Why are your briefcases so expensive?
Wrong question. You should be asking, Why are theirs so cheap? Let me explain generally how pricing in retail works. It’s called Keystone Pricing. You can google it. Everybody doubles their price so they can stay in business, save a little and reinvest to back into the business. It’s the same for T-shirts, leather backpacks, coffee mugs, cool briefcases, rugs and leather duffle bags too.
Let’s say the factory makes a briefcase and sells it to the brand owner for $300. The brand owner wholesales it to a department store for $600 and that department store sells it for $1200 to the consumer. No one is raking it in. It’s just the way of business. Of course, we don’t wholesale our briefcases and leather backpacks to stores, so really you’re getting the equivalent of a $1200 department store briefcase for only $600.
So let’s say the raw materials alone of a leather briefcase cost $200 and then $100 for labor, operating expenses, taxes, the extra 35% of payroll that we pay to the government towards the employee’s retirement and government social programs etc. The total Cost of Goods (COGS) on a briefcase is $300. By the way, the free daycare and private fully English elementary school for the kids of our employees, at Old Mexico Manufacturing, is not in the cost of the briefcase, That comes out of our own profit at the end of the year. It’s on us, not you.
How can they make a briefcase that looks just like mine, but sells for the cost of my raw materials or less?
Why are theirs so cheap? That is the question.
There are only two ways.
Lower their materials costs
Lower their labor costs
That’s it. There is no other way.
We sum it up in our video How to Knock Off a Bag
Lower Their Materials Costs
They use lower quality leather
High quality minded companies, like us, use full grain leather for our briefcases, wallets, duffle bags, backpacks and everything else. All of the grain is on the top of the hide, which is the part of the leather with all of the tightly woven fibers that make our briefcases so strong, long lasting and highly water resistant.
But the top part of the hide has the scars and blemishes on it. So we have to cut around most of those scars and bites and throw about 25% of that expensive leather into the trash. That’s really expensive trash. The low quality briefcase makers buy the leather with the top (scars AND grain) shaved or split off from the bottom so they don’t have to cut around scars and throw away leather. But along with the scars, the tough grain went bye bye too. In the industry, we call that leather Genuine Leather or Split Leather. Now they can make 25% more wallets or briefcases that we can with their leather.
The shaved off leather and scrap is ground up and mixed with chemicals and a smudge of dog poop to create a leather vinyl equivalent called Bonded or Reconstituted Leather. It’s the PT Cruiser of the leather world. A briefcase or wallet made with Genuine, Split or Bonded Leather will stretch, absorb water or dry out quickly. They look like junk and fall apart in a short time.
Watch our gross and fascinating video How to Tan Quality Leather to watch them scrape the fat off then shave and split the hide.
They use low cost leather
The reason most leather out of 3rd world countries is so inexpensive, is because most of the hundreds of their tanneries don’t have to spend any money on filtering the water they used to tan the leather. They just dump all of the chromium and low quality toxic acids and waste materials from their tanning process into the rivers which, in turn, ravage anyone who touches or eats from that river and then it pollutes our oceans. Chromium is harmless in leather, but harmful in bodies. Nor do hardly any of them spend money to protect their workers from the harsh tanning materials and acids. Youtube has a good number of horrific videos about the tanneries in India.
They use bad or low quality tanning oils, dyes and preservatives that are a third the price of what our quality leather is tanned with. And you know why? Because they love the money that the low price-minded consumers throw at them trying to buy their cheap leather that their cheap leather backpacks, duffle bags and wallets.
The tanneries we use in Mexico, near our factory, are Gold and Silver rated by the LWG Environmental Stewardship Audit, an organization out of the U.K.. One of them won Tannery of the Year out of hundreds of competing tanneries in North and South America. They’ve invested millions of dollars in water filtration systems, safe and clean work environments and use only eco friendly high grade ingredients. Our leather is two or three times the price, but worth it.
They use low cost hardware
Okay, I admit maybe I did go a little overboard on the 316 Stainless Steel hardware for our backpacks and briefcases. It’s like killing a fly with a shotgun, but it’s not that much more expensive than a lesser high quality hardware. But the cheaper leather briefcase makers usually use some sort of hardware that’s a tenth the price of ours or less. They can nickel plate any junk material or cheap composite they can want. Heck, they probably even nickel plate their crack pipes.
