While Buying Something Expensive, Have You Ever Wondered What the Actual Price of That Product Is? Sometimes It’s Crazy.
Here’s a riddle for you Aluxers… What costs nothing to make yet breaks your bank account when you need to purchase it? High profit margin businesses. Can you guess which ones?
It might be the first time you’ve got dozens of answers for a question, so we’ve selected 15 products that bleed you dry!
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It’s clearer with visuals how these products aren’t worth the buck you’re spending on them, here’s the video version of this article:
With that out of the way, let’s jump right into the article.
Have you ever held a baby grow in your hands and thought, how is it possible that a person can be this tiny and then, how is it possible that something so small can cost so much money?
Baby clothes have a huge mark-up, and it can seem insane to spend such exorbitant prices on such tiny items of clothing. But, new parents, grandparents, well-meaning friends and family, will gladly shell out $30 for a scrap of fabric that’s going to cover baby for 5-minutes.
There are legitimate reasons as to why companies price baby clothing higher than regular clothing. The fabric is usually softer and of higher quality because of baby’s delicate skin.
Brand name clothing, according to howstuffworks, can see increases of up to 300%, but a general rule of thumb is keystone pricing, which simply doubles the cost price.
Buying gently worn baby clothing is a great option for new parents, as you can still get beautiful, branded clothing at a fraction of the cost.
We just mentioned the huge mark-ups on branded clothing and falling victim to those huge hikes are designer jeans.
Even “cheap” jeans are subject to huge mark-ups, including those $21.99 ones from Kohl’s who have a 112% mark-up. If you bought jeans from True Religion, you would be paying a 300% mark-up.
Isn’t it funny that this item of clothing was initially designed for miners, and yet here we are happily spending hundreds of dollars for the perfect fit?
Also called Epinephrine auto-injectors, these little lifesavers may save your life, but your pocket will take a beating.
As reported by nbcnews.com, Mylan – a distributor of the epi-pen – were selling 2 epi-pens for $600. Industry experts confirmed that each pen would not cost more than $30 to make.
As Adam Fein, president of Pembroke Consulting, said, “Whether you like it or not, it’s the way the world works.”
Mylan is just one of the high profit margin businesses in the medicine industry that came under fire for selling pens at sky-high prices. Their products EpiPen or EpiPen Jr. package retail between $650 and $700 for two.
Mylan has since released a generic version, which you could get for between $150 and $400, depending on what discounts or coupons you have available.
From one pharmaceutical rip-off to another…
Aluxers, explaining the high profit margin businesses of prescription drugs in two words is easy… Monopoly Pricing. We just mentioned the excessive pricing of the Epi-pin, and here’s another example provided by Time.com: between 2012 and 2019, AbbVie’s rheumatoid-arthritis drug Humira increased from $19,000 a year, to $60,000 a year!
Name brand drugs increase exponentially each year. At first, the excessive pricing was attributed to innovation, research and development and the discovery of new, more efficient drugs. But that theory has since been dismissed.
A study published in the journal Health Affairs claims that lack of competition and regulations in the US is the main cause for the exorbitant prices attached to prescription drugs.
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Time to get some liquid refreshment…
Aluxers, we’re not even going to go into all the controversies when it comes to where spring water really comes from, but we’ll just share one statistic with you. Ecowatch.com confirms that 64% of bottled water comes directly from the tap.
Consumers are spending in the region of $10 for a gallon of “purified” water, which you can either get for free or nearly free from your taps. That’s a 2,000 % mark-up.
You must wonder, how they get away with this? Predatory marketing practices… consumers truly believe that their tap water is inferior, with germs living in there, and makes one sick. And yes, there are some places that do have this problem, but in most places, it’s perfectly ok to drink tap.
Pre-packaged water costs American households roughly $16 billion a year and we won’t even go into the damage it’s causing the environment. We do however, highly recommend you watch our video, 15 Things You Didn’t Know About The Waste Management Industry for a deeper look into what happens to all those bottles.
What ultimately are eyeglass frames? A small piece of plastic, metal or wood shaped to hold 2 pieces of glass. Is the process vastly different from say, shaping a curly wurley plastic straw?
As published in a column in the LA times, under the heading, “How badly are we being ripped off on eyewear?” E. Dean Butler, the founder of LensCrafters, says that China is responsible for manufacturing the majority of frames bought in the US and there you could pick up Warby Parker level of quality, for between $4 and $8! If you’re willing to fork out $15, you’d get designer-quality frames, like you’d get from Gucci.
The average cost of frames is $231 a pair, so why are we paying 20 times the price of what it costs to manufacture? Again, it all comes down to monopoly. Luxottica is the Italian company that owns and holds the licences for Ray-Ban, Oakley, Michael Kors, DKNY, Coach, Burberry, Versace, and Chanel. It can’t very well compete with itself, which is why you’ll need to sell your soul to afford a pair of decent frames.
Actually, we take back what we said about selling your soul for eyeglass frames… you’ll need it to study!
Besides the fact that textbooks have become one of the high profit margin businesses, they’re also changed every year or two making it near impossible for students to resell or pass on.
As if students aren’t already paying insane prices to study, course material and textbooks keep them in debt several years after their studies have finished.
43% of students have forgone meals to save money for books, and 85% of students confirmed that textbooks were a huge financial burden. This survey was conducted by Morning Consult, on behalf of Cengage, one of the major college textbook and digital content companies. So, what’s the deal when we all know that printing doesn’t cost an arm and a leg anymore?
Some cite the decline of textbook sales ups their prices, while a more plausible reason could be that the author’s work is valuable. However, like an e-book can be bought for a fraction of the cost, while still making money for the author and being better for the environment, with time – hopefully all textbooks will be available this way and not a select few.
