When You Buy a Super-Expensive Beauty Product, This Is What You’re Paying For

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Call me a beauty snob (or just very gullible), but I've always assumed that luxury skin-care products are superior to their budget friendly counterparts—the higher price point must mean they're more effective and less likely to trigger my highly sensitive skin, right? But the more I witness the Well+Good beauty team raving over their favorite drugstore finds, the more I've started to question that logic. According to my extremely discerning colleagues, it's totally possible to find hard-working serums, moisturizers, and sunscreen for less than $20, and the quality of mass-market beauty products just keeps getting better. So what's really the difference between, say, a $30 retinol cream and a boutique version that costs $100?

According to cosmetic formulator Stephen Alain Ko, ingredients all play a role in the cost of a beauty product—things like sourcing, purity, and the difficulty of manufacturing a given add-in. Take green tea extract, for example. "Green tea extract is a relatively common ingredient, but the purity of the ingredient can change the cost of the raw material by many magnitudes," he says. This could be one reason why a 2010 investigation found that making a $320 jar of Crème de la Mer with standard ingredients would only cost around $20—the brand responded by saying that the sea kelp it uses is rare and sustainably sourced, rather than the more commonplace sea kelp found in lower-priced products. (Of course, in this extreme case, branding probably also has something to do with it.)

"Formulation can be a huge determining factor." —Stephen Alain Ko.

April Gargiulo, founder of cult skin-care brand Vintner's Daughter, likens this to the food industry. "The example I like to give is a tomato. Take a tomato that you might find in a fast-food chain’s sandwich and the tomato you find at your local farmer’s market in the height of season that has been grown organically on a farm that pays its employees well and employs regenerative farming techniques," she says. "The two tomatoes are spelled the same, but they are worlds different in terms of nutritional value, environmental and ethical impact, taste, and, yes, price."

Manufacturing, too, plays a pivotal role in the price of a finished beauty product. "Formulation can be a huge determining factor," says Ko. First of all, he explains, it's more expensive for a brand to develop an exclusive, proprietary formula in-house than it is to use a generic, ready-made formula from a third-party manufacturer (this process is called "white labeling" and its commonplace within the beauty industry).

In the first scenario, that additional cost is often passed on to the consumer. Creating a formula is highly labor-intensive, and the more innovation involved, the more it impacts the price. "Things like encapsulation and using formulation to enhance the stability and efficacy of an ingredient often take more raw materials, development and research time, processing, and specialized equipment to create," Ko says. "As an example, while alpha-hydroxy acid and beta hydroxy acid exfoliants are very common now, it's important to remember that we didn't always know that they were effective, or know to use them on the skin. That took time, money, research and development from scientists. So something that can be seen as common, affordable, and almost a commodity now, may not have always been." Add in specialized equipment, staff training, and the cost of running a manufacturing space, and it's easy to see how the pennies add up in certain products.

Even packaging can impact whether you pay $5 or $50 for a given product, particularly when sustainability and fair wages are top of mind. "Clean beauty brands work diligently to have sustainable packaging, and that means not using stock plastic options," says Annie Jackson, co-founder and COO of clean beauty retailer Credo. What's more, because these smaller brands can't buy the mass of ingredients that some bigger beauty behemoths can, the price for raw materials and the eventual end product climbs as a result.

The cosmetic space isn't regulated by the FDA, which means that no one is really checking to ensure that all those fancy ingredients and advanced formulas in a luxury skin care product are really doing the most for your skin.

But does this mean luxury skin care prices are always worth it? Not exactly. The cosmetic space isn't regulated by the FDA, which means that no one is really checking to ensure that all those fancy ingredients and advanced formulas in a luxury skin care product are really doing the most for your skin. "It can be difficult for a consumer to determine [how pure an ingredient is,]" says Ko. "A green tea extract that's highly purified for EGCG (epigallocatechin gallate), a powerful antioxidant, can still show up on an [ingredient] list the same as a green tea we would drink."

Plus, as Jackson points out, high-quality ingredients and boutique formulations aren't necessarily worth it if the product isn't more effective than lower-priced options and doesn't meet a real need. "Indie brands often suffer from overpricing something because they made it and it's hard work—but they are so intimately involved in the development that they lose sight of the marketability to sell it and will price it too high," she says. "If the product itself is interesting and we say no [to stocking it at Credo], 50 percent of the time it's due to price. A $90 hydrating balm for your lady parts is just not going to sell, no matter what is inside or how you made it."

On the other hand, says Gargiulo, some luxury skin care brands—namely, the ones that put clean ingredients and ethical practices at the forefront—contain benefits beyond the efficacy and safety of the product itself. "We are all waking up to the true costs of the products we use, whether that be the clothing we wear or the foods we eat," she says. "I think clean beauty reflects many of the true costs associated with the production of skin care, from ingredient procurement to living wages to sustainability considerations."

Unfortunately, there's no easy way to tell whether the real value of a skin-care product is aligned with its price. As a starting point, Gargiulo says to go to the brand's website to get a sense of "their ethical stance, sourcing philosophy, and their formulation practices." But if you're simply looking for a product that will give you results, know that lower-priced options using simple formulas and commonplace ingredients can get the job done, too—after all, thousands of positive reviews for The Ordinary's under-$10 skin-care arsenal don't lie.

Good-for-you beauty doesn't have to be expensive—check out Cover Girl's new clean cosmetics line, and find out which drugstore brands are going big on sustainability in 2020.

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