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5 Reasons You Should Make Expensive Cosmetics

A friend of mine forwarded me this product link for the Estee Lauder Re-Creation Face Cream set.  If you click on that link you will see that they are selling a product “system” which includes a 1.7 ounce container of face cream and a 0.5 ounce serum for…$1100 US.  rich woman cosmetic

Eleven…hundred…dollars!  Yikes!!

And how is this cream different than say the $25 Oil of Olay product you can get at Target?

Antarctic Absurdity

Well, this one has ingredients…

From the pristine depths of the Antarctic Ocean comes the inspiration for our exclusively refined, sustainably cultivated Glacial BioExtract™, proven in vitro to help skin boost its natural elastin production. Re-Nutriv Life Re-Newing Molecules™ help repair, recharge, and restore skin’s energized, radiant appearance.

First of all, the “Antarctic Ocean”?  Where on Earth is the Antarctic Ocean?  I’ve heard of Antarctica and the Arctic Ocean but not the “Antarctic Ocean”.  Some copywriter needs to go back and relearn Geography.

But to answer the question, I suspect there really is no measurable performance difference between the Olay product and the Estee Lauder product.  There really is no technology that Estee Lauder has access to which would justify the price of their product.

Performance is only one factor to consider when pricing a cosmetic product.

Costing your cosmetics

Whenever someone asks me about pricing and how much they should charge for their products, I always tell them “make it expensive.” If you are a cosmetic entrepreneur or just trying to build your own cosmetic brand you do not want to be competing on price.   Here are 5 reasons why you should make your cosmetics more expensive than most that are out there.

Big companies will crush you when you compete on price

It’s pretty simple.  A big company has a lot more money than a small company.  Therefore, a big company can afford to sell products at a loss for a little while and still stay in business.  If you get into a cost battle with a big company, you will lose.  It’s better not to compete for the people in this world who are already being served by big companies.  The low cost brands in all categories are already filled.  Don’t add another one to the mix.

Selling a $1 product is just as much work as a $100 product

From the standpoint of a new business, it will take you just as much work to create a product that sells for $100 as it will to make one that sells for $1.  And it will cost just as much to take orders, fill orders, store inventory, and market the product.  So if you’re going to do all the work anyway why don’t you just sell the product for a higher profit?  Starting a cosmetic line is going to be a lot of work.  You should ensure that you get paid for your hard work.

Easier to make it exclusive

Estee Lauder certainly demonstrates that one way to make your product exclusive is to make it expensive.  Seriously, how many people in the world could afford to pay $1100 for 2.2 ounces of a product you smear on your face?  The more expensive you make something the more exclusive it becomes.  Estee Lauder is trying to create an aspirational product.  And people who buy it relish the thought that they can afford it.  When you make a product that everyone can afford, it no longer becomes exclusive or “special”.

You can always lower prices

It’s a truism of the marketplace, you can’t raise prices.  Of course, you just have to look at the price of gas to see an example of where that truism breaks down but I’m not talking about small price increases.  I’m talking about significant price increases.  When you start a brand it will be evaluated by your consumers based on price.  It will start to take on characteristics of other brands at that same price.  When you charge less for a product it will be seen more as a product like Olay than Estee Lauder.  But if you wanted to raise the price to a new level, consumers just won’t believe your brand justifies the price increase.  Start at a high price.  You can always lower it later.

Big companies want to buy small brands with high profit margins

Finally, every cosmetic entrepreneur should have an exit plan and that exit plan is frequently a plan to sell your business.  Big corporate sales like Burts Bees and Toms of Maine are just a couple examples of entrepreneurs who cashed in on their product.  If you ever want to sell you company it will be much easier to sell it if your product line has a high profit margin.  And the only way you can get a high profit margin in the cosmetic industry is by selling expensive products.

Estee Lauder demonstrates that it is possible to sell expensive cosmetics.  If you are a cosmetic entrepreneur you should follow their lead and make expensive products yourself.  To some people, $1100 is not an outrageous amount of money to spend on a cosmetic product.  For the new cosmetic entrepreneur, those are the people you want to sell to.

Incidentally, if you have $1100 to spend on a skin cream, don’t bother.  Save another couple of thousand and get cosmetic surgery.  This will be much more effective and long lasting than ANY skin cream.

{ 9 comments… add one }

  • pavla 03/06/2014, 8:46 am

    EL using butyl paraben and other harsh chemicals and you pay tons of money for it. Classy cosmetics is a myth. After I’ve got a very bad problems with my skin while using L’Oreal cosmetics for a long period of time, it was then when I started my research and found out that L’Oreal in Europe is different than L’Oreal in USA. EU banned more like 400 ingrediencies which r used here in almost all products. It’s also about tresholds…..anyway, Cindy Sherman nailed it!

    • Perry Romanowski 03/07/2014, 11:49 am

      The EU cosmetic products are not safer than the US despite the regulations. Cosmetic companies are not interested in harming consumers. It makes no sense.

  • Jill 12/11/2013, 8:47 am

    Thanks for the great post, once again. I totally agree with pricing your products so that you make a profit, and the more profit the better. $1100.00 for a small jar of cream seems ridiculous, but if the market bears it, why not? Most cosmetics seem to be sold by the story told about them, not necessarily what they actually do. I can’t imagine what could be in a topical application that would do enough, even over time, to warrant spending that much money.

    • Perry Romanowski 12/16/2013, 8:47 pm

      Me either!

  • alchemist 12/10/2013, 4:11 pm

    You should make cheap cosmetics. You should sell expensive cosmetics. ;)

  • Joe Geography 12/10/2013, 11:01 am

    There are 4 generally accepted oceans on the planet. Atlantic, Pacific, Indian, and Arctic. Some consider 5 oceans, but the generally accepted term is Southern Ocean. So apparently it’s a not generally accepted version of a not generally accepted ocean. Sounds amazing though. Where can I drop my $1100 on that crap?

  • One 12/09/2013, 9:23 pm

    Isn’t the Southern Ocean also called the Antarctic Ocean?
    http://en.wikipedia.org/wiki/Southern_Ocean

    Anyhow, I wouldn’t spend 1100$ on a face cream.

    • Perry Romanowski 12/09/2013, 10:43 pm

      I had never heard of the Southern Ocean and it is not generally accepted in geography. However, perhaps I was being a bit harsh in my criticism since some people do call it the Antarctic Ocean

  • Randy 12/09/2013, 8:26 pm

    “Antarctic ocean.” Lol!

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