Consumers usually pay more for what the products actually cost. Markups are reasonable, as retailers still need to profit to survive the competitive business industry. But how much of a markup becomes too much? Research has revealed that we can pay up to 300% markup for products such as makeup and everyday household items. As consumers ourselves, we wondered how much brands are ACTUALLY making. So we did a bit of digging ourselves, and here’s what we found out.
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Skincare & Cosmetics:
According to Marcia Kilgore, the founder of Soap & Glory, most luxury skincare has a price markup of more than 10x. The same goes for makeup products, as brands can charge up to $40 for an Eyebrow Pencil (Benefit Cosmetics, we’re looking at you). But does the manufacturing of the product really cost that much? Brow pencils are made of color additives, Glycerin, Beeswax etc, all of which do not cost much to procure. While not all eyebrow pencils are made equal, many drugstore brands are usually made with the same ingredients, and deliver the same results.
Essentially, the image of a brand directly correlates to the price of cosmetics. Premium brands demand premium prices just because they can. Often, the excessive marketing and fancy packaging contribute to the high markups on these products.
For example, Sk-II has long been a cult-favorite. The SK-II Treatment Essence cost $191. In comparison, Missha Time Revolution First Treatment Essence costs around $70. Many beauty enthusiasts rave about the Missha Essence, calling it a dupe for the exhobirtant SK-II Treatment Essence. In fact, according to blogger Gio, the Missha Essence contains far more superior ingredients than the SK-II essence.
2. Diamonds
Diamonds are a girl’s best friend, but this best friend will also burn a hole in your pocket. These shiny stones are usually sold at a 100 to 300x markup. In South Africa, an unpolished and uncut diamond can cost only 15 per carat. The diamond goes through many hands, and when it eventually reaches a Tiffany and Co outlet near you, a 1 carat diamond can cost up to $6k – $7k, depending on the cut of your diamond.
Like beauty products, a significant sum of the price we pay goes to marketing. For instance, a timeless brand like Tiffany & Co launches extravagant marketing campaigns to make you believe that their diamond rings are THE ones to go for when you get engaged.
However, other brands like Lee Hwa Jewellery and SK Jewellery all source their diamonds from the same diamond supply conglomerate – De Beers. The only thing that should influence the price of your diamond would be the 4Cs – Cut, Carat, Color and Clarity, instead of the brand name that sells your ring.
3. Fashion & Apparel
Fashion apparel like jeans and lingerie often have a hefty price tag. The mark up on these fashion pieces can go up to 1100% for designer lingerie and 650% for designer jeans.
According to a journalist at Refinery29, it would cost only $4 to obtain sufficient fabric for a pair of jeans. Including minimum wage labor costs, transport, and overhead costs, the cost price of a pair of jeans would cost less than $20.
In stores, a pair of Levis jeans costs approximately $120. With some digging, we discovered that Medlar Apparels, one of Levis manufacturers in Bangladesh, also manufactured for other brands like St John’s Bay. St John Bay’s jeans on the other hand, have a price tag of $60-$70 on average. Here’s a question that intrigued us: does the quality of fabric differ so much that Levis can justify its more than 650% markup?
IUIGA protests excessive retail mark up
Retailers in Singapore also attach an exorbitant markup on their products, which is why IUIGA strives to reveal the huge mark ups behind every product in the market. With IUIGA’s commitment to price transparency, we aim to help consumers make informed purchase decisions. For instance, the raw cost of MUJI’s aromatic diffuser costs $15.18. In stores, it is being sold at $90 – $105, amounting to a 95% markup.
In contrast, IUIGA works with the exact same manufacturer as MUJI, providing our fans with the same product at a fraction of the price. At only $29.90, IUIGA’s profit margins are streamlined to 50%.
