The $15 Shirt Supply Chain: Where Your Money Actually Goes

In 2017, I negotiated a shirt order that I still think about. The brief from merchandising was simple: men's casual button-down, short sleeve, solid colors, retail at $14.99. My job as senior buyer was to find a factory that could deliver it at our target FOB price of $4.20.

Four dollars and twenty cents. That's what we'd pay per unit, landed at the factory gate, for a fully constructed garment. From that $4.20, the factory had to cover fabric, thread, buttons, labels, labor, electricity, equipment, rent, management overhead, and profit. Whatever was left over -- and there was very little -- was margin.

I sent the spec package to 11 factories across three countries. Eight responded. Five could hit the price. I chose the cheapest.

That's what the supply chain of a $15 shirt looks like from the inside. Not optimized for quality, or ethics, or durability. Optimized for one number.

The Cost Stack

I'm going to break down a $15 shirt the way I used to break it down in quarterly business reviews -- every line item, every cost bucket, nothing rounded to make anyone comfortable.

Fabric: $1.80 to $2.50

The single biggest input cost, and the one with the most variability. At this price, you're buying commodity-grade fabric -- typically a polyester-cotton blend (60/40 or 65/35) from a mill that runs massive volumes with minimal quality control. The fabric is dyed in bulk using reactive dyes chosen for cost, not colorfastness. That's why your cheap shirt fades -- the dye chemistry is designed to survive the price negotiation, not the washing machine.

During a factory visit in 2016, the mill rep showed me two swatches from the same fabric lot -- different ends of the same production run. Visibly different in shade. "Within tolerance," he said. That tolerance was wider than most customers would accept if they could see the comparison.

Thread: $0.05 to $0.10

A line item so small it barely registers. That's precisely why it matters. Thread at this price is commodity polyester -- functional but prone to breakage under stress. Quality thread costs three to five times more and doesn't snap when you pull a button through a tight buttonhole. But at $0.05, nobody at the brand level thinks about thread. The factory buys whatever clears the minimum spec.

Buttons and trims: $0.30 to $0.50

Plastic buttons injection-molded in batches of hundreds of thousands. At $0.02 to $0.04 per button, they're functionally disposable. They crack, chip, come loose. The difference between these and the tagua nut buttons on our shirts isn't just aesthetic -- it's structural. Tagua nut resists cracking and holds its attachment because the material is denser and the grain absorbs stress instead of fracturing.

Labels, hangtags, care tags, polybag: another $0.10 to $0.20. All sourced from the cheapest compliant supplier. The polybag alone -- that flimsy plastic wrapper around the folded shirt -- costs about $0.01. There are billions of them in landfills.

Cut and sew labor: $0.60 to $1.10

This is the number that should stop you. A basic men's short-sleeve shirt takes 18 to 25 minutes of sewing time, depending on construction complexity. At the labor rates most factories pay to hit a $4.20 FOB, the person sewing your shirt earns between $1.50 and $3.00 per hour.

That's not from a report. It's from the factory cost sheets that crossed my desk every week. When a factory quotes a labor rate per unit, you can work backward to the hourly wage by multiplying the labor cost by the line's output rate. I did this math routinely. My colleagues did it routinely. We all knew what the numbers meant. The fair wages breakdown shows what those numbers look like compared to living wage benchmarks.

Factory overhead: $0.60 to $0.90

Rent, electricity, equipment maintenance, management salaries, compliance costs. The factory's fixed overhead gets spread across output volume. Higher-volume factories absorb these costs more efficiently, which is why the industry consolidates into enormous facilities producing millions of units per month. A smaller factory with better conditions and lower output can't compete on this line item.

Factory profit: $0.20 to $0.40

Five to eight percent margin, typically. Sometimes less. During my buying career, factories accepted thin margins because refusing an order meant losing it to a dozen competitors. The margin was so thin that a single quality issue, a delayed shipment, or a currency fluctuation could wipe it out entirely.

