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Why is Perfume so Expensive – The Secret Unveiled

Why is Perfume so Expensive

What is the average perfume price in your closet? Around $150?

You can consider it very affordable because the price of the most expensive perfume can go up to $ 1 million.

Yes, you see it right. One Thousand Grand. Sounds insane, but it’s true. If you check the price of 10 most expensive perfume brands, the cheapest one is $ 1500.

So, why is perfume so expensive? Is it only because of fancy packaging and dazzling advertisements? Well, there are many more factors that can affect the perfume manufacturing cost.

06 Reasons Why is perfume so expensive

1. Highly Expensive Ingredients

Expensive perfumes come from expensive fragrances. And expensive fragrances are made from rare and pricey essential oils.

These essential oils come from some of the rarest and most expensive natural ingredients.

Ambergris

It is a waxy substance produced during the secretion inside the intestine of the sperm whale. Whales are endogenous species, and legally collecting this wax will be a hell of a job.

No wonder Ambergris cost $5000/kg. Some of the most expensive perfumes in the world use this for creating a sweet earthy scent. Moreover, this also keeps the smell of the perfume or cologne fixed for a long time.

Orris

Another super expensive and rare ingredient of essential oil is orris. It is collected from the iris root with the smell of violet. The fragrance and feel are very diverse in orris that includes soapy, sweet, powdery, and earthy.

 

The extract, known as orris butter, takes 3-5 years to collect. It needs to be dried and aged before any use. Per kg will cost around $3000.

Oud

Agarwood, the most expensive wood in the world, secrets resin to protect itself from mold infection. This unique resin is oud that costs around $3000 per kg.

The musty, woody and the nutty scent are very popular in the Middle East. Due to the scarcity of the resin and labor-intense collection process, oil from oud is very rare and expensive.

Jasmine

A quarter-million jasmine flowers can make an ounce of essential oil for the fragrance. Besides, a few flower species are only available at a specific season.

It is evident that, after orris, jasmine is the second most expensive floral source of fragrance.

Bulgarian Rose

This rose is only available in May in a part of Bulgaria. So, both collecting and storing are highly labor-intensive and costly. Any perfume made from this European variety of rose will be super expensive indeed.

2. Massive Marketing Cost

A report by A.T. Kearney in 2016 said perfume manufacturers spend up to a billion dollars for marketing purposes. Contrarily, the users prefer more on reviews rather than a high-end marketing campaign.

Then why are the companies wasting that much in those pricey campaigns? First, it’s a matter of fame and glamour. Secondly, you are paying for the campaign price by paying high prices.

The marketing campaign includes TV commercials, digital promotion, advertising in magazines, billboard placement, and whatnot. If a celebrity endorses the product, the cost will be sky-high.

Celebrity endorsement comes with a licensing fee. The sports or film star will take away 5 to 10% of the sales for licensing their name with the product.  This cost can go up to $3 million.

3. Luxury Packaging

Cheaper perfumes may come in modest-looking containers. However, some of the luxury perfumes fit inside gold and diamond made containers. Obviously, you are going to pay for that lavish packaging.

Both the perfume bottles and the box ensure the safe storage of the perfume for more extended use. Nevertheless, perfume makers use the bottle and box to demonstrate the appeal and uniqueness of the perfume.

Typically, high-end perfume lines come in heavy bottles and boxes. It makes the user feel more confident and generates a sense of satisfaction.

The most expensive perfume bottle is made for DKNY Golden Delicious. Martin Katz designed this bottle with 2,909 precious stones, including 2,700 white diamonds, 15 pink diamonds, 183 yellow sapphires, and many more. No wonder the price is only $ 1 million.

4. Exclusivity

Rarity or uniqueness is a costly business in the perfume industry. It plays a vital role in the upscaling of profit margin.

Will you pay a few hundred bucks for the smell of cheap perfume? Maybe not. But you will pay it for the limited edition of your favourite brand. This is how exclusivity is leveraging the price.

Fragrance lovers will be happy to pay for the rare scents. Besides, the overall marketing and packaging strategy creates a sense of pseudo-panic—the panic of losing the rare chance of having the fragrance.

All these factors boiled down into one thing-you are paying much higher for a rare and limited edition.

5. Perfumer’s Payment

It’s not the brands that make the perfume. Perfumers do the job. Just like a ghostwriter, they remain anonymous. Perfumers typically work for the international fragrance companies like International Flavour and Fragrance (IFF), Firmenich, and Givaudin.

These three companies control 50% of the perfume market with a 300 to 400% profit margin on their fragrance formula. For a $10 formula, these perfumer companies will charge $40 to the big brands.

So, who will pay for the extra $30? It’s you, who else.

6. Retailers Markup on Perfume

Don’t forget about the retailers in the malls, department stores, and speciality perfume shops. They must cover staff salaries, utilities, rent, in-store marketing, and many more. So, they will also mark up the price between 20 to 80%.

If you found the same perfume at two different prices in two different stores, it’s the markup margin that makes the difference. These retailers are entitled to have a piece of the actual profit.

Conclusion

The journey started from the resin embedded barks or secretion from the sperm whale’s intestine and ended in a million-dollar container.

Throughout this journey, both the natural ingredients and outer appearance has changed a lot. These combined changes are the factors that are upscaling the price of perfume.

It may sound insane, but you are paying only $2 for the original fragrances out of each $100 of perfume price. The rest of the $ 98 is the cost of making the perfume exclusive and extravagant.



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