Beauty consumers lament that beauty products are too expensive despite the consumer price index for cosmetics rising slower than the overall consumer price index in the United States. The cosmetics CPI gained 2% in March this year from last year while the general CPI for all urban consumers gained 3.5% in the same period.
For the latest edition of our ongoing series posing questions relevant to indie beauty, we asked 25 beauty entrepreneurs, executives and consultants tasked with figuring out how to sell products to consumers in today’s pricing environment the following questions: Do you get a sense that consumers feel beauty products are too expensive? Do you believe they’re too expensive? What, if anything, should be done about the consumer perception of beauty products being overly pricey?
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Sandra Velasquez Founder, Nopalera I don't understand why people complain about beauty products being too expensive. We aren't talking about baby formula or medication that you need to survive. Nobody needs an influencer-founded lip gloss.
If you can't afford what is at Sephora, there are dozens of options at CVS or Walgreens that will get the job done. I can't afford a Porsche, but I don't complain that cars are too expensive. There are other options.
Furthermore, consumers have no idea how much it costs to make products—and they may not care. Beauty retailers take a 60% margin, and brands still have to pay for endcaps and promotions.
If you are buying a $10 product, the retailer is making $6 of those dollars, which means the brand is left with $4, which means they need to make it for $1.50 and net $2.50. And then customers want things made in the USA and free shipping.
The more interesting story is how much retailers are making in margin and how they use chargebacks as profit centers.
- Monique Benoit Founder and Chief Advisor, SoFull Creations
Consumers are dealing with rising costs in so many places that are necessities— housing and food—that they are now feeling pinched in other areas like beauty. No, beauty products aren't necessarily too expensive, but everything else is. As a result, consumers are cutting back in places where there weren't before.
Additionally, consumers are being more conscious of what they have to assess if they really need something new. There is also a growing trend towards deinfluencing, and I think this has some impact here as well.
- Susan Wong Founder and CEO, HAN Skincare Cosmetics
I think there will always be a segment of beauty consumers who feel beauty products are too expensive, especially these days with ongoing broad-based inflationary pressures.
But, in my opinion, 2% in cosmetics inflation is pretty reasonable compared to other sectors with an overall higher CPI (gas, food and services come to mind).
When businesses are transparent about the rising cost pressures they face from raw materials, packaging, shipping and labor, to name a few from my own experience, I think the more the beauty consumer understands the reason for the product price increases and may be OK with it.
However, for those who are very price elastic or sensitive, I would say there are beauty products at every price point if they are willing to make that tradeoff.
- Razvan Romanescu Co-Founder and CEO, Underlining
I don’t believe products are becoming too expensive in relation to the grand scheme. The prices are naturally keeping up with the rising costs of materials, shipping, inflation, etc.
From the perspective of an operator and beauty business owner, it is very hard to turn a profit if I don’t price competitively or high enough to account for product costs, shipping, fulfillment, advertising and marketing costs, etc.
When it comes to smaller and more boutique beauty brands, they may need to price higher just to stay in business long enough to break through the noise. Some of the major beauty conglomerates and holding companies have the luxury of pricing more affordably since they have reached significant scale.
Regardless, there are a ton of great options out there for premium quality at affordable prices.
- Laura Burget Co-Founder, Three Ships
I definitely think that consumers are tapped out with the amount that they are willing to spend on beauty, but I think that this stems from the epidemic of hyper-consumerism that plagues social media.
Consumers only have so much disposable income to spend, and with other goods rapidly increasing in cost, it eats into the amount that they have to spend on beauty. At the same time, we're constantly being pushed new products and being told that XYZ new category is something that "you can't live without.”
So, it's not so much that each product is too expensive as it is that the cost of an entire routine is getting out of hand due to the sheer number of products we're being told we have to use. As an industry we should avoid pushing hyper-consumerism and focus instead on creating high-quality products that deliver results. This is definitely a philosophy that we subscribe to at Three Ships!
- Jeff Lee Co-Founder and CEO, DIBS Beauty
Beauty customers were becoming more discerning in all respects, including formulation, performance and, of course, pricing well before the current inflationary trend. That's a challenging environment to be in for products that can't cut into the inner core of the consumers’ routine, whether it's because they're single-use "nice-to-have" instead of "must-have" or simply undifferentiated in branding or formulation.
We've seen both mass and luxury brands struggle with this in different ways in recent months, which tells us that it's not just a price tag issue, but a product differentiation question.
