TBF’s Personal Finance Series “Being Broke Ain’t Cute”: Pasta and the Price of Luxury

Eating out is a pleasure and I enjoy being served. But I have trouble ordering
pasta in restaurants. I don’t suffer from wheat allergies and I’m not pasta phobic. I just know
better. You see, as a young professional in New York, I worked in a few
Manhattan restaurants and I know the cost of a pasta dish. Dressed up in
sauce, cheese and Portobello mushrooms, noodle entrees cost less than 50
cents to make, but were sold to diners for $8 to $12 a serving. (My boss
loved to brag about his pasta profits!)

Armed with that knowledge, I am a cautious diner and I eat for value. What’s
more, I try to apply that same logic to my clothing budget. If pasta sells
for hundreds and hundreds of percentage points higher than costs, what’s the
real deal with clothes?

For answers, I checked into an employee complaint blog of a major discount
retailer. The inside story:  Most clothes on a rack are sold at markups of
at least 100 percent over the wholesale price, according to the cyber-chat
of two retail employees. What’s more, they estimated that the retail markup
at high-end stores was as much as 500 percent to 1000 percent. Ouch!
Suddenly, I have a new view of end-of-season clearance sales. Bottom line:
Even with sharp discounts (60 percent off), most stores pull in tidy

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  1. michelle says

    Good points here, Budget Fashionista.  The biggest profits in the apparel industry are made not by the (mostly foreign) workers – whose share continues to shrink each year –  but by the retailers.  Even more reason to shop on sale!

  2. Jena says

    Though I’m sure this is true of big box stores and chain stores, this is definately not true of most independently owned boutiques.  As a buyer for two different boutiques in the past 10 years, I can say with certainty that most struggle to compete with chain retailers and have to deal daily with the misconceptions like these.  We mark our merchandise down 60%, we are LOSING MONEY!  So, if you enjoy shopping at small, independently owned stores and appreciate the variety of merchandise they offer, but can’t always afford the prices, don’t hagggle.  Instead, be nice, befriend the staff and ask for advance notice of sales.  After all, the salesgirls are usually living on a budget as well, so they will understand your frugal ways!

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