What determines the cost of wedding gowns?

Check out this fun video from Planet Money: Why Did My Wedding Dress Cost So Much? (Apr 3). (Sorry, I can’t get the video to display properly here.)

To some extent the title of this piece is wrong. The real question for her is not what her gown cost to make, but why it is priced so high. That may strike you as mere semantics, but there is a difference. As our young bride finds out in the video, the production cost of an item can differ widely from what it sells for. The real reason her wedding gown was priced so high is that people will buy at those prices. A store will charge $2,730 for the dress because there are brides out there who will pony the cash. Yes, information asymmetry and a bride’s desire to show her commitment to wedding play a part in that but all of that is largely independent of whether the dress cost $700 or $1,000 to make.

Which is not to say that how wedding dresses get made and distributed is uninteresting.

This has always struck me as a curious market. At most bridal shops, women try on samples and then order “their” dress. But their dress is not really a custom item in then sense of being cut just to fit them. Rather, brides order standard sizes and then have them altered. That, of course, points to one reason why wedding dresses cost so much. Bridal shops aren’t so much selling dresses as selling the service of being doted on and building up the excitement of finding the perfect dress. All of that adds cost. (You should check out Rebecca Mead’s book One Perfect Day: The Selling of the American Wedding for more on how bridal shops play up the experience.)

Another interesting feature of the market is that most bridal shops don’t carry inventory; they really are ordering those dresses after brides order. That puts an interesting spin on pricing. Since they aren’t saddle with unsold dresses at the end of the season, it lowers the pressing need to cut price.

Next there is the question of where gowns get made. According to the Mead book, most gowns sold in the US were made domestically through the early ’80s but the industry moved first to Taiwan and then to China starting in the mid-eighties. That isn’t all that unusual, particularly for a labor-intensive product. What is somewhat surprising is that  the industry as a whole has kept from the customer that their special gown is banged out on assembly line.