Beauty products, from makeup to specialized shampoos and soaps, have become commonplace in American households. However, although they are an everyday staple, they are quite expensive. But why is that the case?
Beauty products are expensive because of production costs, marketing costs, and demand. Sourcing the raw ingredients needed for beauty products is difficult, and therefore a pricey undertaking. Meanwhile, the great demand for beauty products has made corporations able to increase their price.
Below, we will cover these reasons why beauty products are so expensive in more detail, including what makes production costs and demand high enough to lead to a higher price point.
Why Are Beauty Products So Expensive?
As mentioned above, beauty products are expensive because of the high production and marketing costs and overall demand. Customer loyalty may be another reason why these products can get away with being more expensive than other everyday household products.
High Production Costs
Beauty products have to go through a long process before becoming available to the consumer, from ingredient sourcing and product testing to manufacturing their packaging. Each step of this process costs companies a lot of money, so they pass those expenses to the consumer to cover the final cost.
The following are a few steps of the production process for beauty products that can add to their final cost.
Raw materials are needed to develop and manufacture beauty products. Some ingredients are harder to find and source than others, which can be quite costly to do. Additionally, although the use of local ingredients is a huge selling point for products, they are expensive for companies due to their high demand among local businesses and other corporations.
Testing Product Quality
Of course, before a beauty product is developed and mass-produced, companies must create sample products to test before it is deemed safe and effective for consumers to use.
The costs for this rigorous testing and trying to make sure products meet federal regulations and guidelines to be sold on the market can be relatively high. Regular product testing and production also take a lot of time, meaning companies also have to factor in labor costs for developing their products.
High Marketing Costs
With every new beauty product a company launches, they have to drum up enough interest for the product to get it into stores and consumers’ hands; this may require expensive marketing strategies for the initial launch, with the goal being that eventually, the product will sell itself with enough demand.
For this reason, a beauty product company may decide to price their products higher to cover the initial production and marketing costs.
High Product Demand
Naturally, the high demand for beauty products makes it easier for corporations to increase their prices accordingly to make more significant revenue and overcompensate for production costs. As long as beauty products are a commodity, they will continue to be sold at a higher, competitive price.
For example, the skincare industry alone was forecasted to remain the most profitable product category. Its market value was projected to grow by $20.1 billion between 2014 and 2019.
With this massive increase in sales, this begs the question: why and how are beauty products a commodity at all?
Necessity and Everyday Use
“Beauty products” is a category that covers a variety of items, from shampoo and makeup to a plethora of other items in between. The average American uses several of these products each morning in preparation for their day, men and women alike. Now, imagine a world without any of these products. You can then see why they’ve become an everyday staple in American homes!
Intended Product Results
Certain beauty products, such as acne and facial creams, can actually exacerbate skin issues to ensure the continued product’s continued use. In other words, some products may give the user a false sense that it is effective when in reality, it causes the issue to continue.
In some cases, one product may lead to oily or dry skin or clogged pores—only to encourage the consumer to purchase another product from that same company to combat these new issues. Thus begins an endless cycle of consumers relying on a product line to battle ongoing skin care problems.
Beauty products can be used to look nice, smell clean, and feel fresh, making it an everyday household necessity—especially as more marketers advertise these products as items that make you always look, feel, and smell your best.
With such a significant focus on looks and the presentation of oneself, it is no surprise that so much money is spent on beauty products. This allows beauty product companies to virtually set their own rates. They show eye-catching videos and presentations about how a product can transform your life, and suddenly, you find yourself spending whatever it takes to obtain the product.
Another way marketers can drive the demand for beauty products is through psychological pricing. This is a marketing strategy that assumes that a product’s price can psychologically impact consumers and their attitudes about the product.
In the case of beauty products, the higher the price, the more likely a consumer will equate it to being of high-quality. Therefore, they will be more likely to choose it over a product that is a lower price.
High Customer Loyalty
Finally, high customer loyalty can allow companies to increase their prices to make more money. Corporations that can maintain a loyal following can easily gradually raise their prices—often without consumers even realizing it.
Even if customers notice the price increase, they usually won’t see it as a reason to switch to a competitor brand; after all, they’re loyal because they believe in the quality of a product and may use that as a way to justify the higher price point, as mentioned above.
Does Price Determine Quality?
Many people believe that price determines quality, but this isn’t always the case. Just because a beauty product is more expensive or packaged more creatively doesn’t necessarily mean it is of better quality. In fact, it can mean the opposite. Some beauty product manufacturers have been criticized for spending more money on the product’s presentation than the actual product itself.
With that said, when shopping for a new beauty product, it is essential to research your options. Read reviews from actual customers. Look into how the company sources their ingredients and tests their products.
You may be surprised to find that the more expensive products you come across are made at a lower cost due to low-quality ingredients, while those low-cost options you purchase at a local drug store are made with better ingredients.
Beauty products make up a significant revenue source in the US, with the standard estimated amount in 2019 being around $49.2 billion. This is possible in part due to their high price point and consumers’ willingness to purchase these products at these prices.
Beauty products are so expensive because it costs companies a lot of money to produce high-quality products and market them to the public. Thanks to the marketing efforts the company invests in, the nationwide demand for such products drives the price even higher.
Meanwhile, loyal customers are so loyal to a brand that the company can get away with increasing prices, with most consumers assuming that the higher price point means they’re investing in a higher quality product.
However, just because a beauty product’s price is higher doesn’t necessarily mean it’s better than lower-cost items. So, make sure you do your fair share of research before investing. Your body—and wallet—may thank you later!