Revised price model

Atacac is not a fashion brand. Atacac is an ongoing fashion experiment. When we started Atacac we launched it with a dynamic pricing model. I.e. garments were available for pre-order at a lower price before and during production. Like booking travel tickets. As no one questions that you get a better deal if you book your trip long in advance, why not apply the same principal on garments. We combined this with photo realistic digital renderings straight from the design studio, no need for online-store-photo-sessions any longer.

In order to investigate and prove this concept we set up an in-house micro factory in our warehouse-studio on Ringön. Today three machinists, i.e tailors, and one pattern cutter operate the Atacac micro factory. We have a turnover time for short series of less than a week. The outcome and quality becomes exactly the way we want it to be.

However, the wages in Sweden are among the highest in the world. This means consequently a radically higher production cost than for most garments on the market. We are not interested in offering cheap products. Cheap means less caring - and we care. On the other hand we are not very keen on the idea of luxury or of being inaccessible for most.

This is why we now revised and update the dynamic pricing model. Let us explain how it works:

Traditionally the price is calculated something like this in the fashion industry :

MANUFACTURING COST (fabric and making)  x  100% BRAND MARKUP (design, management, marketing etc. together with compensations for overproduction)  x  100% RETAIL MARKUP (store, online store, and again compensations for overproduction) (There is also VAT, in these calculation that is included at all stages)

If the manufacturing cost is 1€ the price for the consumer will be:
€1  x  2  x  2 = €4

Our pricing model looks a bit different and and makes it possible to purchase our garments for the same price while it is designed and manufactured for twice the cost in Sweden:
€2 x 1.5 x 1.33 = €4

Let us explain in detail:

To produce garments in Sweden is about twice as expensive as in the eastern and southern parts of Europe (or about 30 times more expensive compared to some places Asia / Africa).

Anyway, let’s use twice the cost (or €2 as a hypothesis).
€2  x      

Instead of a markup of 2 for the brand we add 1.5 (as our in-house production results in a rapid and low cost development, production planning etc.).
€2  x  1.5  x

Then, we offer the possibility to pre-order our garments. This means we can minimize overproduction and stock keeping. In this way we save money and can lower the retail markup to one third. Basicly, if you pre-order before the item is produced you pay the costs for production, design, developments and our digital communication. You do not need to pay for stock keeping or for overproduction compensation.
€2  x  1.5  x  1.33  = €4 (Ah, same price as when produced in low-cost states)

During production we raise the markup to two thirds, this covers online store management and the potential stock keeping cost when we produce on speculation. There is still a discount but the delay from order to shipped garment is less.
€2  x  1.5  x  1.66 = €5

When the garment is finalized and stocked for instant delivery we add a full markup. We keep the items in stock until sold. No seasonal sales. We wouldn’t even dream of burning some unsold garments. At this price you get an instant delivery and helps cover our stock keeping costs. We think this is a sound, transparent and honest approach.
€2  x  1.5  x  2 = €6

References

Check out these examples of other brand who inspired us by working with similar approaches to pricing and transparency:

Julia Valle
Honest By
Everlane