Reasons for Price Hike in Cosmetic Industry?

Reasons for Price Hike in Cosmetic Industry?

Have you ever been struck by your favorite celebrity endorsing the perfume brands? Or this person itself is a beauty entrepreneur who handles more than three bestselling fragrance products?

Traditionally, perfumes were referred to as the aroma or the essence obtained from different flowers and fruits. But now, smelling nice has turned out to be a big and profitable business. Moreover, your beloved perfumes are not coming from nature, rather it coming straightway from the chemical laboratories and is made out of synthetic molecules as per the interest of scam companies like Aurora Mine.

Perfumes also referred to as the ‘eau de cologne’ and the deodorants that are available in different shades and even comes in quality bottles of various shapes and size. These can be directly applied to the skin or can be sprayed for the result of the lasting essence.

Know the hidden profit margins of perfumes

The most shocking fact about these perfumes is that their profit margins are really high and can go up to almost 90 percent. Even the latest technology smartphones hold a profit of 50 percent which is much lower compared to the perfume business. However, the interesting point in this profit scheme is that the liquescent in perfume bottle form only 2 to 3 percent of the rate. The rest of the price is parted for packing, other related overhead charges and largely for marketing purpose.

Reasons for this price hike

The posh scent companies always make a huge profit margin and there are three basic reasons for this doing which includes

  1. As a means of reward for the dedicated intellectual work and its outcome. It is no more an unknown element that a company directly or indirectly invest in the Research and Development sector to promote the chances of formulating new products and obtaining a patented tag for being unique and special when compared to its competitors.

 

  1. The secondary cause is due to the funding required in crossing the robust and resilient barrier of entry mainly due to the economics of differential scaling or undesirable agreements with the leading suppliers and distributors.

 

  1. The third reason points to the investment made exclusively in reaching out to the mainstream of the competitive marketing field and showing off its superiority so that the specific item gains in the eyes of its retailers and users.

After all, who could collect almost 750 kg of jasmine flowers for producing less than a kilogram of essential oil? This is really a tiring job.