The Price of Luxury Perfume

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Last year the weekly French magazine Le Nouvel Observateur published an interesting article about perfume creation called La Guerre des Nez (The War of the Nose). It featured a candid interview with perfumers Dominique Ropion and Anne Flipo and provided a table outlining the price breakdown for an average prestige brand perfume. The revelation is that in a bottle of perfume that costs 100 euros, the value of the fragrance concentrate is only 1-1.50 euros, or about 2-3 dollars. The rest is for marketing and distribution: 19.6 euros for value added taxes, 36 euros for distribution, 25 euros for ads and so on. I know all too well the economics of making a perfume, but seeing this table was still a shock.

On the face of it, why would this be so surprising? Everyone knows about the hefty markups on designer clothing or premium wines. As the fragrance business became the major money maker for fashion houses, it started to follow the logic of profit margins. It would be naïve to expect anything to the contrary. However, it is a rude awakening to realize that the cheapest thing about a bottle of perfume is the element that has any true significance. The ad may attract my attention and the bottle may look pretty on my dresser, but the perfume is what touches my skin, becomes a part of my aura and my own scented signature. The fact that this is worth less than the paper on which the perfume name is printed simply does not go down easily with me.

The topic of prices in the fragrance industry is still one of the most sensitive and confidential. Although reports like those published by Le Nouvel Observateur appear in the press, the conversation is restricted mostly to trade journals and conferences. Professionals decry the current state of affairs, remarking that if in the 1950s a perfume brand would be prepared pay around $300 for a fragrance (per each kg of fragrance oil), today this sum has been whittled down to the single digits.

It is a given that the contemporary realities of retailing, distribution and raw material availability prevent most brands from spending hundreds of dollars on perfume. However, is it completely unreasonable for them to allocate enough money so that the fragrance concentrate value in Le Nouvel Observateur’s table registers not $3, but say, $6? If in the past perfume was a precious luxury, today it is as ubiquitous as mouthwash and deodorant. The only issue is that the retail prices keep rising without a commensurate quality increase.

Of course, the price of fragrance concentrate is not the only measure of quality. It is also the creativity, the originality and the uniqueness captured in a drop of liquid. The issue of quality, however defined, is really the crux of the matter. The main problem I have with today’s perfume launches in all areas of the market, niche included, is that every brand tries to pass their product as a fine vintage, whereas most fail miserably. As a consumer, I cannot rely on prices to tell the gems from junk, as the latter is just as likely to be luxuriously priced and exclusively distributed. Criteria such as the newness, a fancy brand name, packaging or advertising do not help much either.

The only way to tell quality in perfume is to smell it. I do not mean for this answer to appear flippant, because it is a fiendishly complex subject. By way of example, why do the perfumers in training study the highest quality aroma materials that their school can afford? Why does a perfumer trainee wishing to work on functional products nevertheless learn the nuances of floral absolutes and sumptuous amber synthetics? The idea is to form the base line and the sensitivity to quality early on. As fragrance consumers, we do not have many opportunities to train our noses by smelling precious essences, but there are other ways to learn about fragrance quality and the ways to tell the wheat from chaff. In the second part to this article, I would like to share my personal guidelines on how to spot a quality perfume.

Part 2: Value for Money, Quality and Other Perfume Musings

Image: Diamonds via 123rf stock images.

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48 Comments

  • Vanessa: Having worked in marketing myself, I was fascinated by this article. There was a bit of a cost analysis of perfume retail prices in The Perfect Scent, and I am always on the lookout for more such nuggets!

