Why is Maternity Clothing so Expensive?
Reason #1 You're stuck
Because “They” know they have you. Your options are limited and you really are going to need a new wardrobe for 9 months. I don't want to sound like a conspiracy theorist but capitalism is a driving force in every industry.
You're the most captive spender on the planet. Your body will change and grow and you have no choice but to re-outfit yourself. And your options are limited. Supply and demand. When I was pregnant, It didn't give me the feel goods. It made me feel like I was being taken advantage of. That's why I started H.E.A.
Reason #2 You're only a Customer for Nine Months
It’s more expensive to be a maternity business than any other type of retail.
Because you won’t need the clothing for long. From a business perspective, that means marketing and advertising costs are higher because we're constantly trying to reach new expecting mom’s.
Traditional retail keeps its customers for years! So the cost of acquiring one returning customer is lower.
That’s why word of mouth is so important for small maternity businesses like mine. You help me spread the word, which helps keep my advertising costs lower, and helps me keep the price of clothing lower.
Reason #3 Markup vs Costs
Most maternity brands are small businesses that started with you in mind. They wanted to offer better pieces at reasonable prices, and they offer the best prices they can while maintaining a markups big enough to keep them in business.
Markup - markup is the difference between the cost of a product, and the price it's sold for price
A small business’s markups are 100% or less. That means the business gets to keep 50% of the sale price towards their business and the other 50% covers the cost of buying the item you just purchased from them.
So for example, a 100% markup means a $45 piece cost the business 22.50$ to buy. That doesn’t include the cost of their marketing, website, store space, staff…it’s just the price of the clothes.
A big brand like Old Navy has markups around 500%. They can buy a piece for $5 and sell it back to you for $45 (800% markup). Their big business brand name gives them buying power. They get discounts on clothes, shipping, tariffs and duties.
To recap: the cost of a $45 top
Old Navy cost $5 markup of 800%*
Small business cost $22.50 markup of 100%
It's time to start asking big business why they need such high markups!
*This is an example, big brands don’t release their actual margins to the public.
Reason #4 Exchange Rates & Bank Rates
The problem with being a small maternity business in Canada.
Almost all international business is done in US $. That means right away purchasing and receiving new brands or pieces direct form the manufacture costs us more $ than our US counterparts.
As of today, it takes $1.27 Canadian to buy $1 us dollar. This rate changes daily.
All transactions are done with credit or paypal. Credit card companies charge an average of 2% for foreign currency exchange, paypal charges 4%
Canadian small business incur extra fees on the clothing they import.
On average an extra $0.30 per dollar for the exchange rate and 2-4% of the entire order cost for the financial institutions.
These fees are also applied to shipping costs which are in US $. Small businesses never receive free shipping for their orders.
Reason #5 Duties, Brokerage & Customs Charges
Next, there are the customs charges, which are higher in Canada and the order threshold is lower.
What are these charges?
Brokerage – the cost (could be as high as half the order value in US $) to have your items moved through customs. These can be handled by a customs broker you keep on retainer, or the shipping company.
Duty –is a tariff payable on a good imported to Canada
Customs taxes -are the equivalent of the taxes you would have paid if you purchased these in Canada. In Ontario it’s the 13% HST. You pay this on the order total and the brokerage fees.
What’s the smallest order you can bring into Canada to avoid these fees:
If it’s a gift, $60
From the US or Mexico $40, $40-150 is duty free but you still need to pay taxes
Compare that to the US
- Up to $1,600 in goods will be duty-free under your personal exemption if the merchandise is from an IP.
- Up to $800 in goods will be duty-free if it is from a CBI or Andean country.
- Any additional amount, up to $1,000, in goods will be dutiable at a flat rate (3%).
This information gets more technical but lets leave it at this!
Maternity clothing is expensive because companies know they only have you as a customer for a a short time. It costs more money to market to a customer who only needs your business fora short time. The exchange rate frees, charge company fees, shipping, brokerage and duty fees also increase the costs of goods. It’s more expensive for a small business in Canada to sell the same goods as a small business in the US. That means our markups are smaller (we keep less money from each sale).
You can help keep small business costs down and prices lower by telling your friends about them!