I watched a factory in Bangladesh nearly go under because a raw material price increase of 3 percent hit mid-production on a large order. They couldn't pass the cost through -- our purchase order was locked. They absorbed it. Their profit on that order went to zero. They delivered on time.

Total FOB cost: $3.55 to $5.50

That's what the factory puts on the invoice. Everything after this is cost the brand adds.

The Brand's Cut

Freight and logistics: $0.80 to $1.20

Container shipping from origin to destination port, customs duties (typically 12 to 19.7 percent on apparel entering the US, depending on fiber content and country of origin), warehousing, and distribution. Container rates spiked 5x during the 2021-2022 supply chain disruptions and have partially normalized. Brands absorbed some of the spike and passed some to consumers, which is one reason basic shirt prices have crept up.

Marketing: $2.00 to $3.50

Here's where the math gets interesting. A major fast fashion brand spends 15 to 25 percent of revenue on marketing -- digital ads, influencer partnerships, store displays, social media content, email campaigns. On a $15 shirt, that's $2.25 to $3.75.

The person who sewed the shirt might earn $0.80 from it. The Instagram ad that convinced you to buy it cost the brand $2.50. Marketing costs more than labor.

Retail operations: $1.50 to $3.00

Store rent (for brands with physical retail), e-commerce platform fees, customer service, returns processing. Returns alone are staggering -- online fast fashion runs 25 to 40 percent return rates. Each return costs $5 to $10 to process (shipping, inspection, repackaging, restocking or disposal). On a $15 item, a 30 percent return rate adds roughly $1.50 to $3.00 per unit sold when amortized across the assortment.

Corporate overhead: $1.00 to $2.00

Headquarters, executive compensation, legal, IT, HR. The mundane machinery of running a large corporation. This line item includes the C-suite bonuses that come from hitting the margin targets that required the $4.20 FOB in the first place.

Brand profit: $1.00 to $2.50

After all costs, a well-run fast fashion brand nets 7 to 12 percent. On a $15 shirt, that's roughly $1.05 to $1.80. Not obscene per unit. But multiply by millions of units and it adds up.

Where the Money Goes: The Summary

Line Item	Amount	% of $15 Retail
Fabric	$1.80-2.50	12-17%
Thread + trims	$0.35-0.60	2-4%
Labor (sewing)	$0.60-1.10	4-7%
Factory overhead + profit	$0.80-1.30	5-9%
Freight + duties	$0.80-1.20	5-8%
Marketing	$2.00-3.50	13-23%
Retail operations	$1.50-3.00	10-20%
Corporate overhead	$1.00-2.00	7-13%
Brand profit	$1.00-2.50	7-17%

The person who made the shirt gets 4 to 7 percent. The brand keeps 50 to 65 percent. The garment is engineered to last just long enough that you don't return it, and not a wash longer.

The Rottenhand Cost Stack

For comparison, here's what goes into our Core short sleeve ($75) and Core long sleeve ($80).

Fabric: $12 to $16. Custom-milled peach-skin polyester at 220 GSM -- roughly 40 to 50 percent heavier than fast fashion shirting. Consistent across every production run because we specify exact parameters with a single mill. The fabric weight comparison shows what that weight difference feels like.

Labor: $8 to $12. Fair wages, regulated hours, complex construction including French seams and reinforced stress points. The wage breakdown covers what our workers earn relative to local living wage benchmarks.

Trims: $3 to $4. Tagua nut buttons, quality thread, woven labels. Components chosen for durability, not cost minimization.

Factory overhead + profit: $4 to $6. Our factory operates at 15 to 20 percent margin -- healthy enough to reinvest in equipment, maintain working conditions, and retain skilled workers.

Shipping: $2 to $3. Same ocean freight, same duties. No magic here.

Marketing: ~$0. No paid ads. No influencer deals. No billboards. Word of mouth and content.

