The Question:

A colleague asked, what do you make of this comment by a customer? "Anyone else have trouble buying diapers now that you know how much fabric costs? I look at the diaper and go 'Man that wahm probably has about $3.00 worth of fabric into that diaper and she's selling it for 20 dollars,' and then I can't make myself buy it! LOL I'm buying smalls so I *know* that not much fabric goes into making a small diaper... and now that I've seen the coop prices for fabric I always think.. man I could make that so much cheaper... if only I could sew a little better and had a serger and wasn't afraid of PUL!"

The Answer:

She didn't have all of the equipment needed. You have the equipment.
You are not loaning its use to her. You charge for its use. You charge
for its upkeep. You pay then you depreciate the costs.

She didn't have the sewing skills. If you had learned to sew last week
and started your business this week, perhaps you could discount this
one. Chances are you bring a lot of skill to your work, some of it
gained on the job. As your skills improve, the price of your labor goes
up.

She didn't have the quality materials, and she didn't have great enough
need to buy in bulk and get the lowest prices. You probably don't buy
materials at retail. You probably buy larger quantities to get better
prices. You are investing. You are tying up some of your business
capital in fabric inventory. You have also been around long enough that
you probably know good materials when you see them. That is a skill.
You probably know that if you have much-coveted materials, you can
charge even more as the diaper becomes an object of desire. Refer back
to skills and experience raising the price of labor.

She didn't consider the costs of notions included in the diaper. What
do you use: Elastic? Maybe $.10. Jean Stitch? that does add more than
pennies to the cost, but it creates the appearance that is the expected
standard. Snaps? Even at the best costs, this will add more than
pennies. Labels? This can vary wildly and include labor. Were each of
these items sourced and shipped?

She didn't consider the costs of tools used to make the diaper. Small
tools wear out. Needles break. Scissors and blades dull. Cutting mats
wear thin. Could you make the diaper for her without these?

She didn't consider the costs of designing and testing patterns. If you
bought a pattern, you are paying for a license and the customer must
share that cost. If you developed a pattern, you put time into
drafting; you put materials into testing; and you paid costs up front to
ensure that she would get a useable diaper. Customers are probably
coming to you for your pattern as much as anything.

She didn't consider the costs of sourcing not just adequate and
inexpensive materials but what you consider to be the best materials.
There are cotton/poly blends on close out, and there are custom milled
organics. (I often wonder how people who use close-out fabrics conform
with federal labelling laws.) They are not the same materials; they do
not make the same diaper; and they do not reach the same customer.

She didn't consider the costs of sourcing the extras. Do you sell a few
extras? Maybe soap, slings, washing solutions, dollies. Did you search
for them? Did you not only pay wholesale but shipping, telephone, and
other associated costs?

She didn't consider the costs of cutting and piecing labor. A 15 minute
diaper is not the same as a 60 minute diaper. Professionals price per
step. Different steps have different costs. Try it, estimate what you
think you pay yourself for each step. I'll bet it's far below
standard--and standard is mass production. We are not mass producing.
We are custom tailoring. We are the tiniest of couture houses. We pay
attention to details that mass production cannot, will not, and perhaps
even should not. Not every family can, or even should be able to,
afford custom-made diapers. If they want custom work, they should pay
for it. There are other options for the frugalists.

She didn't consider the costs of advertising and promotion. How did she
know you were there? Did she see an ad? Did she visit your website?
The banner ad cost money. The ad placement cost money. Internet access
costs money. Website design costs money. Web hosting costs money.
Granted, how much one puts into any of these items can vary wildly, but
the difference usually shows and the customer is probably conscious of
this on some level. They had better expect to pay this, too.

She didn't consider the costs of business administration. We either pay
to have our taxes done or we spend time doing them ourselves. We pay
for business licenses. I know all of you pay for insurance (am I
right?). This is another area where costs can vary wildly.

She didn't consider the costs of office basics. You have business
cards, shipping labels, boxes, tape. Computer, phone, fax. Tables,
desks, lamps. Pens, hole punches, notebooks. Even if you get some of
this free or low cost, you do have office supply costs to consider.

She didn't consider the utilities. You probably pre-washed the fabric.
You probably had the lights on when you were drafting your pattern. You
probably used an electric sewing machine. You almost certainly
contacted her via an energy-sucking computer. She didn't dare have you
call her on the phone, did she? You're probably paying a mortgage,
rent, or even property taxes. What percentage of your house is covered
in the flotsam your business? Have you ever compared your pre-business
utility costs to your peak business utility costs?

I'm sure I've left out plenty. Has anyone kept a running total? Have
you ever figured out the real costs of doing business? A diaper doesn't
equal materials alone or even materials plus cutting and piecing labor.
This is why wholesale is generally considered to be costs (materials +
labor) x 2. The hidden costs should, theoretically, fit that margin.
Most of us squeeze these costs into the very tiny profit margins we
allow ourselves. We could do all of this ourselves, some of us do, but
the costs are still there. Just because we do the work doesn't
invalidate the work.

Maybe she didn't consider the benefits of buying from a legitimate
business: quality materials, quality work, fine reputation, and
excellent function among them. The diaper standards in our community
are high. The costs of high quality materials are high. The costs of
doing legitimate business on a small-scale are high.

Anyone who says they should not have to pay these costs is expecting a
gift--or a trade. If they want cheap diapers, there are ways to get
cheap diapers, from exploiting labor overseas or domestically to making
the things themselves.