Wednesday, May 23, 2012

How Much Does Your Perfume REALLY Cost?

Oh I know people are going to just love this blog entry (can you detect the sarcasm)....

There are some products we don't mind shelling out the big bucks for and perfume/cologne is one of those items. A man once told me that if you smell good women will like you, and the same goes for women. There's nothing better then walking past a woman and the ever so subtle hint of her perfume gently caresses your nose, prompting you to turn around to that woman who just made your day, but I digress. Daily Finance recently put out an article that may break the hearts of some as they find out exactly how much it costs to produce a 3.5 ounce $100 bottle of perfume...but not just any perfume, a "celebrity" bottle of perfume. Get ready for the ride.....

[Bottle: $6 

The perfume bottle itself is a meaningful contributor to the cost of the fragrance, especially as some bottles are veritable sculptures, expensively designed by commissioned artists, the CEO said. Indeed, perfume bottles have a noble history as objets d'art -- to the point that they have been the subject of museum exhibitions. 

Packaging: $4

Typically, this includes the bottle's package, as well as collateral material for the department store counter, such as testers and displays "that are all part of an integrated presentation scheme," said the CEO.

Marketing: $8
All the legerdemain that goes into creating a perfume's mystique, particularly for a celebrity-backed fragrance, carries a heavy price tag. The marketing-magic machine includes everything from department store marketing at the point of sale to the media blitz: "scent strips in magazines, outdoor ads on billboards and bus shelters, and TV advertising," the CEO said.

While the retailer and supplier typically split the cost of TV spots, all the other marketing costs are usually paid by the manufacturer.

But when marketing a fragrance -- as opposed to fashion or accessories -- seeing isn't always believing, Karen Grant, vice president and senior global industry analyst for the NPD Group, tellsDailyFinance

A shopper might instantly respond to the aesthetics of a handbag she sees in the store or in an ad, for example, which can prompt a sale. But before they'll be convinced to make a perfume purchase, consumers must "encounter the scent" via promotional ploys like testers or scent strips in magazines. And all those things jack up marketing costs, she said. 

Sales Commission: $6 

The sales people at department store beauty counters work on commission, which also figures into the price of the fragrances they sell. Typically, they are paid by the beauty supplier, as opposed to the retailer. 

Licensing Fee: $4 

When a perfume is a celebrity label, and so many of them are these days, the star gets a royalty for the use of their name, likeness and participation in promoting the product.

Manufacturer's Overhead: $15 

A big chunk of the perfume price goes toward the manufacturer's corporate overhead -- everything from the salary of the brand's CEO to corporate office expenses. And of course, paying for the chemists who produce the scent is factored in as well, the CEO said. 

In the case of a celebrity fragrance, the star or product development gurus articulate their concept. Then companies like International Flavor and Fragrances and Givaudan, often working on contract for the fragrance manufacturer, produce scents based on that input, which then go through a selection process.

The journey from concept to final fragrance is not unlike how a food manufacturer settles on "a recipe for chicken soup," the CEO said.

Manufacturer Profit: $15

This figure is an estimate of what the retailer profits from the fragrance. (Not bad.)

Retailer's Corporate Overhead: $25 

This is the same as the manufacturer's corporate overhead, excluding the cost of the chemist. 

Retailer's Profit: $15

The is the profit the store generates from the perfume after corporate expenses. (Also not bad.)

And Finally ... The Juice: $2

The actual liquid concentrate, which includes a mixture of distilled water, alcohol and flavorants, is the least valuable part of that bottle of celebrity perfume.
And while the mixture of exotic flavorants can be expensive, "it's introduced in very small concentrations by the brewmeister who created the scent," the CEO said.] source:

 Please read the whole article in its entirety here!

Now that your blood pressure just shot through the roof take a look at this to see the world's most expensive perfumes!  

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