The Perfect Tailor - The monetization

The Perfect Tailor would have basically the same business model that other clothing stores do. The biggest differences are that TPT wouldn’t use semi-slave labor in developing countries, it would use local labor. Second, it wouldn’t need the complex supply chain. The only inputs are denim material and thread. The only waste is excess denim, which could be minimized using clever cutting patterns. Like some of my other startup ideas, profit here will come from minimizing the amount of human labor. The fabric isn’t nearly as expensive as several hours of wages. According to indeed.com, the average seemstress salary is $25,000 per year, or around $13/hour. In the Bay Area, I expect it would be at least $15 to maybe $20 an hour. Ideally, the labor time could be kept to about two hours per pair of jeans. I would aim to sell the jeans at $90 dollars per pair. That may look like a lot of profit (30 dollars in labor and probably about 10 in materials), but there is also the cost of running the store. Thankfully, the store wouldn’t need a large footprint, because it only needs to have a few booths for scanning and a back room for sewing (or sewing could be done off-site), or about 300 square feet. In silicon valley, I was able to find some locations with roughly that amount of square footage for $25 to $30 per sq.ft. per year, or a rent of around $750 per month for the space.

The last major cost would be that for customer service in the store. One annoyance with staffing a retail store is that most of the employees are idle, or not fully utilized, a large fraction of the time. It’s only during peak hours at night and on the weekends, when most people do their shopping, that you actually get your money’s worth out of the labor.

If some of the sewing machines are in the back of the store, TPT doesn’t have to eat all those costs. The store would be staffed mostly by tailors who also do customer service, when there are customers. When the store is idle, then they go back to sewing. If window shoppers don’t require much interaction, then a sales rate of 25% when the tailor interacts with the customer could be reasonable. I expect that it would take around ten or fifteen minutes of interaction to complete the sale (not walltime just interaction time). With those numbers we need to add on one hour worth of sales cost to each pair of jeans, or 15 dollars.

The retail front rent cost per pair of jeans depends on how many jeans TPT can sell per month. I think weekday sales could be about five or ten pairs. Over the weekends I expect 25 to 50 sales per day. The would sum to 300 to 600 pairs per month. The rent cost is then at most $2.50 per pair.

Putting it all together, I find that the total cost of the jeans is $40 (to make the jeans) plus $18 (to sell them). If each pair is sold for $90, then the profit is about $30 per pair, or $10,000 per storefront per month.

If this eventually grew to have 100 storefronts, TPT would have $12 million in profit per year.