The answer, as to many things in life, is not that simple. Some might just say, it’s designer clothes! Of course they’re expensive, but that would just be stating the obvious.
#1 Productions costs
One of the most obvious answers to the outrageous prices is the production costs. Luxury brands tend to work with higher quality materials than high street retailers. These companies also tend to produce products which have a significantly more expensive manufacturing labor than a country like India or Vietnam.
#2 Limited production
In order to create exclusivity some brands produce 100 tops instead of a 1000 and what working with bulk orders will teach you is that the more garments you order then the cheaper the price per unit will be.
#3 Research and talent
Higher end lines spend more time and do more research to develop their products. In an interview with a former employee of Calvin Klein also comments on how inspired she was by the amount of time and effort spent on each piece. In comparison, brands who do “Fast Fashion” like Zara just copy fresh looks of designer’s runways and call it a day.
Fashion shows are very expensive to produce! Once upon a time, the purpose of these events was for buyers to look at the latest creations and order them for their respective retailers. In the age of YouTube shopping hauls and Instagram models charging six figure numbers to take a snap with a particular product, the old fashion show purpose doesn’t work anymore. Now instead the runway is used for marketing. Basically, when you’re purchasing a product you’re also paying for the ad that told you that that product existed in the first place.
#5 Strategic Brand Positioning
Back in 2014, Burberry announced it would be increasing the price of their products to make the brand more exclusive. This could also translate as making themselves less affordable to lose some undesirable “less rich” customers. At a first glance this might seem like a bad idea, why would you want less customers? But that’s the game these brands play. They’re not just selling a t-shirt, their selling status and exclusivity. When you wear a Burberry coat, you’re also telling the world “I can afford this”. It also makes sense when we realise that the number of millionaires around the world has increased considerably in the past decade.