomy business to head into..too bad it's my gloomy business

But tricotine, I was wondering, since you deal with high brand costumers, do they trust the new designers merchandise these days? or are they really just buying if they can see ads in magazines?

 

[tricotineacetat]

600%!!! o damn
Well it sure sounds like fashion is a gloomy business to head into..too bad it's my gloomy business

But tricotine, I was wondering, since you deal with high brand costumers, do they trust the new designers merchandise these days? or are they really just buying if they can see ads in magazines?

Frankly, NOBODY is asking me about specific pieces from runway shows or advertising campaigns, and even less are informed about what the actual design aesthetic is like with some designers - With brands like Gucci, some people are still thinking that Tom Ford is head of design, and I still receive questions from customers about the next Helmut Lang collection!

Please keep in mind though that I am not living in a major fashion capital and Germans are not so much known as a very fashion-oriented customers. Then again, I wonder if the average customer in Copenhagen or Amsterdam or whereever is known who Phoebe Philo or Stefano Pilati is, I highly doubt that.

We´ve got several brands in the shop that are raising brows in the inner circle of fashion followers - such as Rochas or Dior Homme, but to the average European customer (weather they are Russian, German or whatever), these names are still widely unknown. On the other hand, we have got people like Stephan Schneider or Anne Valérie Hash - both absolutely new to my customers, which are doing very well.

So yeah, keeping in mind that our market is a rather difficult one - both from a fashion-cultural aspect and the economic state - I think it is possible to sell emerging designers, even if you are not Colette or another uber-trendy instituation where people are going crazy for the latest sh*t - you just have to find the RIGHT collection for the RIGHT audience - which is why we will likely add Jens Laugesen for next winter.

 

[Venús As A Boy]

Well I did work experience eith lainey keogh, regarded ireland's greatest fashion asset (cuz we have so many!!)

Anyway... lainey specialises in knitwear...

The cost of a lainey 3/4 length cardigan is £900 but if it's embroidered it's ov
er $1600

But she uses pure cashmere's and "steel" or silk... They are knitted in ireland whish itself is very expensive, all other clothing manufacturing has moved to eastern europe. She uses domestic knitting machines which is a lot slower but can do certain things on these machines then you can do on industrial machines. A LOT of things have embroidered flowers that need to be hand-sewn on (I know all about that!) that are ctaully done in the studio not the factory. Everything is felted...