    It saddens me to think of the small percentage of the price accounted for by the formulation itself – I guess I cut the brands a bit of slack for all the creativity and development costs involved and assumed that was a reasonable chunk. Is R & D separately itemised? I would be interested to know. February 22, 2012 at 9:09am Reply

  • zazie: The price breakdown of fragrance is a very interesting (and discomforting) topic. Thanks for the info!
    As these are average values, I would be extremely curious to understand the impact of concentration, presence of expensive naturals in the formula, etc… on the cost of the juice. For example, I suppose n.5 extrait (the juice before ads, distribution, etc.) might cost several times more than, say, narciso Rodriguez for her…
    One might also assume that an “industrial” blending process impacts (favorably) on the cost of the juice with respect to the indie perfumer who mixes raw materials by hand.
    Does the 3$ cost take into account the “creative” expenses? Dominque Ropion making hundreds of trials for vetiver extraordinaire or carnal flower must have an impact on the price, I suppose. But how much? A couple of dollars? February 22, 2012 at 9:12am Reply

  • Victoria: The creative process is not taken into account by the price. At all! The client does not pay for perfumers’ time, for market tests, for research, etc. Only for the raw materials used in the fragrance concentrate. Of course, the oil houses factor some of these things into their raw material prices, but by and large, that’s how it works.

    The high prices of indie perfumes is not so much to industrial vs manual blending, but because they pay much more for their raw materials, packaging and other things.

    And yes, the breakdown above is for an average new launch. The spending by brand varies, of course. Some big brands definitely spend much more than $3, and you can smell the difference. February 22, 2012 at 9:26am Reply

  • Victoria: Oh yes, now I remember that chapter in The Perfect Scent. Of course, it is just an average figure. You know, on some level, the price itself and even the percentage does not matter as much as the fact that in the sea of new launches, the number of truly distinctive perfume is small. But it is a part of the whole picture. Chanel No 5 can’t be made on a single digit budget! February 22, 2012 at 9:37am Reply

  • Austenfan: This saddens me. I knew it was bad, not that it was this bad though. Makes me feel better hunting for bargains on the Bay etc. I’ll be very interested to read the next installment of this article, as I don’t really know how to determine quality in perfume. February 22, 2012 at 10:38am Reply

  • Nina Z: Brilliant post! Thank you so much for this. And this explains to me why some so-called high end fragrances smell very synthetic to me, even cheap. I very much look forward to the second half of the post. February 22, 2012 at 11:08am Reply

  • bloody frida: Victoria, how IS the perfumer compensated? February 22, 2012 at 11:11am Reply

  • Tulip: The sweet spot – high quality and reasonable price!
    Enquiring minds want to know. February 22, 2012 at 11:25am Reply

  • Victoria: The companies that employ perfumers have different compensation schemes, but as a rule, a perfumer is paid a salary and a bonus based on their success in winning perfume projects. February 22, 2012 at 11:37am Reply

  • carmencanada: I imagine the Nouvel Observateur found those figures in Elisabeth de Feydeau’s “Le Parfum”, where they are tucked in the dictionary under the “prices” entry: a real eye-opener!

    I think it was someone from Now Smell This who tested perfumes full of beautiful materials versus anorexic designer juices with a group of “civilians” and even a non-iniate could tell the difference when doing a side-by-side test. It was a telling experiment, but sadly a lot of people don’t have direct access to the better stuff… February 22, 2012 at 12:11pm Reply

  • RusticDove: Fascinating, albeit depressing, article. Extremely well written to boot. Thank you! February 22, 2012 at 12:12pm Reply

  • Victoria: I don’t know if I will reveal any secrets, but I’m happy to share what I’ve learned. February 22, 2012 at 12:57pm Reply

  • Victoria: It is very confusing to wade through the available selection at the fragrance counter. Some fragrances smell expensive and interesting, others (priced similarly or more) smell like something that should belong in a bottle of laundry detergent. It really doesn’t make sense. February 22, 2012 at 12:58pm Reply

  • Victoria: I am smelling Parfums de Nicolai Sacrebleu right now, and it is hitting the sweet spot for me! February 22, 2012 at 12:59pm Reply

  • Victoria: I’ve seen this table in other publications previously, and yes, it always shocks me. Will check Le Parfum for more details later.

    On your second point, it is so true! A side-by-side test is so revealing. February 22, 2012 at 1:03pm Reply

  • Victoria: Thank you! Glad that you found it interesting. I didn’t mean to depress, but you know, I find the degradation of quality to be really disheartening. It makes me very sad to see great house launch fragrances that really do not deserve their glorious names.

