Why are designer fragrances much cheaper than clothes?

[lair77]

Many designers will sell clothing, suitcases and handbags for thousands of dollars while the fragrances are in the $50-100 price range. I just realized that fashion lines is basically a huge marketing campaign for the products they sell to the middle class. They lose money on the fashion shows. And while they get money by selling a $7000 watch, it's a limited audience. They make a sizable portion of their profit from selling fragrances. Or other products that could be sold in the <50% range (i.e. lipstick, sunscreen, etc).

Ferrari makes more money selling merchandise than it does from their cars.

 

[hednic]

They make a sizable portion of their profit from selling fragrances.

Big market for that commodity.

 

[Lomaniac]

Seem to have answered your own question. The high dollar items create the mystique, the mass market items create the cash flow. Designers today have almost nothing to do with the origins of fashion, where bespoke clothing and actual rarity drove pricing. Now there's really not much sense to the pricing other than the idea something cost a lot because reasons. Mass produced, identical goods available globally without differentiation. Oftentimes produced alongside other brands using the same materials, equipment, and employees. They're expensive simply because the prices are high, but that only means bigger margins, not necessarily higher quality. Fragrance is just one of the cheaper product lines that follows this identical process.

 

[lair77]

Yes, designers like Burberry create an illusion of scarcity by burning their products if they dont sell.

If they make 10000 handbags and they only sell 2000 in a given year, the other 8000 could get burned.

 

[ultravisitor]

Yes, designers like Burberry create an illusion of scarcity by burning their products if they dont sell.

If they make 10000 handbags and they only sell 2000 in a given year, the other 8000 could get burned.

That's Louis Vuitton, not Burberry. Burberry has an outlet in east London where they sell the products that don't sell as well. Louis Vuitton does not put items on sale or have outlets, hence the destruction of unsold goods.

And I doubt many companies, especially one as successful as Louis Vuitton, are so bad at forecasting that they would end up with 80% of a certain product needing to be destroyed because of lack of sales.

 

[PStoller]

It works both ways. The mass-market items are cash cows, but also aspirational items to draw in future high-end customers.

As for which companies destroy unsold luxury merch, the answer is, most of them have done so—including Burberry, which famously got called out for destroying $37M worth of items in 2018. (Not just luxury goods companies; Amazon and Nike do it, too.) In response, Macron called for an end to the practice, which thus becomes illegal in France this year. I don’t know if that has any bearing on merch in the US.

 

[GoldWineMemories]

It works both ways. The mass-market items are cash cows, but also aspirational items to draw in future high-end customers.

As for which companies destroy unsold luxury merch, the answer is, most of them have done so—including Burberry, which famously got called out for destroying $37M worth of items in 2018. (Not just luxury goods companies; Amazon and Nike do it, too.) In response, Macron called for an end to the practice, which thus becomes illegal in France this year. I don’t know if that has any bearing on merch in the US.

Really? It's illegal now huh? Well, I imagine France is only so large a market. They'll probably just export the excess clothing to be destroyed in America or China. Sad result of globalism.

 

[PStoller]

Really? It's illegal now huh? Well, I imagine France is only so large a market. They'll probably just export the excess clothing to be destroyed in America or China. Sad result of globalism.

Possibly. I don’t know if that’s also illegal.

Or, if so, enforceable.

 

[Cook.bot]

It works both ways. The mass-market items are cash cows, but also aspirational items to draw in future high-end customers.

"Doesn't this $18,000 unwearably avant-garde suit look fantastic on our catwalk? Come on into the store and we'll sell you a $400 pencil skirt."

 

[ultravisitor]

"Doesn't this $18,000 unwearably avant-garde suit look fantastic on our catwalk? Come on into the store and we'll sell you a $400 pencil skirt."

Hell, $18,000 is a bargain to some people. In the late 90s, a lot of the stuff shown on couture runways (the avant garde stuff) from houses like Givenchy was on order for close to $100k. I've no doubt it's much, much more expensive now. Nowadays $18k might buy you a bag or two from Hermes. MIGHT.

 

[PStoller]

Nowadays $18k might buy you a bag or two from Hermes. MIGHT.

Depends on the bag and the material. You could have change left over from two of the less costly bags. If you want just one crocodile Birkin, though, you’ll need to dig deeper into your pockets.

 

[Ken_Russell]

Tending to second the opinion about even greater turnover, margins and/or sales figures on many separate bottles of comparatively affordable fragrance, compared to higher value but fewer sales of pricier haute couture, jewelry, watches etc.

 

[imm0rtelle]

Many designers will sell clothing, suitcases and handbags for thousands of dollars while the fragrances are in the $50-100 price range. I just realized that fashion lines is basically a huge marketing campaign for the products they sell to the middle class.

I think there is a danger in looking at just the price, and ignoring the item that is being charged at that price. I wouldn't say that the fragrance being charged $50-100 is cheap.

They lose money on the fashion shows.

While true, this is a very obtuse way of looking at why they have fashion shows, and the purpose of a fashion show. If the fashion show hurt the company more than it benefited the company, they will stop.

And while they get money by selling a $7000 watch, it's a limited audience.

That's why they release a lot of different products to cater to a range of customers. They want to sell something to almost anyone.

They make a sizable portion of their profit from selling fragrances.

The raw materials are probably in the lower end of the single digit range. If you found out how much they're overcharging on fragrances, it will boggle your mind. The fact you feel comfortable paying what they charge is a testament to their marketing prowess. Brands are raising the prices of their fragrances regularly. They charge as much as they can get away with.

 

[Sandy]

I have a very simple reply - maybe wrong. But watching our Hungarian newly-rich class, what matters is it should be visible. A watch, a cloth, a bag, these all can be photographed, these show verbatim who you are, THAT's what these people pay for. A smell around you can't be seen in a magazine.

 

[StylinLA]

Fragrances are much cheaper because they are easier to produce and cost a lot less. There's a lot of labor involved with clothing, handbags, etc.

The cost of development, packaging and marketing for a fragrance are way more money than the actual cost of the juice. People who get hung up on knowing the actual cost of the liquid in the bottle of a fragrance relative to the price they must pay have a tough time.

Fragrances and cosmetics are HUGE profit margin items.

What gets very interesting is that while a company like Creed or Louis Vuitton may actually use more expensive aroma chemicals/materials, the actual cost difference would be laughable if we knew it.

 

[ultravisitor]

Depends on the bag and the material. You could have change left over from two of the less costly bags. If you want just one crocodile Birkin, though, you’ll need to dig deeper into your pockets.

That's why I said "might".

 

[orestes13]

Because hardly any people wear perfume, while everybody wears clothes. Also, the most popular designer fragrances with advertising backing them aren't cheap at all.

 

[speckmann0706]

I’d much rather wear the excellent fragrances than the clothes. The exception would be Ralph Lauren I find their long sleeve dress shirts and shirts in general to be excellent quality and the logo is phenomenal.