Currently I sell some of my hats online with discounts just to show my gratitude towards your kind support when everyone has more or less concerns about his/her finance and when a handmade hat is really not ‘essential’ at all. However, as some of you know, I’d never done a ‘sale’ until current lock-down started. That was simply because there is effectively no ‘profit margin’ to squeeze to bring the prices down.
Amongst small business which sell things, there are two large categories. I would name them ‘maker brands’ and ‘retail brands’. A ‘maker brand’ is a brand which sells goods which are produced by a maker(s) within the brand. demure belongs to this category. A ‘retailer brand’ buys goods from wholesalers or manufactures and sell them on.
Between these types, the simplified price structures look like this.
Maker brand: A (material cost)+B (maker’s hourly wage x number of hours spent)=sales price
Retail brand: C (wholesale price of the goods)+D (company’s profit, typically 170-200% of the whole sale price)=sales price
In case of a maker brand, the maker would pay her costs such as rent out of A, her wage.
In case of a retail brand, the retailer would pay her costs such as her own wage and rent out of D, her profit. After these deductions, there is normally net profit for the business.
At maker brands, there is often no profit left for the business after deducting the maker’s wage. Also for maker brands to compete with retails brands, which typically buy products produced by cheaper labour force than that of maker brands, the maker’s wage is under large pressure.
I trained to be a specialist in hat-making so I would like to pay myself a wage as a specialised worker (while providing services as such or delivering products of high standards) but in reality, it has been extremely difficult to do so. And I don’t see much prospect of generating ‘net profit’ for demure as a business (however it’s ok because this has never been my goal). Also, I hate to say it on my behalf but also on behalf of other dedicated makers, I believe that professionally trained specialists’ work should be compensated accordingly.
I have wanted to explain this to people who are interested in demure without sounding rude to anyone not least because I’d hate if people come to think that my prices as a ‘non-famous brand’ was a rip-off. Fortunately, most of the people have shown much understanding and kindly told me that my products explained it to them already but I have come across with some potential business partners or other public who didn’t seem to understand it. Such situations definitely limit opportunities for maker brands to sell their products via other retailers if the makers want to be sincere to customers and offer the same prices regardless of which outlet the customers may buy their products. You will understand what I mean when you look at the calculations I showed above. For many maker-brands, selling from other retailers is often just a way to expose the brand to a wider audience, not to make profits.
That’s why I never did a sale in the past but as we review many issues within fashion industries during current period, I feel confident in the way I have priced my products and my non-sale policy. And I hope that this little note will help you in comparing not only the face values on the price tag but exactly what you are paying for with your hard-earned money.