    But ever an optimist, I am even more thankful for those who actually care for artistry and quality of perfume. Thankfully, there are brands like that on the market. February 22, 2012 at 1:06pm Reply

  • mals86: V, I came by and read this earlier and got so darn depressed that I had to go fortify myself with some Parfums de Nicolai Le Temps d’une Fete before coming back to comment.

    I recently did some test-driving at the local mall perfume counter (for Ari’s Top 20 Bestselling in the US, based on your list), and came away disheartened by how synthetic everything seems to smell. Even the higher priced things (and my mall is distinctly lowbrow – the “luxury” perfume available is Chanel) smelled like labs instead of gardens. I think it is particularly noticeable with floral notes, though maybe that’s because I’ve been spoiling myself with florals from indie perfumers like DSH and SSS and Tauer, and with vintage florals from a day when even cheap-end fragrances had real floral essences in them.

    I have been whining about how expensive the By Kilian fragrances are, but at the very, very least, the florals smell like florals instead of chemistry lab (I scraped through college chem with a B, and I ain’t goin’ back, no way).

    I did just receive a publisher’s copy of Denyse Beaulieu’s book The Perfume Lover, along with a sample of the orange blossom scent that L’Artisan will be releasing this summer – based on her collaboration with Bertrand Duchaufour. It, too, smells like there are actual orange blossoms in the formula. I don’t demand that my florals be all-natural, but I think I’m less and less interested in anything that doesn’t contain SOME real flowers! Entire generations will grow up thinking that peonies smell like laundry detergent… it’s so sad. February 22, 2012 at 1:49pm Reply

  • Victoria: >>>Entire generations will grow up thinking that peonies smell like laundry detergent… it’s so sad.

    Thank you for putting it this way. The trouble is that the perfume is seen as a frivolous luxury, so there is nothing in place to safeguard the quality. And the fact that the brands do nothing to educate the consumers complicates the issue further. Of course, if people could compare, maybe they would reject half of the things that appear in those Top 20 lists.

    The florals suffer the most, I agree. The floral absolutes are so incredibly expensive that it makes me appreciate Chanel more and more for maintaining its field of jasmine and roses in Grasse. February 22, 2012 at 2:06pm Reply

  • sweetlife: People find this fact very hard to get their minds around. I had a little argument about it with one of my editors before she let me keep my reference to it in the book!

    I agree that the problem is people’s changing perceptions of what something is supposed to smell like. Mandy Aftel has often remarked that people are often baffled to find out what raw oils actually smell like, they’ve become so accustomed to the synthetic version. And what really worries me is that the chains of production will break down–that the farmers growing the flowers (often in relatively poor countries) will have no one to sell their wares to and will turn to other crops, including illicit ones like opium poppies and coca leaves.

    I don’t feel completely depressed about it, though. There are so many delicious things out there even in the current price structure. Imagine what would happen with a double digit budget! February 22, 2012 at 2:22pm Reply

  • Victoria: Reference to prices, you mean?

    I actually do not think that there is a qualitative different between a natural rose and a synthetic rose. They are apples and oranges to me, and they serve different purposes.
    I just do not want to be charged the price of a diamond for something that actually costs more like a cubic zirconia. February 22, 2012 at 2:34pm Reply

  • bloody frida: Thanks for this info, V. Yes, this is depressing. Every time I splurge on a bottle of perfume, my immediate thought is that I’m supporting the artists…I guess I am, in a way, but not quite the way I naively thought.

    :( February 22, 2012 at 2:40pm Reply

  • Victoria: You are, but maybe indirectly with some brands. :)  February 22, 2012 at 2:43pm Reply

  • sweetlife: Yes, the price of the perfume vs. ads/packaging. I was using the numbers Chandler Burr (and I think Luca and Tania, too) mentioned, the ratio of cost, just in passing, and with much qualifying, but my reader did not want to believe me.

