Why the Row’s White Cotton T-Shirt Costs More Than $500

Last month, hundreds of people lined up at The Row’s Sample Sale — or paid linesitters as much as $40 an hour to do so — for the privilege of spending $130 on a plain white T-shirt designed by Mary-Kate Olsen and Ashley Olsen.

That price, more than 100 times the price of a classic Hanes V-neck, is a steal for an item from The Row. The brand’s classic Tori tee — a 100% midweight cotton shirt with a ripped neckline — typically costs $520.

If a $130 shirt didn’t beg the question, a $520 one does: What makes one of a closet’s simplest items worth more than a round-trip flight from New York to San Francisco or some laptops?

There’s no logo, no cashmere, no silk. To the untrained eye, the only distinction is a straight line of stitching running down the back.

It’s emblematic of how expensive luxury goods have gotten. From 2019 to 2023, the prices of some handbags rose by as much as 100%, according to a September report from Morningstar, which called the increases “excessive.”

But excessive may be in the eye of the shopper.

“True luxury customers, specifically for these brands, are price-agnostic,” retail analyst Hitha Herzog told Business Insider.

Determining the exact price of a luxury item, whether it’s a handbag or a white tee, is more of an art than a science. Unlike with mass retailers like Gap or Zara, it’s less about the price of the materials and production and more about perception.

“Nobody needs a $500 T-shirt,” Nicole Marra, the founder and CEO of brand consultancy Fixer Advisory Group, told Business Insider. “They’re selling a dream.”

‘All cotton T-shirts are not created equal’

Most mere mortals have not seen a T-shirt from The Row up close, felt the cotton, or investigated the stitching.

If you did, chances are you’d be a little impressed.

“All cotton T-shirts are not created equal,” Marra said.

The process for creating a better one is more expensive at every step, starting with the design.

To achieve The Tori’s shrunken fit — “one that’s more luxe and hangs just right,” Marra said — The Row may have its (expensive) designer create and order a dozen (expensive) samples, each of which has to be sourced and produced.

Then, like with any item of clothing, there are materials and manufacturing costs.

In the case of the Tori T-shirt, that means expensive, extra-soft cotton and manufacturing in Italy, where labor costs more than in countries like China or Bangladesh, which produce your run-of-the-mill white shirt. Luxury clothing in Italy is made in small batches and hand-finished using the finest fabrics, Marra said.

“You can see the craftsmanship that goes into it,” she added.

That refinement — along with the brand’s marketing and retail experience — is baked into the cost. The Row’s boutiques are located on ritzy stretches of New York’s Amagansett and Upper East Side with top-of-the-line salespeople. And, while The Row doesn’t have flashy magazine ads or celebrity billboards, it does invest in fashion shows in Paris, photo shoots, and gifting for loyal customers.

“That’s all built into the price of that shirt,” Herzog said.

Those costs mean that even at $520, the margins are likely only slightly higher than average, Shikha Jain, the lead partner for consumer and retail at advisory Simon-Kucher, told Business Insider.

“A T-shirt from fast fashion could also still have a 50% margin versus a high-end T-shirt,” she said. “But the dollar value, that’ll be different. So 50% on $20 is $10; 50% on $500 is $250.”

The price of perception

While materials and production account for part of the cost, the remainder is less tangible.

The brand could probably sell its $520 T-shirt for $400 and still maintain a healthy profit margin, or $600 and still find a buyer.

“A product is more than just its physical attributes — especially in luxury,” Jain said. “We’re not just talking about the raw materials, the labor.”

That’s when the art of pricing comes in.

The merchandising, product, and finance teams set the product’s final price based on brand as much as — if not more than — the cost of actually making the goods.

After all, brand is perhaps what The Row is selling above all else — and its brand has value. The fashion label was the fourth hottest brand of the third quarter, according to The Lyst Index, which measures the popularity of luxury brands.

“A $500 tee from The Row is not priced based on cotton and stitching, but on meaning, emotion, and perception,” Daniel Langer, CEO of the luxury strategy firm Équité and Luxury Professor at Pepperdine University, told Business Insider.

Competition helps shape that perception. Pricing can be a crucial indicator of a brand’s position within the luxury ecosystem.

If one of The Row’s competitors, Khaite, say, were to sell its cotton tee for $300, customers might think The Row’s is a rip-off. If Khaite was selling a $700 T-shirt, shoppers might assume it’s better than The Row’s.

Scarcity, or as Herzog called it, “the brand’s ability to create a FOMO on a product,” can also play a role in the strategy. The Row’s $620 Ama slides — think Adidas shower shoe — were produced in a limited quantity this summer and swiftly sold out.

But there is still a real finger-to-the-wind quality to the exercise.

“It’s often still a gut feeling, looking left and right,” Langer said.

Then again, to the luxury buyer, the price may not matter all that much.

“If you can afford to be in on the coolest, most beautiful fabric, hottest T-shirt, that’s going to look perfect under your blazer,” Marra said. “Why not?”

And, to put it in some perspective, it’s a lot cheaper than The Row’s other T-shirt options. A cashmere model? That will cost you $1,050.