Why Does Outdoor Gear Cost So Much? A Peek Behind the Scenes

Let’s be honest: outdoor apparel is expensive. But does it have to be? Today we’re diving into the why behind the cost of outdoor apparel, and what to consider next time you’re wondering if you’re paying too much. 

Important disclaimer: while the math I’m sharing is accurate, the specific numbers I’m sharing are for example purposes and are usually different, varying from company to company.  

Costing vs Pricing

Understanding pricing is quite complex, factoring in things like market research, the state of the economy, profitability, brand panache, and many other MBA-level factors… but an easy, definitely over-simplified method is to simply take how much it costs to make a product and multiply it by two for wholesale pricing and by four for consumer pricing. 

Wholesale pricing can vary based on the type of product you’re selling, and the relationship your company has with the retailer you’re working with, but the math is easiest when you simply double your costs. That way they can sell it for your same consumer price (aka MSRP, or Manufactured Suggested Retail Price) and still manage to make a profit for themselves, while you’re also (still) making a bit of a profit. 

So if you have a product that costs $25 to produce, you’d sell it to retailers for $50 and you’d sell it directly to your customers for $100.

And before you say to yourself “omg is that $75 of profit?!” - remember that that $75 pays for product development, salaries, rental space, website fees, marketing expenses, and more. All in, physical product companies hope to make between 10-30% of actual profit off of each item they sell, which they need so that they can sustainably grow their business and stick around in the long run.

Costing in a nutshell

Understanding costing is quite a bit simpler: calculate how much you spent on materials, labor, and shipping, and add it all up. If only it were easy, as well, because of course none of this is easy!

In general, if you’re making your product domestically in the US, your labor costs will far outweigh your materials costs - we have a high cost of living in the USA, which means the hourly rate for the people making your products will be higher than overseas. 

Making your product overseas, on the other hand, will result in lower labor costs (thanks to cost of living calculations), so your primary costs will be in materials and shipping. This is one of the primary reasons why it’s so hard to find US-made goods, especially apparel, at prices that can compete with overseas-made goods. (But we can dig into that another time.) 

Materials costs vary, of course, based on their type and quality. Recycled materials tend to be more expensive, since there’s less demand for them, and the processes required to recycle materials haven’t hit the level of scale needed to equate to raw material processing. Plastics will almost always be cheaper than organic materials (like cotton, wool, etc) because while plastic is made industrially by machines, humans have to be involved in the acquisition of organics materials (e.g. picking the cotton, shearing the wool, etc). Higher quality fabrics with abrasion resistance or durable water repellent (DWR) have coatings on them, which adds to their costs as well. And then there are dyes, which can be high or low quality, with pricing to match.

When it comes to materials, you tend to get what you pay for. Ditto when it comes to labor and shipping. 

To make costing even trickier, materials tend to be purchased in bulk (e.g. rolls of fabric), and labor costs tend to be calculated based on the number of units. Factories have minimum order quantities (aka MOQs), which also affects the per-unit price. For example, a factory that makes a product for $15 per unit with an MOQ of 500 units might offer to make the same unit at $14.50 with an MOQ of 1500 units. The biggest brands have MOQs in the millions, so consider how that will affect the per-unit costs, compared to tiny brands. 

Putting it all together

Next time you’re looking at something that has been made and you’re wondering if the pricing is reasonable, consider the following steps:

1. Take the price of the item (e.g. $100) and divide it by four to estimate the cost of the item. 
2. Take that new price (e.g. $25) and divide it by two to very roughly estimate the cost of labor vs the cost of materials (we can pretend shipping is free for this exercise).
3. Take that final price (e.g. $12.50) and ask yourself: could you imagine someone being paid that amount of money to make this product? Could you imagine the materials costing that much?

Alpine Parrot’s Ponderosa Pants have an MSRP of $139, while we have competitors that sell hiking pants for $40.

By the above calculation, it costs us $34.75 to make each pair of pants, while it costs $10 for our competitors. That’s $17.38-ish for materials (totally doable when you buy high-quality fabric at $6.50/yd in bulk and spend another $4-5 in trims like zippers and buttons), plus $17.38-ish for labor (it’s a little high, but that’s because every line of stitching has a cost associated with it - all those pockets don’t come cheap 😉). We explicitly work with factories that have certifications for sustainability and ethical working conditions, including paying every worker a living wage. And our materials are similarly certified for environmental sustainability. 

Now let’s look at the $10 costing for those $40 hiking pants: $5 for materials won’t even cover a yard of our fabric. $5 for labor means that the design has to be a LOT simpler - like basic leggings simpler. If there are any pockets, it really calls into question how much the person making the clothes is earning per hour.

In conclusion

I won’t knock anyone for buying the $40 pair of hiking pants. If it’s all you can afford and it gets you outside, I say go for it! I’ve had moments in my life where all I could afford was a $10 pair of leggings: I wore them until they were totally shredded, because a real human made them and their work deserves to be honored.

At Alpine Parrot, we expect each garment we make to cost $1 per wear or less. That means you should be able to wear our Ponderosa Pants at least 139 times: that’s once a week for more than 2.5 years, or 2.5 times a week for a year! (We’ve been making our hiking pants for three years now, and let me tell you: they last a whole lot longer than a year 🙌🏽) We know our clothes require a bit of an investment, but we also know that when you wear clothes that fit you, you’re more likely to wear them and live your best life. It’s not a marketing gimmick - I’m too much of an engineer to think about it that way. 

Hopefully this post was useful to you - my only goal was to give you the tools you need to make the decisions that matter to YOU. Please share it with anyone you feel might be interested in learning more about the cost of clothing!

Are there other topics you’d like to learn more about? Reply to this email and let me know!