Diminishing Returns

This will be a more thoughtful post, revolving around the idea of prices, mark-ups, and mark-downs. You see, I often hear people saying, “This costs just two-dollars for them to make,” which is true to an extent. If you could go down to the various factories where clothes are made, and people are paid pennies, then yes, I’m sure you could buy it for two-dollars. But then, oh wise Capitalists, would you travel all the way to these third-world countries in order to buy those products? No, not really.

So, we have to pack and then ship the product to a local store. The costs for packing, shipping across an ocean on a boat to a sorting factory, then shipping to individual stores and locations by plane, in order for a guy to carry it to a store near you, then someone unpacks the boxes, sorts the clothes, hangs them, and displays them… I could go on, but each of these people get paid for your convenience–for our convenience. If you could go to a shipyard and buy it off the boat, that’d be great, but would you? Ha-ha, not-so-much. If, and totally if, you could buy it right after it was processed and ready to sell in a store, then it is worth the price on the tag. This is rarely the case.

The entire process, for me, ignores the Brand price, which you really ‘should’ keep an eye on. Made in Italy means the people are paid a lot more to make it compared to Made in the Philippines, so the final cost is multiplied. Yet, some companies still make their stuff in ‘those’ countries that you’d never want to visit, and then mark it up because they are “The Big Thing”, so they can mark it up, because people will buy it–supply and demand.

Back to the topic on hand, once the price is tagged and the items are on the floor, sure, it cost two-dollars to make and then more to get it where it is, but what then? Then people try it on, and someone else has to re-fold it, re-hang it, and replace it where it was. Someone is paid each and every time this happens, over and over, until that piece of clothing is sold. If you look at the minimum-wage in your state, if this item is worked on a total of one hour, how much is it currently worth? I actually think the more a piece of clothing is touched, the more it is worth, but these are the diminishing returns. Eventually, the items are marked down, which again takes time and effort to move it around as it becomes less-and-less of the ‘main product’ being replaced by newer products. Then they sit ‘on sale’, actually worth more than they were worth when they first touched the sales floor because of all the extra time and money used to upkeep it (it even costs money to have it on display where a store pays rent). In the end, you might sell something for twenty-dollars, but paid all sorts of people so much, you just make a profit of two-dollars on that product.

So when a snotty genius lifts a shirt, ruining the fold, and throws it down, saying, “This costs two-dollars to make,” I wonder how shallow their minds really are. I can learn to accept the rude, but respecting the dumb is a different story.

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