Why do some jeans retail for hundreds of dollars more than, well, what a typical pair of jeans should cost? The consumer opting for the “premium” product is paying extra for American materials and labor, fancy embroidery on the pockets and waistbands, and, of course, a brand logo that, subtle or prominent, is strategically designed to impress. Oh yeah, and the hefty price tag is also the result of enormous marketing budgets and profit margins of 40% or 50%.
The rise of “premium” jeans reached new heights around 2007, but during the heart of the recession few consumers were buying into the idea that any pair of denim pants was worth hundreds of dollars. But $300 jeans are back. Actually, there are even $1,000 jeans ($10 bottles of water too) on the marketplace as well.
That sorta makes the jeans in the $200-$600 range that are the focus of a Wall Street Journal story seem reasonable. Sorta. The story’s title is a straightforward question: “How Can Jeans Cost $300?”
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Why is it that the most popular pair of jeans from a company called True Religion has an average retail price in stores of $335? The same company, by the way, sells boys jeans for $150, and three-piece baby gift sets (jeans, T-shirt, hoodie) for another $150.
Yes, the products themselves are more expensive to make than jeans that sell for much less. Luxury jeans often feature fancy buttons and embroidery and “premium” denim, along with carefully designed frayed edges, holes, stitches, and special washes to create the fashionably distressed look.
Even if you think those details are worth paying for—I don’t, but then again I still wear jeans from college—you might be less willing to pay for the XXL markups on premium jeans. The production cost of a pair of True Religion’s jeans is $50. But after those jeans are sold to wholesalers, then on to stores, and all the profit margins and extras are added in—including a tag on the jeans itself, which costs 18¢—and the costs of billboards, magazine ads, and other marketing efforts are factored in, the price at the snooty boutique winds up at over $300.
So the purchaser of $300 jeans is paying more for markups and marketing than he or she is for the fashionable article of clothing itself.
I suppose that’s always the way it is in the high-end fashion world. The question isn’t really: How can they charge $300 for jeans. It’s: Why would anyone pay $300 for jeans?
In fact, the vast-vast majority of people don’t come anywhere near the $300 mark. Only 1% of jeans sells for more than $50.