The fabric in most dresses accounts for a modest share of the retail price. The rest is explained by how many operations the garment requires and how few of each style get sold.
Operation count drives factory cost
Garment factories price work by the number of discrete operations. A simple t-shirt requires very few; a lined dress with a zip, facings and a shaped waist seam requires many times more.
Each operation is a machine setup, an operator and a quality check. The cost accumulates in steps rather than scaling with the amount of fabric involved.
Which is why two garments using identical yardage can differ several-fold in what the factory charges for them.
Fit tolerance is much tighter
A dress must fit at shoulder, bust, waist and hip simultaneously, and a mismatch at any one of those points makes the garment unwearable.
Achieving that requires more fitting samples, more grading work across the size range and more pattern adjustment than a garment fitted at one point.
Development cost is spread across the run, so it lands heaviest on styles that are produced in small quantities.
Volumes are low per style
Retailers order dresses in short runs because buyers want variety and because a dress is bought for occasions rather than as a staple.
Short runs lose the efficiencies of a long production line. Setup time, sampling and material minimums are divided among fewer units.
A basic garment ordered in very large quantity absorbs those fixed costs almost invisibly, which is why the price gap widens further at retail than at the factory gate.
Returns are priced into the margin
Dresses have among the highest return rates in clothing, because the fit risk is concentrated and shoppers often order more than one size.
A returned garment costs shipping in both directions, inspection, repackaging and often a markdown if it cannot be sold as new.
Those costs are recovered across all sales in the category, so every buyer pays a share of the returns generated by the category as a whole.
Fabric choice compounds the effect
Drapey fabrics that make a dress hang well are frequently slippery, and slippery fabric is slower to cut and sew accurately.
Cutting also produces more waste on a dress, since long shaped panels and skirt pieces nest less efficiently on the roll than rectangular ones.
Between waste, handling difficulty and operation count, the fabric ends up influencing cost mainly through how hard it is to work with rather than through its price per metre.