Purchasing choices are usually made based on quality, quantity and a good deal or, at least, a fair price. As consumers we feel entitled to the best value for money and now, with the convenience of online shopping, we can poke around for that elusive deal. But are any of our purchases truly ‘good value’? Or would we be better off taking a leaf out of our ancestors’ book, simply making our own goods from raw materials? Is the time worth the saved money? When we buy a fait-accompli, we’re invariably victims of often outrageous markups. High demand, low supplies, and time-intensive craft can sometimes account for this over-valuation of the raw materials – but, infamously, at times a brand name is all takes to mark up your markup. Savvy businesses know people will pay unfeasible amounts for highly coveted items, so a well-marketed and desirable commodity could be priced thousands of percent above material and production costs – and the designer-name-dropping brand devotees won’t question it.
In the pursuit of true value, we’ve investigated 10 seriously marked up items on the market. We’re not surprised at the markup on a Louis Vuitton bag, but some of the crazy markups floored us. Whether it’s a canny marketing ploy or a matter of supply-and-demand, the practice of marking up is a fact of our Capitalist market and if we can’t avoid it, we can at least develop awareness of it. Our list looks at 10 of the most marked up products in the world; you might just think twice about where your next $10 is going.
10. Cosmetics: 60% – 100% Markup
You know that glitzy bottle of eternal youth and impossible beauty on display at Sephora? It’s a lot of well-scented clay, oil, and wax. Since these couple of grams are primarily made of dirt, you could be paying $40 for materials you could scoop up in the back yard. Of course, fragrances are added – as well as colors and sometimes minerals to enhance the product, but most cosmetic products are still essentially composed of relatively cheap materials; the fancy bottle or label is probably the most expensive part of your purchase. The estimated average markup on cosmetics is anywhere from 60% to 100%. The really effective ingredients, like rose water and aloe vera, can be bought cheaply in bulk so in this case, you really would be better off investing time in a bit of DIY.
9. Greeting Cards: 150% – 200% Markup
The card companies have played on our sentimentality – or at worst, our sense of obligation – to develop an industry based largely on expressing our feelings through pre-prescribed platitudes on pastel paper. Rather than handwriting a note and mailing it, we spend time and money to nab the ‘perfect’ card that’ll say all we want it to. From Valentine’s Day to birthdays to Christmas and everything in between, there’s a card for literally (almost!) ever occasion. You’re essentially paying for a piece of paper, ink, and a generic greeting – plus the questionable art skills. Because of their popularity, greeting card companies can mark these accessories up by 200%. This holiday season, avoid being a victim of the markup demon by nipping to the dollar store for some coloured card and stick-on decorations. Or, send an e-card…
8. Coffee: 300%
You can buy coffee at a reasonable price in any grocery store or even gourmet coffee house, but if you’re paying for the pleasure of barista service the markup is huge. You can make a cup of the good stuff for what equates to less than 50c at home, but that same cup will be over $3 at your local Starbucks. But coffee is a natural resource and, for those of you in the USA and Europe, an expensively imported one that requires manual labor – so paying a bit extra to make sure you get the Fair Trade blend seems fair.
7. Engagment rings: 300% +
Diamonds may be a girl’s best friend, but if my friend was overvaluing himself by 300% I wouldn’t be too impressed. Diamonds have this staggering markup made all the more incredible given that they’re merely glorified chunks of rock. The diamond industry is questionable at best, with companies typically importing their diamonds from cheap laborers who dig for the stones. Most of these laborers work long hours for little money so the bulk of the mark-up price goes straight into the manufacturer’s pocket. The markup for a diamond can be between 50% and 200% but the markup for a diamond ring can range from 300% to an astonishing 1000%. The cynical engagement-and-wedding money-making industry is exploiting this cash cow for all it’s worth.
6. Fountain Soda: 600%
Free refills may seem like a great deal, but the markup on sodas is shocking. Fountain soft drinks have an estimated 600% mark-up value – their made up mainly of water with carbonation and syrup adding taste. It doesn’t seem worth it, given that these fizzy sodas are notoriously unhealthy and are often cited as a leading cause of obesity. Those fountain sodas will cost you money, and your health.
5. Coffins: 900%
A necessarily in-demand market, death is a money-maker in our industrialized society. Although cremation’s an option, the majority of people in, for example, the US choose to have their loved ones buried. Coffins don’t come cheap, and you might find yourself persuaded by the salesperson that a more expensive casket is the best way to honor your loved. What they probably won’t tell you, though, is that there’s a 900% mark-up on caskets. Funeral homes can get away with this charge since it is something that the family needs to purchase. If this markup doesn’t appeal to you, you could check out Wal-mart online where they now have caskets for sale..
4. Eyeglass Frames: 1000%
This is another necessity on our list that’s been known to be exploited for money-making. Eyewear’s a facial centerpiece so it needs to fit appropriately, and be comfortable and stylish. Eyewear specialists know that clients are willing to pay good money for glasses – especially ones with comfortable, stylish frames – so they mark them up by a stunning 1000%. Most of the time, you’re paying for cheap plastic enhanced with color or equally cheap rhinestones. They’re mass produced, meaning a low cost of production and higher profits. Unsurprisingly, designer names are often attached to your specs meaning a free-for-all in the markup stakes.
3. Movie popcorn: 1275%
The cinema is known for being a world apart with its prices; outside the cinema doors, you’ll pick up a bar of chocolate at the anticipated retail price. But in the magical land of the movie theatre, that chocolate bar’s going to cost you four times the price. Typically, then, the movie theatre has built an industry on a foodstuff that’s made of some of the cheapest materials known to man. Apply the movie-madness markup and you’ve got a box of delicious sweet and salty snacks worth 1275% less than what you paid for it.
2. Prescription Allegra 3000%
Allergies are a worldwide plague and so, of course, there’s a corresponding worldwide business. Allergy medication ‘Allegra’ is a favourite of the allergy business, commonly recommended. The convenient and effective over-the-counter pill is at a premium during the worst allergy season, so the cynical Pharma company marks this up by 3000%. Brand power’s at work here, and paying this huge markup isn’t the only option for allergy sufferers. Generic options and natural remedies are available, many of which are are purportedly equally effective. As with most of the highly marked up products, this one is mass produced with relatively cheap ingredients, meaning that the bulk of this mark-up is pure profit.
1. Bottled Water: 4000%
This product has become a symbol of the consumer generation. Water, one of the most abundant resources on our planet, and plastic – one of the easiest and cheapest materials to manufacture – make this product the biggest marketing swindle the world has ever seen. Granted when you’re on the move a bottle of water is handy, when water fountains aren’t readily available. If you’re thirsty, you’ll pay for the convenience. You can expect a 4000% mark-up on that bottle of water; next time, you might think about finding the nearest tap.
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