What Is the True Cost of a T-Shirt?
Have you ever thought about how much your t-shirt really costs to make? Or wondered why the retail price is so much higher than the manufacturing cost? What are you actually paying for? We explain what the true cost of a t-shirt really is.
I teamed up with Purnaa’s production manager, Richard, to compare the cost breakdowns between a $20 T-Shirt produced at an average Bangladeshi factory vs. one manufactured at Purnaa.
Bangladesh’s Garment Industry
Bangladesh has one of the lowest minimum wages in the world, which is why it is one of the most popular countries to manufacturer garments in. More than 3.5 million people work in Bangladesh’s garment industry, which now accounts for about 80% of the country’s foreign trade. The workers, about 85% women, are often subjected to long work hours, forced or unpaid overtime, harassment, and unsafe working conditions, all to be able to produce the lowest price products for Western consumption. Wages are determined by businesses, unlike the cost of materials or shipping. So when costs need to be cut, it is usually the worker’s salary that takes the first hit. We chose to compare Bangladesh with Purnaa as this is where a huge amount of the world’s cheap clothing originates.
Purnaa’s Commitment To Transparency
Because Purnaa is committed to transparency, customers can find a complete cost breakdown for each product on the Custom Print Gear website. Purnaa customers can know what they’re paying for and wear Purnaa products with confidence knowing that they are purchasing from an ethical and sustainably-focused company who manufactures the right way.
As you can see in the graph below, Purnaa’s administrative overheads, shipping, and import taxes are significantly higher. This is primarily because Purnaa is in Nepal, a landlocked country with stringent rules and regulations on exporting products. Overheads are higher because of our commitment to fair living wages.
In both cases most of the t-shirt’s cost is allocated to brand markup, but in the Bangladeshi t-shirt’s case, a large percentage is also given to wholesale markup. The total cost of manufacturing the t-shirt is actually only $2.10 compared with $7.81 at Purnaa. A standard t-shirt’s retail price may be up to ten times higher than the wholesale price if it was sourced from a factory that exploits both it’s workers and the environment to make the cheapest possible products. When you buy directly from Purnaa there are no retailing markups, just a modest profit margin which we add to each shirt.
You can see that Purnaa’s material costs are more than double than in Bangladesh. Nepal has a small textile industry, which means many fabrics are unavailable here, especially in large quantities. We import almost all Custom Print Gear fabric from India. Our organic cotton comes from a GOTS, Fairtrade, and Fair Trade USA certified supplier. To import fabric from India, even in large quantities, is very expensive.
The dye that is used to dye the t-shirts are GOTS certified and low impact. They use less water, less heat and produce less waste runoff than regular chemical dyeing processes. These fiber-reactive dyes contain no heavy metals or other known toxic substances, and meet all European Union criteria for eco-friendly pigments.
Wages and Benefits
Appallingly, a Bangladeshi worker can make as little as $0.05 per t-shirt, compared with $1.68 at Purnaa. However, this is only an average as we don’t actually pay a piece rate, all of our employees earn a salary. At Purnaa the lowest wage is $125 a month and the average among sewers is $141. The Nepali minimum wage is $92. You can find more information about staff salaries in our post A Living Wage in Nepal
In September, Purnaa introduced a new bonus system to incentivize staff. Each team has a daily production target depending on the product they are sewing. For every hour ahead of schedule a team becomes, Purnaa pays them 1.2 times their hourly rate for the time saved. The average bonus a sewer can expect to earn per month is $42.50, the highest bonus currently received by a team was $147.50 per person in a month, over double the median wage. Since we have introduced this new system Purnaa has increased production by 35%.
As well as a basic salary and production bonus’, Purnaa is pleased to be able to provide the following benefits:
- Dashian Bonus – Dashian is an annual festival in Nepal, all employees receive a month’s bonus for this holiday.
- Medical Allowance – Employees receive a $100 medical allowance per year and $50 per child or children that they have guardianship over
- Lunch/Tea – Purnaa provides lunch, 2 tea breaks, and a snack everyday.
- Housing Provision – The Nepali government states that a housing provision of 5% of net profit shall be divided among employees and given per month.
- Yearly bonus – 10% of Purnaa’s annual net profit is shared amongst employees.
Purnaa aims to be as transparent as possible in everything that we do. Our new range of Custom Print Gear includes certified organic cotton tees that are customizable for your needs including brand giveaways, events, conferences and uniforms. If you have upcoming merchandise needs, please contact us. We’d love to hear from you: email@example.com