In short, consumers are quicker to call out the perception of unjustified pricing. Plenty of compelling products out there are well-priced for the value, functionality and ultimate reward in their consumers' lifestyles, and the solution to any perception problem is thoughtfulness in both product development and education.
- Hana Holecko Co-Founder and CEO, Veriant
I believe that the economic downturn and changes in consumer habits such as embracing a streamlined daily routine since the onset of COVID-19 likely contribute to this consumer perception.
When considering this question, I think of E.l.f. cosmetics as an example of why consumers would question the prices of other brands' products as E.l.f. has become notorious and beloved for their spot-on affordable dupes of coveted high-end beauty products.
Considering all of the above, including the well-documented shift of women wearing less makeup since the pandemic, consumers, especially those working from home and adopting simpler beauty routines, may naturally question the prices of other, more expensive products/brands.
Consumers today are more informed and discerning than ever before, and they expect brands to be transparent about their pricing strategies and the value they provide. Educating consumers about product value and formulation quality could help shift perceptions of beauty products being overly pricey.
Brands can leverage marketing efforts to highlight the unique benefits and features of their products, emphasizing the value proposition to justify higher price points. For example, I was recently served an ad from a fragrance company that highlighted this extremely well. In the video, the founders explained the exact price per pound for their innovative, key fragrance ingredient.
This ad did an excellent job of not only justifying the price, but proving the value of their star ingredient and thereby their product. Thus, I think innovation is key to a consumer's willingness to pay a higher price compared to a lower-priced alternative.
While offering lower-priced alternatives may not make sense for every brand, the ability to demonstrate value and innovation is critical. By focusing on transparency, education and innovation, beauty brands can effectively address consumer perceptions of pricing and cultivate stronger relationships with their customer base.
- Danielle Black Head of Global Sales
I think the market is so saturated with options, especially with the excitement and newness coming to the mass channels, that if something is pricey, customers can and will easily comparison-shop.
However, efficacy, wear and customer experience trumps all. If a product truly delivers a benefit the customer is looking for, the price is less important.
I'm currently working with the founder at Glissant sexual wellness, and the lubes are $55, which is on the higher end of retail pricing options. The packaging is discreet, and it elevates the experience. It's winning in the luxury spa and hotel market due to that, but the added value of the discreet packaging is clear.
I'm not sure anything needs to be done, although what is going on with deodorant? I would love to understand as a consumer why that retail seems to have tripled.
- Lynn Power Founder and Co-Founder, Conscious Beauty Collective and Masami
Beauty is growing up. It is table stakes now to have cleaner formulas and be more eco-friendly. Unfortunately, better ingredients cost more. So do many sustainable solutions.
But many of the products also perform better, so even though they might be more expensive, you're getting more bang for the buck. We also find that you don't have to use as much product with many premium high-quality formulas like Masami, so a bottle should last longer than you might think.
As a consumer, you have so many choices now. If you don't love that your old standby raised their prices, find an alternative that meets your needs, ideally from a small business which you can feel good about.
- Mike Modula Co-Founder, Sepia
While consumers are indeed becoming more cautious with their spending, it's up to brands to effectively communicate why their products are worth the price. Product efficacy and a sense of community belonging are what primarily drive people to make beauty purchases.
If brands can show rather than just tell consumers how their products meet their performance expectations and make them feel like part of a brand community, then you'd be surprised how price concerns seem to fade away.
- Corey Huggins Founder and CEO, Ready to Beauty
Some consumers feel beauty products are too expensive and some don’t. Consumers are still willingly to pay exorbitant prices for some of the most coveted products on the market. La Mer exists for a reason.
However, the mass channel is just more sophisticated than ever before, thereby negating the need for expensive products. I particularly find this true based on specific segments like skincare, but not necessarily true for haircare.
- Adeline Koh Founder and CEO, Sabbatical Beauty
It’s ironic that beauty is perceived as “too expensive” when it’s the prestige category that grew over mass in 2023. What this signals is not so much actual pricing, but consumer perception of value in terms of beauty.
Perception of value is a complex subject. On the one hand, what value means is dependent on the individual consumer’s self-perception. For a consumer who considers self-care and appearance unnecessary, beauty products will be too expensive as an entire category. For another for whom skin quality and appearance are non-negotiables, the question may be, did this product deliver value?
In the background is the very real consumer perception that the beauty industry is set up to deliver profit to stakeholders rather than value to consumers. And, for the most part, this is true.