They use low cost thread
Our industrial grade UV resistant thick polyester thread is what they use to sew quality work boots and ship sails and what we use to sew our briefcase, wallets and everything else. Lesser briefcases are sewn with the much cheaper nylon thread that frays and falls apart when the sun hits it too much. But the duffle bag looks nice for the first couple of years though.
Lower Labor Costs
They use slave or child labor or pay desperate people almost nothing to work in horrid or dangerous conditions. I’m not trying to scare you. I’m just telling you the truth. It’s a bad world out there. Professional organizations estimate there are abougt 18,500,000 slaves in India and about 3,500,000 slaves in China. If you think this doesn’t happen, then pull your head out of the ground. It’s estimated that even the U.S. has about 500,000 slaves. If you think I’m kidding, check out one of the many organizations working hard to make a difference, like the financially accountable International Justice Mission www.ijm.org. Maybe consider donating to them.
Illegally not pay employee taxes (employees benefits)
This is a super common one. Let’s say it’s a decent factory with no slaves and they pay someone $1000/mo. to make leather backpacks and wallets. They are supposed to pay 35% extra to the government towards the employee’s retirement and subsidized social programs, but they don’t. Most factories pay them $1000/mo., but only give them $100 on a paycheck and $900 in cash under the table. Therefore they only pay $35 to their accounts instead of $350 and therefore cheat the workers for their own gain. Loads of our employees have bought government subsidized houses after only two years because we’ve paid the extra 35% on their behalf.
What can you do to affect the world?
YOU buy fewer but higher quality foods and goods. I’m not saying to wire your house with platinum wiring because it conducts the best. Copper does a great job. I’m not saying only buy $1800 hats or $5000 office chairs or $2700 leather backpacks and duffle bags, but do buy high quality long lasting ones. And here’s why. Quality companies don’t go for the cheapest price in manufacturing and they monitor their factories and supply chains carefully. Companies who buy strangely low priced bags from faceless factories in third world countries and resell them at a strangely low price, are mostly the ones to blame. Not all factories overseas abuse their laborers or cheat with low quality materials, but the ones who sell oddly low priced leather goods often do. Buy fewer things, but shop as if you’re buying it for life.
Tell people to buy higher quality things. Teach your kids by example. Spread the word. Seriously. Little by little the snails made it to the ark. Maybe if five people lower the demand for low quality by stopping to buy low quality goods, it will free one person from slavery or a bad situation. We make a difference in the same way we eat an elephant. one bite at a time. But we’ve got to start somewhere. There are a lot of us. Be one of us.
To understand even more so you can help us and other companies get the word out and make a significant difference, watch the incredible documentary The True Cost on what goes on behind the scenes with low cost fast fashion clothing or accessories. Same idea with leather.
We can’t go to factories and force them to stop loving money and start loving people. But please help get the word out and don’t be part of the problem by buying low quality low priced junk which creates the demand for more. Why are theirs so cheap? That’s the question.
Our challenge to business owners and decision makers. I’m throwing it down here. Choose to sell higher quality. Don’t even offer junk. Start with one product. It’s not hard, you just have to plan to be a quality company. Once people have tasted of true quality, they won’t go back because quality is easy to get used to. Smart people know that you buy nice or buy twice.
A Deal is only a Good Deal if it’s a Good Deal for Everybody
It’s not a good deal unless it’s a good deal for everybody. Buy quality because that’s almost always a good deal for everybody. If you find a shovel or a briefcase or a baseball hat or a wallet with a really low price tag, then some would call that a good deal, but is it really? If all three of the following aren’t a good deal, then it’s not a good deal at all.
Good deal for the buyer - At a good price, if one buys something that lasts long, does a good job or brings joy, then it’s a good deal for them.
Good deal for the maker - With good wages in a good place, if the maker earns enough to provide, save and work in a safe healthy environment, then it’s a good deal for them.
Good deal for the seller - At a good profit, if the seller makes enough money to provide, save and reinvest in the business, then it’s a good deal for them.
It’s a bad deal if it’s just two out of the three:
Good price for buyer, good profit for seller, bad wages for maker
Good profit for seller, good wages for maker, bad product for buyer
Good wages for maker, good product for buyer, bad profit for seller
If you find something at a strangely low price then it’s probably not truly a good deal.