I didn't have a price point in mind when starting Freja. I didn't want a number to dictate any design decisions - creating the best product always comes first.
So we sourced the best materials. We found a factory with highly skilled artisans. And we convinced them to work with orders a fraction of the size of their normal quantity. When you're small, and not willing to cut corners, costs can add up very quickly.
But as I've said before, building good things are supposed to take time and money. And if it's not meant to last, it's not worth making.
As part of our commitment to being a responsible brand, I wanted to share exactly how much it costs to make a Linnea Tote, our first style.
Materials: $41.14 per bag. Each tote uses two different types of ultrafiber leather. The exterior 1.2mm costs $19.73 per meter, and the 0.6mm we use for the lining costs $14.64 per meter. Each Linnea tote uses 0.71m of the exterior, and 1.55m of the lining. The hardware costs $5.44 per bag.
Labor: ~$45 per bag. Our factory team is paid a salary, not by how many pieces they make, but this is the average cost per bag when dividing their salary by the amount of time it requires to make one bag.
Packaging: $4.25 per bag. This includes our dustbag, the note cards, and packaging materials (tape, boxes, tags, etc).
Transport and customs: $22.30 per bag. This includes all costs to transport our materials from the mill to the factory, and shipping for our finished bags to our fulfillment warehouse (aka my apartment). Although not heavy, our bags are large and delicate, which equals massive dimensional weight. Shipping prices have been fluctuating like crazy with the pandemic, and we don't really have any control over this. We don't ship often, or in huge quantities, so we only receive slight bulk discounts. We shipped our last batch in a combination of air (for the preorders) and ocean freight. Air is insanely expensive but the bags arrive in 3-5 days, whereas ocean is cheaper but can take up to six weeks.
Shipping: $9 - $15 per bag. We will always cover your shipping. It's the least we can do.
Cost per bag: $122 - $128, depending on where it's going. We call this the "true cost" of the bag, and multiply it by 2-3x to cover the costs of operation, such as product development, marketing, software, photography, our accountant, etc. My factory and I spend 8-9 months developing each bag, conducting multiple rounds of product research, samples, and wear testing before it's ready. Many styles never see the light of day, and are either cancelled or shelved for future development.
I knew I wanted to invest the majority of my money into product development, which meant doing almost everything else by myself. There's a lot that goes into running a brand...creating content, outreach, maintaining the website, actually fulfilling orders, communicating with customers, etc. At the moment, I only spend maybe 5-10% of my time designing, and 90% of my energy goes towards perfecting our existing products and getting them to you. Moving forward I would love to build a small team to help push our vision forward.
We will never offer big discounts or participate in events like Black Friday. We simply don't have the margins, and I really want every Freja purchase to be a well considered one. We don't do wholesale orders, and I recently turned down a partnership offer of 1500 units this year (that's more pieces than we've ever made) with a well known retailer...it just didn't feel right for us.
I strongly believe the most sustainable way to run a brand is to create beautiful items (not too many), price them fairly every day of the year, sell directly to your end customer, give back when you can, and most importantly, be honest every step of the way. I hope you enjoyed this little peek into the financial side of Freja.
The Linnea is priced at $278, which is a 2.3x markup. For comparison, traditional retailers mark up their items by 5-6x, and sometimes up to 20x.