Markups in beauty are substantial, especially in comparison with many other industries. Also, many brands do not spend the bulk of their money on delivering value with expensive ingredients, but on marketing and advertising to the consumer.
That prestige grew over mass in 2023 while consumers are pushing back, saying products are “too expensive,” may signal that they are actually willing to pay more for a product that delivers value and not willing at all to pay for products which do not.
- Louise Butler Founder and President, Ignite Beauty Strategy
Are beauty products too expensive? This is an interesting question as we are seeing the tween consumer purchasing beauty, especially skincare, in more prestige retailers like Sephora where there are higher price points as compared to the mass market.
Where previous generations began their beauty journeys is likely influencing this perception. I expect gen X or millennial parents of tweens are surprised at the beauty spending of their tweens!
I actually believe that there is an abundance of choice when it comes to beauty price points. Great quality can be found in all price ranges. I do think one factor that may be edging up some prices is that many of us in the industry are trying to make more conscious sustainable choices in formulation and packaging and those choices tend to drive up the cost.
We are also in an environment where marketing costs to build brand awareness and acquire customers have increased dramatically, so margins are getting squeezed especially for new brands.
One tactic that could shift the perception that beauty is too expensive would be for the beauty press to ensure that all price points are represented in product roundups.
- Katherine "Annie" Finch Founder, Katherine Girl
The quality of lower priced products is amazing, so the consumer is really winning. It’s a matter of understanding your needs versus wants kind of like handbags. The prices of designer bags have gone up, but the designs of lower priced goods are fantastic.
Also, the ingredients and level of good ingredients has gone up, so really just find what you love and need and want. So many more choices now!
- Charlotte Palermino Co-Founder and CEO, Dieux
Always boils down to education. Some brands are too pricey, but that may be why people are buying them. It's a perception thing, and that brand may not be for you.
If a brand is experiencing their own customers or potential customers voicing concerns, explain why the formulas and brand are worth more. Did inflation hit raw materials? Did you do a clinical? Was there a shift in your business? If you can answer the questions people have, from my experience, it makes for great content.
- Stephanie Lee Founder and CEO, Selfmade
I get the sense that folks are feeling the squeeze from all angles, particularly when the “little luxuries” all have risen at the same time as the cost of bare necessities to just live has increased.
On top of that, inflation continues to outpace wage growth, which means every single dollar spent needs to work harder for the consumer. In terms of their attitudes towards cosmetics pricing, I know they are way more discerning over each element of their purchase especially as they are overwhelmed with choice.
At Selfmade, we intentionally created our products larger knowing our consumer is price concerned and research savvy. This means our products have a retail price similar to our peer brands, but the unit price is actually lower in favor of the consumer (i.e. Secure Attachment Comfort Serum+ is 1.7 ounces versus the typical 1 ounce, and both are priced around $36).
The notion of determining worth is subjective. So, while the data is says one thing (i.e., it’s not that bad), what is most important in a person’s buying experience is emotional data, perception of value and the overall consumer confidence, just like how the stock market operates.
Currently, people are burnt out and overwhelmed with the stress of everyday. So, it makes sense that people are feeling negative or cautious towards products, brands, systems, etc.
While the CPI rate of beauty is lower in relation to general rates, they are still increasing at a time where interest rates and gas prices are record high. Unemployment rates are low, but what is visible on the news are huge layoffs. We’re in a presidential election year, which means uncertainty in a lot of areas that affect our daily life.
I don’t think that consumer perception of beauty products being too pricey is something that can be controlled. It’s relative to so many forces happening at population, system and individual levels.
- Ann McFerran Founder, Glamnetic
Beauty consumers complaining that beauty products are more expensive has a lot to do with what marketing they’re being exposed to.
We’re seeing more prestige brands investing a lot more into marketing, and with the rise of TikTok Shop, a lot of affiliates pushing more products a lot more often as the TikTok algorithm is pushing TikTok Shop more and more. So, people who are on social media are getting way more exposure to products being pushed to them.
The launches per brand are not slowing down and people are coming out with more and more innovation in cuter packaging. So, it’s fueling this feeling of FOMO for new products, but, at the same time, do you really need another lip product, moisturizer or hair mask?
We’ve been moving into this culture of maximalism in the beauty industry where everyone is always talking about the latest and greatest, and this in combination with the economy slowing down. It’s no wonder people are feeling like it’s “too expensive” to keep up.
