How much should a t-shirt cost - $5, $50 or $500?

The white cotton t-shirt conjures some famous images: James Dean in Rebel Without a Cause; Marlon Brando in A Streetcar Named Desire; Paul Newman in … a white cotton t-shirt.

The quintessential American garment has been through numerous incarnations on its journey from humble long johns in the 19th century to actors' get-up of choice in the 1950s – after which it assumed universal status.

Today, with more than $US20 billion ($21.45 billion) a year spent on t-shirts in the US alone, it's an everyday staple found in most men's – and women's – wardrobes.

But while one white tee may look identical to the next, it's not. The type of plain t-shirt someone buys says a lot about their personality and their social tribe. Rappers and skaters wear them long and baggy. Some men prefer them tight across the pecs and biceps. Surfies sport them as outerwear, often with a simple slogan printed across the front. Professionals wear them as undershirts to stop their work shirts yellowing under the armpits. After all, that's as they were originally intended.

In 1904, the Cooper Underwear Company ran a magazine ad announcing a new undershirt, sans buttons or pins, for bachelors. The following year, the US Navy specified sailors should wear undershirts under their uniforms. Thousands of men began wearing what was then called a "crew neck cotton pullover".

Today, hundreds of labels compete for consumer loyalty, offering various cuts and fabrics at a range of prices. Hanes ($US4.99), Cotton On (two for $20), Industrie ($22), Bonds ($24.95), American Apparel ($27) and Rag & Bone ($US80) all do a version of the classic white tee.

In recent years that same white shirt has made it into the realms of the luxury industry. Most brands from Prada ($US280) to Gucci ($US570) sell a version, offering customers the same amount of fabric at a substantially higher price point.

Indeed, research carried out last year by brand consultancy Hitchcock Partners reveals a lot about how consumers perceive brands. The company took black t-shirts, ranging in price, from seven different companies and hid the labels. Participants were asked to try to identify which brand belonged to which t-shirt. The result? They critiqued the design and fabric of the shirts, inadvertently criticising the expensive ones and complimenting the inexpensive, run-of-the-mill ones.

Brand perception beats price

The results led Hitchcock Partners to theorise that all a Prada label and $US280 price tag on a simple tee does is make it appear better than a $US5 black Hanes t-shirt from Target. "The hypothesis was that the only difference between one t-shirt and the next – and the price of that t-shirt – was the brand," chief strategist Peter Bysshe says.


Bysshe says most people were spot-on when guessing which t-shirt belonged to mid-range labels such as Jill Sander or Versace Collection – which start around $US80 – but the failure to discern between a Prada and a Hanes was far more common.

Brands typically perceived as "cool" to different demographics also brought up interesting results. "If you ask a 20-year-old what Levi's should charge for a t-shirt, they say $50," says Bysshe. "If you ask a 50-year-old American man they say $14.99.

"The 20-something or non-American would say $50 because Levi's is a premium brand in their mind. To the old-fashioned American, Levi's is a standard pair of jeans."

Customer loyalty has much to do with brand perception, too. Both Alexander Wang and James Perse are known for producing good-quality white t-shirts in soft fabrics. For a soft tee, you shop at those stores. French brand A.P.C. made its tee cool by having Kanye West produce a white "hip hop" one for $US120. Despite polarising consumers, it promptly sold out. A tee from The Row – the high-end, highly priced label founded by Mary-Kate and Ashley Olsen, costs $US260. Just because. (They sold a bag for $US39,000, after all.)

While the white tee today might be seen as a luxury item, its origin contradicts that message. The Oxford English Dictionary defines it as a simple kind of garment; a man's undershirt, typically short-sleeved and forming the shape of a letter "T" when spread out flat.

It also tells us it was F. Scott Fitzgerald who helped bring the name into being, using it for the first time in his debut novel This Side of Paradise (1920): "Amory, provided with 'six suits summer underwear … one sweater or T-shirt . . .' , set out for New England, the land of schools."

Instinct influences choice

Why, then, are people willing to spend hundreds of dollars on a rudimentary wardrobe item? Bysshe says it comes back to instinct. "It has nothing to do with what you can afford. It has everything to do with what you think you deserve," he says. And people are swayed by clever marketing.

It's one reason Erik Schnakenberg and Sasha Koehn launched Buck Mason, a line of no-fuss, affordable, yet stylish basics. Despite what seems to be an overcrowded market, Schnakenberg - who has a background in fashion retail - and Koehn - a former tech and media guy - maintain they couldn't find a t-shirt they were happy with, so developed their own.

Their classic crew neck is cut from North Carolina cotton, sewn in LA and finished with a hem that's slightly contoured like a shirt tail to give it a dressier look. They also sell chinos, Oxford shirts and jeans.

"What was missing was a brand that focused on making quality products in America with a timeless aesthetic," says Koehn of launching the online brand in November last year. Being direct-to-consumer means each t-shirt, which costs $10 to make, can be sold for $24.

"You can make one hell of a t-shirt for $10," says Schnakenberg, adding that most $10 tees are sold for $70 to $100. "We decided, let's just cut out the fat and not spend a ton of money on marketing and trying to create this brand that is built on this kind of pseudo-luxury nonsense. And let's just come up with something that is rock solid. We just want people to know it's a luxury tee, it's never going to go on sale, but the price is $24."

What began with a cult following in LA, New York and San Francisco, started to pick up steam internationally in January. The white tee – crew neck and V-neck – comprises 40 per cent of the company's volume.

"It's one of those items that people seem to buy multiples of," says Schnakenberg. "We've had a lot of success with customers coming back and buying over and over again. Or they buy 12 at once. Twelve in a year of the exact same body and the same colour is quite a lot."

Schnakenberg previously worked with luxury brands selling jeans and knitwear for high prices. "When Sasha and I got together, what we thought about was why is it done this way? Is there a way we can offer a superior product at better value, something impeccably made that can stand the test of time?

High-end transfer

"When we sat down to look at it, it was almost like, what's the catch? We realised we could make a superior product, sell it for $24 and still make money, and we're undercutting our competitors. We have customers coming in and they're not transferring over from American Apparel, they're transferring over to us from high-end brands."

Buck Mason t-shirts are aimed at people who can afford to spend $150 on such an item, but who just don't want to. "For us it's a sensibility thing; it's about buying smart," Schnakenberg says. "There are people who could go out and spend $450,000 on a Lamborghini, but they just don't think it's a smart decision. People could spend $80 on a simple tee but they could also spend $24."

Michael Preysman has a similar story to tell. In 2010, at the age of 25, he left his job as a venture capitalist to start online-only business Everlane. Its philosophy: "If you are buying such basics as t-shirts, belts or tote bags at traditional retailers, you're probably paying too much."

The company searches for the best factories in the world – the same ones that produce product for designer labels – and manufactures its products using the same quality leather and fabric, without the huge mark-up. How they make a cotton tee that sells for $US15 is documented on the brand's website.

While this type of marketing appeals to some consumers, the truth is there are always going to be people who want to – and can – pay top dollar for just about anything. Kanye's second T-shirt for A.P.C., released in July, costs slightly less than its predecessor. At only $90 a pop, it can even be worn without an undershirt.

This article first appeared in The Australian Financial Review's Luxury magazine.