    You know that I am, as you once said so well, an agnostic on the question of natural vs. synthetic, but I think people forget what real flowers smell like, and what real strawberries (ripe ones!) taste like, and so on…that’s a real loss. But one that I suppose perfume can’t really address. February 22, 2012 at 4:36pm Reply

  • Victoria: Oh, I see what you mean, and I completely agree. That’s a loss, a side effect of the way our agribusiness and the food retailing is structured. Or maybe, the side effect of anything done on a large scale… And here we are, back on the topic of perfume business. :) February 22, 2012 at 4:42pm Reply

  • Undina: I read a long time ago about the actual cost of prestige cosmetics so I just always assumed that the same was true for perfumes as well.

    To tell you the truth, I’m not sad about the situation. Whenever anything stops being a luxury item and becomes ubiquitous the quality inevitably goes down – look at cars, hotels, transportation, resorts. And the list can go on. And I wouldn’t be too upset about the mass perception: a century ago most people had no access to any perfumes – good or bad, since those were a luxury not affordable to them. So it doesn’t really matter what their modern counterparts think of a modern perfumery. As long as there are Amouage, By Killian, Frederic Malle, etc. to fill the niche (no pun intended ;)). February 22, 2012 at 6:57pm Reply

  • Victoria: Thank you for your input! I guess, I just long for more honest, good-quality fragrances that don’t cost like the niche perfumes. Which is why I am always delighted to find something like that at the department store or Sephora. *wearing Knize Ten today, a wonderful $29.99 TJMaxx find!* February 22, 2012 at 7:08pm Reply

  • annemariec: Oh but I think cheap perfume has been around for a long time, like cheap lipstick and face powder. Admittedly if people could hardly afford to feed themselves they are unlikely to be buying perfume. But archeological digs of former slum areas in inner cities quite often reveal scent bottles and cosmetic jars and so on. It is just that brands have not survived and we don’t know about them now.

    It always amuses me that the fragrances that Grossmith has revived – Phul-Nana and so on – and now market as luxury items at enormous cost were once disdained as ‘perfumes for servant girls’! February 22, 2012 at 9:36pm Reply

  • Victoria: Your comment reminded me of stories my friend shared about working for women's charities targeting women living in extreme poverty in India. She said that first, they would ask for some food for their children and second, for the moisturizer/cosmetics! And my great grandmother shared how during the WWII, she and her friends would split and savor a single bottle of perfume. An elderly aunt who served in the army (also the WWII era) admitted to always carrying a lipstick. "It boosted my morale," she would say.

    The desire to feel beautiful and to indulge in small pleasures whatever the circumstances is universal. February 22, 2012 at 9:55pm Reply

  • columbine: i think it’s wrong not to count the R&D cost in the price of perfume. the people who worked to design the perfume don’t work for free. it’s like for drugs, it takes millions and millions for a pharmaceutical company to develop a new drug, and that is reflected in the price of the drug.

    but i do agree, paying for the components 6 instead of 3$ would not make a big price difference for the consumer but yet improve quality dramatically (maybe) February 23, 2012 at 8:12am Reply

  • nstephens@beachcroft.com: Oh.
    I didn’t think of myself as naive in respect of the percentage cost of the “art” component of perfume but clearly I was. 1 – 1.5%. And after absorbing that little nugget of information I learn that the creator’s time and skill is not reflected in the perfume’s price, at least on this analysis.
    Back last summer I was turning over in my mind vague thoughts about quality after sniffing Elie Saab. I liked it but it did smell very synthetic especially when compared to his work for his own line (Francis Kurkdjian I think?). And then came Bottega Veneta restoring confidence in the notion of quality at a reasonable price. Even so I have been thinking that I need a trip to Patricia de Nicolai soon (love Sacrebleu, Vie de Chateau and Weekend a Deauville) as my attention was caught by Kiss me Tender last time. As you point out above – now there’s a sweet spot!
    Nicola February 23, 2012 at 9:02am Reply

  • Victoria: R&D counts in the price of materials, but you are right, it is such a big part of a perfume. This business is relatively new, and it developed organically, which is why it works in this strange way. At least, I find it very strange. February 23, 2012 at 10:33am Reply

