Most retailers consider the true cost of an item’s production to be proprietary, confidential information. After all, if customers knew the product’s markup, they may not be willing to pay the full retail price. But, some retailers are challenging that long-held belief. These innovators—such as apparel retailers Honest By and Everlane and leather goods company Oliver Cabell—have embraced pricing transparency. These companies and others like them break down their production costs, telling shoppers everything from the cost of labor and transportation to the cost of size labels and hang tags. And while this trend might not be for all retailers, select groups have found it appeals to their clientele.
Online-only retailers have been particularly eager to adopt the pricing trend. For merchants with no brick-and-mortar counterpart where shoppers can look at and feel materials, convincing customers of their products’ quality can be a challenge. The idea is that if customers can see the cost breakdown showing that a product is made of luxe materials or hand-sewn, for example, they are more likely to trust the quality and to buy online. E-commerce companies, as well as online startups, can also benefit from pricing transparency by highlighting their cost-savings; by selling directly to consumers and by having no brick-and-mortar overhead costs, these companies can often sell high-quality goods for less than their wholesale competition.
Some retailers have embraced the trend to further solidify their commitment to ethical clothing practices. Retailers can better engage with and reassure shoppers who are committed to buying vegan or organic, or from companies that pay fair wages, by practicing pricing transparency—this allows consumers to see exactly what materials (and sometimes even processes) were used in making the product and the wages each laborer was paid.
And yet, for others, the new pricing practice is one more way to try to combat fast fashion’s increasing hold on the market. As shoppers, especially millennials, gravitate towards trading quality for slashed prices, retailers have begun to use pricing transparency to show where buyers are getting a discount or paying less of a markup. Others use it to show shoppers that the increased price truly reflects an increase in quality, making the item something worth investing in. While this pricing trend appears to be driven by online retailers, brick and mortar businesses may have similar incentives to adopt it. One day, it might be the norm to know what that zipper cost or what laborers were paid, regardless of whether you are shopping online or in a store.
Such transparency is not without risks, however: Not every shopper is going to hand over $448.00 for a jacket that only cost $226.00 to make.