We found a slew of options that cost more than your standard $29 Champion or Gap staple hoodie. One hoodie rings up at $365, another at $845 and another at $1,495, all for a sweatshirt.
Why? To answer that question we went to the Westfield Garden State Plaza in New Jersey and asked two of our interns to zip up in hoodies at different price points. Maria wore a $30 hoodie and Jade wore a $365 hoodie.
I had to make one amendment to the two hoodies because the zipper on the more expensive style was a dead giveaway. It was highly-stylized and looked like an embellishment, so I covered the zippers on both our expensive and inexpensive hoodies.
With our interns modeling the ridiculously similar blue sweatshirts, both cotton, I approach about 30 shoppers and posed a simple question. “See these two sweatshirts?," I asked. "One is more expensive than the other. Which one?”
Roughly 60 percent of the people we asked guessed the hoodies' prices correctly.
Many identified the more expensive hoodie by looking closely and saying they noticed embellished seams and a slightly nicer metal ring on the hood string. But when I asked people to guess how much more the expensive hoodie cost, they failed miserably, guessing in the range of $20 to $50.
“Try $335 dollars more," I told them.
Consistently, that news of the hoodie's actual price caused people’s jaws to drop. When I told them about hoodies for sale in the $800 to $1,400 price range, the only word that describes their reactions is incredulous.
Lori Bergamotto, style director at Good Housekeeping magazine, explained the trend at the high end.
"Right now in fashion we are seeing this move toward boxier silhouettes, things that are over-sized and really we have a lot of street style stars to thank for this," she said. "The pendulum in fashion is always swinging. One minute it is all about the most uncomfortable highest heel you could wear and then the next minute it is all about the fashion sneaker.”
Maybe it’s a revolt against stilettos and skinny jeans? That I understand. A fashion trend moving toward comfort and athletic inspiration? I am all about that.
A sweatshirt for $1,495, um, no thanks. I think I’ll just use that money for my mortgage payment this month.
Retailers can sell them for whatever they think they can get for them. But you are setting a retail value of $40, because that's what you are retailing them for. Chances are, the wholesale price of $30 won't be that attractive to most retailers. To sell at your suggested retail value would only be a 25% margin. Most retailers want to be at 50%, if not more. To hit their margins, they need to sell them at $60+. Very few retailers can get that price, so your market is limited.
Something else to consider...
A retailer's profit margin is a part of their risk management. If they put your shirts on their sales floor, and they don't sell after a month, they go on sale. And if they still don't sell, they go on clearance. Retailers want to build in enough to profit margin so that they still make money even when they sell product on clearance. Buying at 75% of retail just doesn't leave enough room, making your brand high risk to a retailer. The alternative is to drive up the retail price, but then the retailer is selling at a much higher price than what's on your site. Retailers usually don't want to compete with their own suppliers like that. It makes them look like they are price gouging, which could effect their own customer's loyalty.
I'm in a similar situation. I typically sell my shirts wholesale at 50% of retail, with a min of 30. I also state that they can't sell for any more than what we agreed upon. I sell my shirts for $15 online, at trade shows and events. I always suggest that to retailers and at $7.5 a shirt they're usually happy. I think $15 is a good fair price and try to keep it at that.. however, I have one shop that wanted to sell them for $18 so I charge them $9.
That formula works well for t-shirts but as you've mentioned i'm not comfortable offering 50% for hoodies.
I just recently had an inquiry for hoodies after we discussed wholesale for shirts... so I think they're assuming hoodies are the same 50%.
I purchase hoodies blank for $8.75 and typically sell them for $25 online, at trade shows and events. If I did 50% for wholesale I'd only get $12.5 for them... leaving only $3.75 per print. That's less than I make off a t shirt wholesale. Even If I suggested a retail price of $30 giving me $15 that's only about $0.50 more than I make for each shirt wholesale.
I screen print all my own garments... and for me hoodies are more difficult, time consuming and expensive to produce. They require a different printing process for me and I have to use more supplies. Plus when I make a mistake it costs me a lot more than when I make a mistake on a tee shirt.
Because of the extra work and money I can't really do 50% of any fair retail value. I was thinking of doing a 60/40 split at $30 retail for the shop. Gives me $18 and them 12.
Not sure they'll go for it but that's all I can think of.
A 70/30 split on consignment is a pretty good deal.. as long as you get the 70.
Make sure to discuss with them some of the issues that could arise with product out on a show room floor. I've had issues with theft and always seem to end up eating the cost. Write up a contract and hold them accountable for every piece you hand over to them.
I like consignment deals because its an easy sell to the retail shop owner... I started out with 2 consignment deals and I had envisioned my self expanding it out to have 20-50 or so set ups around my town.... that idea quickly burst when I realized i'm losing 1 shirt for every 5 sold!! And to make matters worse I think its the employees of the one shop stealing them.
With that kind of loss, it would put me out of business if I didn't print my own shirts. Since I print them my cost per shirt is only like $3.5 printed. If I loose say 10 a month but sell 50 it sucks... but still worth it for me. If I outsourced printing and had to pay say $7 per shirt..... and I lost 10 per month, it would kill all my profits.
Consignment is great for starting out.... but really try to push the wholesale. Its much easier to manage... and cash up front is nice. I'm also toying with the idea of telling retail owners that if they buy them wholesale and don't end up selling them in a few months i'll by them back at what they paid for them. I figure with a deal like that the retail owner would look it as a win win and i'd still get money up front. Seems like a good idea.. any one every try anything like that?