Growing number of retailers breaking down item cost to spell out how price is determined

Posted at 1:50 PM, Aug 02, 2017
and last updated 2017-08-02 23:34:41-04

Have you ever wondered if it’s worth paying $300 for a handbag when another is only $50… or $100 on a blouse when another is $25? Sure, retailers claim “quality” controls cost, but now consumers want to know what exactly drives price tags.  A growing number of retailers are listening…deciding transparency is the key to trust – and loyal customers.  

When it comes to her clothes, Mary Lee Joseph likes to know she’s getting what she pays for.

“It’s something you think about, you know, how much things cost and why,” says Mary Lee.

Traditionally, though, retailers have rarely spelled out exactly how price is determined…until now.  Several e-tailers are showing their cards with something called “transparent pricing.”  Fashion trend analyst Charcy Evers says, “Transparent pricing is basically when a retailer breaks down everything from sourcing where a fabric comes from to transportation to how much a zipper costs.”  

One example:  while shopping online – Mary Lee spotted a black T-shirt for $16.  Along with the price, the site shows that materials cost $1.31 – Labor $5.95 – and transport $.13 for a total cost of $7.39. That means a markup of $8.61. 

“They actually surprised me a lot in terms of how detailed the breakdown was,” says Mary Lee.

Evers says some companies even declare the countries and factories where products are made, claiming the safe conditions and fair wages.  

She says, “When you talk about why something is $150 versus $50, the argument for the $150 piece is where it’s coming from. ‘I’m doing good for the environment, I’m helping support fair labor conditions.’” Mary Lee explains, “I’d rather pay more if I know it comes from an ethical, responsible company.” 

Like the transparency movement already popular in the food and beauty industries, experts say millennials demanding more information driving the retail response. 

“If other companies see that companies are transparent and are successful, then I think they definitely will follow that trend,” says Evers.  She adds that huge companies are less likely to be transparent because it’s more difficult to track each part of the supply chain.