Actual Cost of MAC and other Estee Lauder products

[color_lover456]

Hey guys

I just took a peek at Estee Lauder's financial statements, and I was pretty distraught: they make 8 billion dollars a year selling makeup, but the makeup itself only cost 2 billion. Selling costs take up 5 billion.

What this means: on average, for a $14 lipgloss or eyeshadow, it actually costs $3.5 to make. but they spend $8.75 of that 14 to market it...

I realize that estee lauder is home to many of the higher end makeup, but do I really want to pay almost $9 of selling fees for my $14 lipgloss?

What are you guys' thoughts?

 

[couturesista]

WOW! Doesn't change anything for me, Its all about marketing! As a WOC I appreciate spending the extra money and supporting a company(MAC,Clinique,Bobbi Brown) that represents all types of ethnicities!

 

[ClaireAvril]

I always think of this --that it must not cost much to make cosmetics, clothing etc.. whether it be using inexpensive materials and/or cheap labour.
I think its safe to say almost every company is doing it. All business care about is making money. That's it. Manufacturing the cheapest product and selling it for the highest possible price is the goal.

Recycling their products makes it cheaper for them to manufacture products also.
Thats just the way it is.. And if people will continue to buy, they will continue to make money and slowly increase prices.

 

[panther27]

Unfortunately,I'm not surprised at all to hear this.I kinda figured.A lot companies are like that.That is a huge price difference though

 

[uh_oh_disco]

Wouldn't that leave them with 1 billion to research and develop new products or lines? Or does that fall under selling costs? 1 billion doesn't seem much at all, seeing as then they honestly wouldn't be making mucg profit at all for such a big company.

 

[lyttleravyn]

Wouldn't paying all their employees, also training them, rent/maintenance on locations, research/development of products and collections, taxes (payroll, etc.) etc. be part of selling costs? You'd also have to think about the loss they take on returned/thrown away product and gratis, even though it only cost "3.5" to make a lipgloss or eyeshadow" there are usually a 1000 other factors into what goes into a selling price.

 

[blindpassion]

I think they market their company well,
I think they make money because of it,
and more power to them, they got me hooked, and most brands don't.

 

[color_lover456]

Quote:

Originally Posted by uh_oh_disco Wouldn't that leave them with 1 billion to research and develop new products or lines? Or does that fall under selling costs? 1 billion doesn't seem much at all, seeing as then they honestly wouldn't be making mucg profit at all for such a big company.

The billion dollars is their profit.

 

[blindpassion]

A billion doesn't seem like a lot until you say it like "999,999,999.00"

Thats over 9 hundred and 99 MILLION dollars.

 

[Ruby_Woo]

It doesnt change anything. Business is business, like at the theaters it cost 2 cents per bag of popcorn, 15 cents w/ the bag included, and they charge 5.25 for each bag. They have to pay labor, material, marketing.

 

[Mabelle]

im not surprised at all. this is how businesses become successful. they make a product for little as possibly and then sell it for as much is socially acceptable.

 

[*KT*]

Quote:

Originally Posted by lyttleravyn Wouldn't paying all their employees, also training them, rent/maintenance on locations, research/development of products and collections, taxes (payroll, etc.) etc. be part of selling costs? You'd also have to think about the loss they take on returned/thrown away product and gratis, even though it only cost "3.5" to make a lipgloss or eyeshadow" there are usually a 1000 other factors into what goes into a selling price.

Exactly. Just like all those Victoria's Secret panties made in Sri Lanka. It certainly doesn't cost $12 to make a thong. We're paying for all those photoshoots, catalogues, print and tv advertising, etc.

I wonder how much returned/sample/outdated product companies like Estee Lauder and Sephora throw into the trash internationally every day. It's probably staggering.

 

[TIERAsta]

I am not surprised at all. How else would business make money? I think about all the reasons I support the particular brands that I do... and it's more about the end product. With MAC in particular, not only do I love the makeup and cosmetics, but I also appreciate the packaging, marketing, celebrity endorsements, philanthropic ventures, customer service, etc. All of that costs money. If I didn't want to spend my money on all of those other endeavors, I'd buy makeup at the 99-cent store.

 

[wifey806]

lol, i'm obviously BRAINWASHED

cuz all i can think of is Britney's "gimmie, gimmie more" song lol.

MAC?? I don't care, just GIMMIE GIMMIE MORE!!!

 

[LatinaRose]

Thats just business honey. Virtually every product on the market has an insane markup. Thats how companies stay alive.

 

[jsky83]

Quote:

Originally Posted by *KT* I wonder how much returned/sample/outdated product companies like Estee Lauder and Sephora throw into the trash internationally every day. It's probably staggering.

Seriously!! I work at Sephora you would be amazed at what gets thrown away almost everyday. Everything that is returned and has been opened, doesn't even matter if it's been used, gets marked out of inventory and thrown into the dumpster. It's literally tens of thousands of dollars worth of product a week, and that's only one store! That's another thing you are paying for when you pay high prices...a great return policy.

 

[jsky83]

oh and I forgot to mention...because we are an open sell store people think they can just open up products and use them without buying them. HELLO! There are testers for a reason. Needless to say that those products are also marked out of inventory and trashed.