- Sophia Moradi Founder, Sōm Skin
I definitely get the sense that consumers feel beauty products are too expensive. What I find interesting is that the average consumer does not find cosmetic surgery procedures "too expensive," but certainly are more hesitant to make the investment in skincare and prevention.
In general, I feel like our consumer culture is a bit more reactive, and people respond better to instant gratification. It makes sense and is normal, but it's great to see the beauty industry and social media placing a stronger emphasis on education to encourage consumers to make that investment in order to prevent the need for expensive procedures in the future.
I believe it is important to be diligent and do research when purchasing beauty products and make sure you are purchasing high quality products that are right for your skin type and beauty goals.
In terms of changing consumer perception, education is key. Educating consumers on the consequences of not caring for our bodies can help. Educating consumers on the proper use of beauty products is also key.
I know many people rarely read the directions on products thoroughly enough. I have seen many people use a product in a golf ball size amount that was intended for use in a pea size amount. More is not always better!
- Karen Raghavan CCO, Luna Daily
Beauty products have always ranged from mass to premium and luxury, and recent trends have shown premium and mass retailers launching brands that address the mass/masstige customer as well as premium/luxury one. This signals that consumers enjoy a range of brands within a retailer and perhaps having the option of buying mass or massage alongside some premium products.
Perhaps consumers think that beauty products are getting more expensive, but so are basic goods, and what’s amazing about this industry is that we do not lack options should we need to find alternatives that fit our budget. With reports of premium beauty growing faster than mass, there are consumers out there who are upgrading or trading up in beauty at the expense of other categories perhaps.
- Megan Douglas Founder and Product Creator, The Organic Skin Co.
It's no secret that times are tough for many right now. Inflation is sticky, and most consumers have less spending power than they used to.
In the past, the beauty industry has successfully navigated economic downturns (“the lipstick effect”), but I'm not sure that this will always be the case going forward. People are taking a broader approach to wellness and self-care these days, and many of their choices in this area will be made on perceived value or how their money can alternatively be spent on other areas of their well-being.
Value is always in the eye of the beholder, of course, but I believe that many consumers consider the majority of beauty products to be overhyped and overpriced, and increasingly it's likely they will look for products that deliver the same quality and benefits, but at a lower price point.
For manufacturers of clean beauty products in particular, this is food for thought. Many natural beauty products sit in premium indie price bracket and are marketed and priced accordingly. Of course, this is in part due to the costs of sourcing and formulating with authentic and premium natural ingredients as opposed to creating something with cheaper synthetics.
Education the customer is important here, explaining why organic and natural comes at a cost, but it also becomes incumbent on brands to look at their costs and decide what's most important to them. How can we offer a brand that remains pure and premium, but at an accessible price point?
At The Organic Skin Co., we've made the deliberate decision to keep our prices as low as we can so that they're available to as wide an audience as possible. This has always been a foundational motivation for our brand. As a naturopathic-formulated range, we believe everybody's health and well-being is important, not just the elite few.
At the same time, we understand that our products, which range between $25 and $35 in price, will still be out of reach for many, but paying fair prices down the chain remains important while also keeping the integrity and authenticity to our offering.
We're lucky in the regard that, over a period of 14 years, we have built some amazing relationships with our organic farmers and packaging suppliers, and we therefore purchase as close to the supply chain as possible, decreasing raw material costs.
We are also increasingly in a position to manufacture at economy of scale, which means our COGs are lower than when manufacturing in smaller runs, and we keep our overheads as low as possible. We have been able to pass these savings on to the customer in regard to prices while still retaining essential markups to keep the business running profitably.
It's been a long road getting there, and if I had a message to other brands who are just starting up and who cannot manage economy of scale to get their prices down, I'd say build slowly, don't cut corners and take time to build direct and authentic relationships with your suppliers.
- Lisa Mattam Founder and CEO, Sahajan
We are currently in a space where the cost of living has increased dramatically, from the increased cost of avocados to the shrinkflation of a beloved bag of chips. I believe that the beauty consumer is very well aware of the business reality that has driven brands to increase their prices and the economic pressures particularly indie/founder driven brands face to remain competitive and viable.
To say that beauty is "too expensive" feels overly simplistic. It negates the phenomenal work being done by brands at mass to make beauty accessible. Couple that with the varied retail channels (CVS, Target, Ulta, Sephora) and the current consumer has several choices to shop beauty in consideration of their budgets.
For brands across the spectrum, it remains critically important to price in relation to perceived value. At Sahajan, we were one of the first clean brands to invest in clinicals, demonstrating not only the transformational power of Ayurveda, but the tangible benefit of using our hero SKUs.