Operations: $3 to $5. E-commerce, packaging, customer service. Lower than fast fashion because we don't process 30 percent returns -- our return rate is a fraction of the industry average because when you pay $75 for a shirt, you've thought about the purchase.

Overhead + margin: $5 to $8. Small company, low fixed costs. Our margin per unit is lower than fast fashion's. That's fine. We make two products and we make them well.

Line Item	Amount	% of $75-80 Retail
Fabric	$12-16	16-20%
Trims	$3-4	4-5%
Labor	$8-12	10-15%
Factory overhead + profit	$4-6	5-8%
Shipping	$2-3	3-4%
Marketing	~$0	~0%
Operations	$3-5	4-6%
Overhead + margin	$5-8	7-10%

Labor is 10 to 15 percent of our retail price. In fast fashion, it's 4 to 7 percent. Our fabric cost alone exceeds the entire factory gate cost of a $15 shirt.

What Everlane Got Right (And Where They Stopped)

Everlane built a brand on "radical transparency" -- showing customers what things cost to make and why the markup existed. That shifted consumer expectations.

Where they stopped: Everlane's cost breakdowns, while directionally useful, present polished aggregate numbers without the context of how those numbers interact with factory pressure. Saying "true cost: $16.50" doesn't tell you whether the factory's margin is 5 percent or 15 percent, whether workers earn minimum wage or living wage, or whether the brand is one of twelve competing for that factory's capacity.

Transparency is a spectrum, and most brands -- including many in the sustainable space -- stop at the level of detail that makes them look good. Publishing cost stacks is step one. Publishing who gets what from those cost stacks is step two. Most brands do step one.

The greenwashing checklist includes specific questions you can ask any brand about their cost transparency. The answers -- or the evasions -- are revealing.

The Question Worth Asking

Next time you pick up a $15 shirt, run the numbers. Four to seven percent of that price went to the person who made it. Another 12 to 17 percent went to fabric. The majority went to selling it to you.

The supply chain functions perfectly -- for the brand. It delivers a garment at a price that generates foot traffic, drives impulse purchases, and sustains shareholder returns. It does this by compressing labor and material costs to the absolute minimum, and spending whatever the budget can bear on convincing you to buy.

The cost per wear reality shows what happens downstream: that $15 shirt costs you more over time than buying fewer, better things that last.

A $15 shirt is never $15. It's $15 plus the replacement in six months, plus the one after that, plus a closet full of garments that were never built to matter.

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Frequently Asked Questions

Why should I trust your numbers?

Because I negotiated them for 11 years from the buyer's side. I've signed NDAs that prevent me from naming specific brands or factories, but the cost structures I've described are standard across the industry. If you've worked in garment sourcing, none of this is surprising.

Has inflation changed these numbers since you left the industry?

Raw material and freight costs have risen. Labor costs in most garment-producing countries have risen slightly. The proportional breakdown -- who gets what percentage -- has stayed remarkably stable because brands pass cost increases through selectively. Fabric and freight increases get absorbed or passed to the consumer. Labor increases get pushed back on the factory. The worker's share stays roughly the same.

Aren't some fast fashion brands better than others?

Significantly. There's a real difference between a brand paying $5.50 FOB and one grinding factories to $3.80. Some fast fashion companies have made genuine investments in supply chain conditions. But the structural incentives -- high volume, low price, short product cycles -- push all of them toward cost compression. The brands doing the most have moved the margins from brutal to uncomfortable. That's progress, not a finish line.

If I can't afford an $80 shirt, am I a bad person?

No. The garment industry's labor practices aren't your fault, and individual purchases don't fix structural problems. If $15 is what your budget allows, buy it. What this breakdown offers is information -- so when you do have a choice, you know what you're choosing between. And if you decide that a shirt with fair wages built in is worth saving up for, our Core shirts will be here. We don't run limited drops.