CristianP
Member
In recent times I have noticed that a lot of people (including myself) associate ethical, local businesses with high prices.There’s a common belief that companies have to choose between making money and doing good. But looking at recent trends, that doesn’t seem to be the case anymore. Many businesses are showing that ethical practices like, paying fair wages, sourcing responsibly, reducing environmental impact, can actually strengthen a brand, build trust, and attract loyal customers.
Which are all great things but it still seems like the prices at these businesses are extremely high, the reason for this is that they are still trying to make the same profit margins as companies who outsource all of their stuff for cheaper. For example, if we take two clothing brands and one that does everything locally and one that outsources. Now on average sourcing things locally costs between 20% - 100% more depending on the product. So we'll take the middle at 60%. So if Company A (the one that outsources) has a cost on an item of $10 and they sell it for $15 so they make +$5. Company B, would have to sell the same shirt at $21 in order to make that same $5 profit. Which doesn't seem too bad, the issue is the amount of tax then the government puts on that shirt. This continues to widen the gap between cheap and expensive.
The Solution?: The solution to the issue is volume, if local manufactures lower their profit margins in order to decrease the sales price of the shirt, it would be cheaper for everyone to purchase. And as such they would increase their volume which in turn would mean they could make an equal amount of money. The only way for this solution to work however is with everyone's efforts on buying only from local, sustainable businesses, because without the volume they wont have the profit to stay in business.
Wondering if anyone else has any ideas on this idea or if they have an idea of their own in order to make local products cheaper.
Which are all great things but it still seems like the prices at these businesses are extremely high, the reason for this is that they are still trying to make the same profit margins as companies who outsource all of their stuff for cheaper. For example, if we take two clothing brands and one that does everything locally and one that outsources. Now on average sourcing things locally costs between 20% - 100% more depending on the product. So we'll take the middle at 60%. So if Company A (the one that outsources) has a cost on an item of $10 and they sell it for $15 so they make +$5. Company B, would have to sell the same shirt at $21 in order to make that same $5 profit. Which doesn't seem too bad, the issue is the amount of tax then the government puts on that shirt. This continues to widen the gap between cheap and expensive.
The Solution?: The solution to the issue is volume, if local manufactures lower their profit margins in order to decrease the sales price of the shirt, it would be cheaper for everyone to purchase. And as such they would increase their volume which in turn would mean they could make an equal amount of money. The only way for this solution to work however is with everyone's efforts on buying only from local, sustainable businesses, because without the volume they wont have the profit to stay in business.
Wondering if anyone else has any ideas on this idea or if they have an idea of their own in order to make local products cheaper.
