The Cost of Manufacturing Ethically in Australia ~ an updated edition for 2023

 It warms my heart that over the years, this blog post has been shared far and wide. I receive emails each and every week from people who have just stumbled across it and are writing to thank me for giving a small bit of insight into the costs of manufacturing locally.

In the four years since I first wrote this post, a lot has changed in both the world in general , and in the world of local manufacturing. One of the largest changes of course, being the costs associated with production. I have sat over the last 12 months and watched small business after small business close their doors, and it has made me more determined than ever, to keep our virtual doors open. To do that, I honestly believe we need transparency in our costs. If we are going to increase our prices in line with the huge increases we are seeing in costs, then you, the consumer need to understand without any doubt, how our costs are changing.

We all know that this world is set up to support big business and make life harder for the little people, but it is all too easy to read the articles about big companies increasing prices while recording record profits, and to slip into the habit of believing this is the case for small businesses too. It is only transparency which shows consumers this is most definitely not. So, welcome to my updated transparency page, where we break down the costs of making a pair of Gather & Moss PJ's. As always, if you have any questions, please just ask. I haven't had a question yet that I am not willingly and happy to answer. If you have ever looked at or purchased some of our pjs, then you are a part of our family, and we don't keep secrets from family! 

 The other day (2018 other day), I received my first ever Instagram comment that my products are lovely, but just too expensive.

It did not make me angry, it didn’t make me sad, but it did remind me that there is a whole big world of people out there who shop in different ways. They may not believe in what I believe in, they may not agree with what I do or how I think, but in a lot of cases, I think they just do not know that there are many ways of manufacturing, of creating and of bringing products to life and that some ways cost far more than others.

Rather than get angry, I decided to write a blog post on the cost of manufacturing our pj’s – something I have been meaning to do for a long time. Transparency is something that is so close to my heart. If more businesses showed transparency in what they do, I think the world would be a very different place. I want my customers to be able to understand why they pay more for my pyjamas than those from many main stream brands. I want other brands who are interested in manufacturing in Australia to understand the costs. I also think it is important to allow people to see inside a business or brand, so that perhaps they start to question why not all businesses are transparent.

So here goes, an close up look at how our Pj’s are made and why they are priced the way they are...........

The two primary costs in our PJ’s are the fabric costs and the cost of paying fair wages to those who actually Cut, Sew and Trim our garments (CMT).

Fabric - Our GOTS certified organic cotton costs $19 per m (previously $16 when this post was first written in 2018). This cost encompasses the cotton yarn, the custom colouring of the yarn, the knitting of the fabric, and the screen printing of our designs. The GOTS certified organic cotton plants are grown in India and the cotton is spun into yarn in India. The knitting of the yarn into fabric, the colouring of the fabric and the hand screen printing of the fabric are all carried out right here in Australia.

Cut Make Trim – The CMT of our garments is exactly what it sounds like – the cutting of the fabric, the sewing of all styles and the finishing of all pieces (tags, labels, pressing etc). Of course, this cost varies from style to style. To give you an idea, here are the CMT costs for our most popular products:

• Winter Pj sets $22 for pants and top (previously $12 last time this post was written)
• Summer Pj set $21 for pants and top (previously $12)
• Kids dress $14.30 (previously $9.70)

Our CMT is carried out by a wonderful family owned business in Sydney who specialise in sewing with jersey fabric. Staffed with one amazing cutter and several dozen ladies, who sew better than I ever will, I feel so lucky to have found such amazing makers to work with.

On top of these costs to actually have the item constructed, the following "additional costs" are also factored into each garment:

Swing tags - Printed in Australia

Pattern making - $600 - $800 for the drafting of a new style 

Packaging materials – compostable mail satchels etc

Sew in care labels - $700 - 1000 per collection 

Graphic designer costs $300 - $700 per design

Screen print set up costs - $200 per design

Website hosting - $550 per year

Photography $500 - $600 per collection 

Domain names

Marketing

Transaction fees each time an order is processed (2-3% of the transaction - we have recently stopped using Afterpay as they take 6% of every sale as their fee, which is a LOT)!.

 These costs break down to about $5 per piece/set. 

 The manufacture cost of our pjs comes from adding:

Fabric cost per garment (the fabric yield) + CMT + additional costs 

Our Long PJ sets use 1.2m of fabric ($22.80), our summer pj sets use 1m of fabric ($19) & our nighties use 1m ($19) bringing the total cost of these garments to:

- Kids Winter Pj' set - $22 CMT + $22.80 fabric + $5 additional costs = $49.80 per pair (previously $34 per pair prior to updating this blog in 2023)

- Kids Summer pj set - $21 CMT + $19 fabric + $5 additional costs  = $45 per pair (previously $27.8 per pair prior to updating this blog in 2023)

- Kids Nightie - $14.3 CMT + $19 fabric costs + $5 additional costs = $38.30 (previously $28.2 per nightie prior to updating this blog in 2023)

Of course, all of these costs are simply to produce the garments. They do not factor in my wage, tax or super-annuation. These things all depend on how well a collection is received, so you can understand what small businesses mean when they say there is not always money to pay themselves.

Effectively, what these above figures amount to, is that the cost of making my garments is well over half the retail price. This is in contrast to most conventional business models which take the manufacture price and multiply it by 4 to get a retail price. Obviously we cannot sell a pair of kids pyjamas for $184, so we are making the choice to make much less money from our pieces in a trade off with choosing a manufacturing model that fits our ethic and our values. What these figures equate to, is that basically, I need to sell almost 2/3rds of a collection before the production costs have been paid for, and I have made any type of wage. What my wage looks like for the next 6 months is determined by how much of a collection sells at full price!

Looking at these figures sometimes even makes me wonder why exactly I am doing this. As you can see by the numbers, there is not a whole lot left over at the end of the day and what is left to pay a wage and to make profit, hinges on a collection selling very very well. If I have a style that is not popular or does not sell well, then those products that remain, represent all of my wage and profit sitting in a box in my spare room, rather than in a bank account, paying for our mortgage and groceries.

When faced with figures like these, a lot of people would say "what is the point" and it is a fair question. I strongly believe that manufacturing locally and ethically in Australia can work.! It is risky, it is never certain and it costs more, but I really believe that it is a long term game. I think it comes down to working out exactly the right balance of production so that your items are in demand, so that they sell well, and you do not have your wage left sitting in a box in your spare room. Working out that balance however takes time. This is not a game of making fast money or a lot of money. Lucky for me, that was never the point. For me the point is freedom and spending my days doing something I believe in.. I can run this business on my own terms. I can dream of the day that we take our family around the world whilst still running Gather & Moss.

The last 8 years of running Gather & Moss has been a huge learning curve, of mistakes, of losses and of hard work but also of fun and imagination. The last 3 years have seen things begin to work the way I always hoped they would, but then along came hugely increased production costs, and the game changes yet again.

I think the thing I always come back to is that Gather & Moss was never about making a fortune. It was about making a difference and offering a product that a) you guys love, b) continues Australia's strong manufacturing tradition and c) brings me joy and does not compromise on my ethics or principles. It won't make me rich, but in 2020, it was just starting to make me a reasonably average wage. Here's hoping that with hard work, and a sprinkle of luck and magic, it will once again become an income the equivalent of a job in the “new real world”, that I have built myself from a tiny little dream.

Kate xx