Pre-Cut Fruit and Veg
Don’t get us wrong Aluxers! Just because the prices of pre-cut fruit and veg shoots up, it doesn’t mean we will stop buying it. Convenience does cost after all.
But here’s the irony of this price hike. The reason why that particular fruit or vegetable was cut up and peeled is because it was either bruised, misshapen in shape or close to being tossed. So, it gets cut and packaged, prices hiked up and then sold.
It’s way more profitable than chucking it, and again, we’ll still buy it for sheer convenience. I mean, Aluxers, can you recalling chopping and peeling a butternut? It’s hard work and for a little extra, someone will do it for you.
Alcohol at Bars and Restaurants
Aluxers, do you know the cost of a bottle of decent whiskey? Or the price of a good red? Think about how much more affordable it will be when it’s bought in bulk… considerably enough that it should make its way to the list of high profit margin businesses!
But, if you buy a glass of decent red wine in a restaurant or bar, you could pretty much get an entire bottle for the same amount.
You’re paying more for the experience than the actual beverage.
An article by the daily mail claims that bottom-shelf mixed drinks get a 456% mark-up, draft beer 355%, house wine a 350% mark-up, a top shelf spirit a 300% increase and a bottle of wine, 150% increase.
Would we opt not to order having this information on-board? Bar tender top me up please!
Urban Dictionary featured a contribution by zarquon who said, “the most ridiculous markup since bottled water. Bottled water puts a fraction of a penny worth of water in a 2 cent bottle and sell it for a buck. Crocs, on the other hand, mold a few cents of plastic (with no water inside) into something kinda resembling a shoe, then sell the damn thing for $30.”
Curved Mirror stated, “they are neon rubber shoes that cost $.50 to make and sold for $50.”
And we couldn’t have explained it better than contributor, Nolton7 did when he said:
“Costing pennies to make, then marked up by about 5,000%, these “shoes” make you look like a dumbass.”
Suffice to say, they cost nothing to make – yet make sh*t tons each time someone sells a pair!
In times of crisis, there will always be people that cash in with some high profit margin businesses and its no different with Covid. Nottingham-based Boots found themselves making headlines on nottinghampost.com when their masks were selling at a 500% markup!
The usual retail inflation in this case should have been 2.1% and they took complete advantage of the crisis and the fact that people, by law, must wear face masks.
Manufacturer, Lyncmed Medical Group, sells them for 12p a mask!
New Zealand faces a similar problem where shoppers have reported that they’re paying $100 for 50 face masks, that’s $2 a mask! Prices increased exponentially when the country moved from level 2 to level 3, with some pharmacies charging $3 a mask.
Aluxers, it’s sad but true, but the moment you mention that whatever you’re ordering is for a wedding, people see dollar signs.
Of course, weddings incur a lot of additional costs that most couples don’t anticipate. Things like marriage licence, out of season flowers, even extra charges for cake cutting!
But compare the prices of ordering a 3-tiered wedding cake to ordering a 3-tiered cake for a random birthday party. Wedding programs see a huge price-hike. Hiring a photo booth for a wedding compared to a more run of the mill event costs more. Backdrops are a huge rental expense when used at weddings. And even venues hike up the price when they know it’s for a wedding.
It’s perfectly ok to want all the beauty that comes with a once-in-a-life time event, but there is a lot you can make and do yourself and save yourself a great deal of unnecessary spending.
Remember this though, “A wedding is a party, not a performance. If at the end of the day you are marrying the one you love, then everything goes perfectly.” We stole that off Pinterest.
While most people plan their wedding on a budget, there are some who love to go over the top and spend tons on the wedding dress alone. Check out Most Expensive Wedding Dresses.
Remote Keyless Systems
Aluxers, if you’ve ever lost your remote key, you would have probably shed a few tears because the price of replacing one is frightening! That is exactly why its one of the most enduring high profit margin businesses.
We know technology comes at a price, but some cost as much as $800 to replace. Graham Eves, a Merimbula based locksmith, affirms that replacing these remotes has ‘got to an absolutely ridiculous price’.
Unfortunately for us, car companies make money from us losing our key. They have no competition. It’s not like we can head down to the local hardware store and just grab another one. We have to program them to work with our exact vehicle and computer.
So Aluxers, best to keep your key in a safe place unless you have a few hundred dollars lying around.
Takeout Coffee / Tea
We completely understand the need for your daily caffeine from your favourite spot, but you might reconsider going as often as you do when you learn that the mark-up is in the region of 817%!
Research shows that a regular coffee will cost around 30 cents, including the cup. What are you paying for your coffee? Probably anything from $2.50 to $3.50.
Before you start fretting about the mark-up, remember that the shop needs to pay rent, staff, advertising, electricity, etc etc…. so, mark-ups are not just about making tons of cash, but also to cover expenses.
Aluxers, buying a mattress is a huge decision that can cause quite a lot of confusion. And sometimes disagreement between those that have to sleep on it. It’s a huge investment, and it’s not the kind of purchase you can easily replace if it’s sh*t, because they can cost thousands of dollars.
Mattresses have excellent profit margins, and with low overhead costs, can make a retailer a fair amount of money. Most mattress shops are inside warehouses and staff work on a commission-based salary. Then take into account that a $3,000 mattress costs roughly $300 to manufacture, you’re looking at a 900% mark-up.
But as Canadian reality television personality, Jonathan Scott says:
“If you want to have a good sleep, you have to have a good mattress.”
Which products do you know make high profit margin businesses? We’d love to hear from you!