Complex supply chain used to produce premium jeans  Though jeans were once a staple of nearly every American wardrobe because of their relative low cost. However, prices have soared over the past few years and jeans now routinely sell for more than $100 per pair. 

The Wall Street Journal reports that companies have increasingly worked to fine-tune their strategic sourcing practices as they look to make business cost reductions amid surging commodity prices. Premium jean companies like True Religion are largely based in the U.S., according to analysts, and business is booming as the economy recovers.

Many jeans makers offset the costs associated with production onto consumers. True Religion chief executive Jeff Lubell told the news provider that it costs about $50 to make a pair of the company's Super T jeans, which are the fashion house's best selling pair. Still, the wholesale price comes in at $152 and the average retail price is a staggering $335.

Jeans makers charge such steep prices for their product offerings because of the multiple profit margins taken at each level of production, according to industry analysts. Jeans makers often contract with a myriad of providers, with fabric and buttons, for example, often emanating from varying parts of the country. The big markups are used to pay for aggressive marketing campaigns and, of course, to help companies bring home large profits from their clothes.

Premium jeans produced by the high-end fashion houses often carry with them hefty profit margins. Compared to the low-cost jeans that many average consumers purchase, those companies are logging solid earnings on their jeans, according to industry analysts. For example, the gross profit margin for private-label jeans made for stores like Wal-Mart and Sears are less than 20 percent. Premium lines, however, often have profit margins in excess of 40 to 50 percent.

Premium denim is manufactured primarily in the U.S., meaning that many companies are unable to compete with China and other countries that have low labor costs. North Carolina-based Cone Denim supplies many of the high-end fashion companies with premium denim. That, according to analysts, is because the company's looms date back to the 1950s, allowing for certain irregularities in jeans that give a certain texture that modern high-efficiency machines cannot.

That denim is then shipped across the country, usually ending up in Los Angeles where most of the companies that produce high quality jeans are based. The added transportation costs, along with the increased manufacturing prices, contribute to the higher total costs of the jeans. 
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