Alongside those clinicals, we have made firm commitments to choosing high performing time tested ingredients, investing in sustainable practices and giving back. As a founder, it's imperative to me that our customers can transparently understand what they are investing in every time they choose Sahajan.
- Susan Kim Tsui Founder, Norie
I can't speak on behalf of all beauty consumers, but I think the general sentiment among those who buy skincare is that, despite inflation, they are willing to pay more for premium products.
I've experienced a few cycles since 2003 when I started my career in the beauty industry. I recall in the years leading up to 2008, luxury skincare was all the rage, and consumers were willing to pay top dollar for anti-aging skincare products.
That all changed after the Great Recession in 2008 and spending on premium and luxury skincare dropped significantly. I recall seeing a shift in the media and in consumer perception that mass and masstige brands worked just as well as expensive, luxury brands. Although I'm not seeing the luxury skincare market bounce back, premium skincare market has been growing since COVID.
It's hard to say that all beauty products are too expensive. With more awareness and demand for cleaner and safer skincare formulas, smaller niche brands are investing in quality, effective and sustainable products. The higher price points reflect this investment.
For our brand, the cost of ingredients, packaging, shipping increased quite significantly while we were developing our first product during the height of COVID. Our price point for our cleanser reflects this increase in our cost of goods and is higher than mass drugstore brands.
I'm not sure much can be done to change consumer perception of beauty products being overly pricey except to be more transparent about the cost of doing business in the beauty industry.
- Margarita Arriagada Founder, Valdé
I do have a sense that consumers perceive beauty products to be expensive primarily because it’s become a self-fulfilling prophecy. If a brand like E.l.f. is growing like it is, it pretty much underscores the consumer sentiment and reality check and couple that with the proliferation of dupe content.
The industry overall has allowed for a perceived devaluation of products due to the saturation of sameness and promotional activity. So, we have influenced this outcome.
That said, I absolutely do not think beauty products are expensive. In fact, I can’t remember a time they have been better valued than now. It actually costs a lot in R&D and years, which is not reflected in the price, to create some of the formulas offered. The reason prices are low is due to high production volume runs, which distorts the perception of the overall value ratio equation.
Yes, some formulas in mass and prestige are similar yet quite different in price, but not everyone wants to buy or sell in mass. Therefore, prices are different.
What needs to happen is that we need to pull back the curtain and educate customers on what goes into product development. There would be a much higher appreciation for all that goes into even making a $10 product, and I guarantee it would raise the perceived value.
However, due to proprietary concerns, most brands don’t. Regardless, there’s an opportunity to take the customer on the journey with some level of transparency, which I believe they would appreciate.
- Ashlee Posner Founder, State of Change and Lucent Labs
As a brand owner, I can tell you the value perception varies so much across consumers. We have heard, “It’s too expensive,” and “OMG, it’s so cheap,” on the same product. Much of this is budgets, priorities and individual perspectives.
The emergence of dupes has further complicated this issue by casting doubt on the value of expensive products. The marketing surrounding dupes has fostered skepticism, leading consumers to question whether high-priced items are truly worth the investment.
Providing consumers with more information can help build trust. This is a core value at both State of Change and Lucent Labs. I believe openly discussing ingredient quality, R&D processes and sustainable manufacturing investments can bring clarity to the perceived value of a higher priced product and help consumers make more informed purchasing decisions.
I think perception shifted with the rise of dupes. The marketing made it seem like all expensive products are a scam. I think consumers always feel better with more information. Although this is a tricky space, I personally believe communicating transparently about ingredient quality, R&D and sustainable manufacturing practices help provide clarity to a higher priced product.
- Claudia Poccia CEO, Grace de Monaco
Today’s consumers across all categories and across all price points—from mass to luxury—demand full transparency from the brands they purchase. This is especially true in the world of beauty because of its personal nature.
Consumers are savvy and seek the highest quality products from ethically sourced ingredients to sustainable packaging, all of which may very well translate to increased pricing of final goods.
Additionally, the cost of doing business has increased for beauty brands of all sizes—from startups to those that are iconic—and this can also play a role in final consumer pricing.
All these factors are why it is critically important for brands, particularly in the luxury beauty segment, to educate new and existing communities about their commitment to these core principles and to deliver a concierge experience across every touchpoint.
If you have a question you’d like Beauty Independent to ask beauty entrepreneurs, executives and consultants, please send it to editor@beautyindependent.com.