  • Victoria: Nicola, Bottega Veneta also restored my confidence! It is such a well-made, elegant perfume. And Patricia de Nicolai’s line is one of my top favorites, whatever the price. February 23, 2012 at 10:35am Reply

  • OperaFan: This is such a great post topic and a great discussion. Like Undina above, I have also read or heard about the proportional cost of making the actual cosmetic products versus the retail price, so have come to accept it as a given. Yet, it comes as a bit of a shock even as a reminder. More the reason why I value the information writers like you, Denyse, and Team NST put out on your blogs. Your writings help me make informed choices about what I do and don’t want to try and learn to tell the differences between quality and otherwise. That’s not to say I won’t have my own opinions but it saves me a lot of time and effort to be devoted to other important things. February 23, 2012 at 11:39am Reply

  • Victoria: That’s how I felt too–it was a shock and a reminder. I’m glad that my reviews help a bit. For my part, I love reading other perfume blogs as well as the reviews of cosmetics, movies, books, etc. to help me navigate the market and save time. February 23, 2012 at 11:51am Reply

  • D: This article should be included in economics courses!
    One of my favorite economic theory articles was called “The Price of a Lemon.” It explained why a new car depreciates the moment it is purchased by a consumer. People assume that a consumer resells his car because of some disatisfaction, and if a car is sold within the first year, it must be a faulty car. Therefore, they will only pay a discounted price to reflect the risk that the car is a lemon, regardless of what the consumer/seller says is her reason for selling.

    This article is the foundation of a theory which states that prices do not merely reflect supply and demand but are relied upon as signaling something (like quality) about the product.

    However, as “luxury brands” have become trademarks for mass distributed products (Mal found “Chanel” as a “prestige” brand at her local non-prestige mall) and the brands themselves are mere divisions in mass companies, it seems that those divisions do not even bother to make sure that there trademarks represent medium quality goods. In other cases, brands are sold from one corporation to another, with the buyer intended to discount the quality while hoping the former image will still attract buyers. (Remember when Anne Klein represented the height of womens’ business suits, something to be worn to the board room, but beyond anything seen in the mere weekly staff lunches, nor worn by middle-managers. department? No you don’t remember those legendary fine wool, elaborate clothes; well if you looked at the Anne Klein suits in your local mid-priced department store, you wouldn’t be able to even guess at that history. Let’s not even talk about those “couture” houses that market poor quality logo shirts and jeans to teenagers).

    Perfume seems to be at the forefront of this corporate strategy. Once, again, Channel (which I believe is owned by LMHV) was found by Mal as the one “prestige” item at the local mall, but alot of the juice is synthetic.

    Getting back to the price signals quality economic theory, I wonder if that will continue to be sustainable for the “luxury good” industry? If the degradation of what were once truly bespoke (in the literal sense of the word- custom artisan made) brands to justify slight higher pricing of mass produced goods is ultimately sustainable? At some point, don’t people notice that the polyester blend pant suit by Calvin Klein bears no relationship to that custom gown worn to the Oscars?
    Admittedly, in the perfume branch of this industry, the bespoke name is generally only valuable in advertising and at the counter. Unlike, a handbag which can display the logo as part of the hardware or design, once perfume is worn, it can display anything. It is a scent, and only the most sophisticated and sensitive noses can identify a fragrance by name once worn.
    (Don’t argue to me that this is easy, andyou can do this, you ARE that most sophisticated and sensitive nose; the general public can not).

    The average member of the public, is less likely to be able to identify a synthetic molecule than a synthetic fabric (which is actully on the label). Most do not even know that they can learn about fragrances, much less have any interest in doing so. If the juice smells nice (or more likely the top note) at the counter, then they may rely upon the brand for some representation of quality and style. This is probably why just about every brand *of anything in the world tries to market perfumes, and why some fragrance houses just rather use celebrities to provide that marker of quality and character.

    However, the really “exclusive” prices, however, now generally don’t belong the celebrity or mega luxury brands. LMHV’s premiere perfume brand (also arguably its most overpriced fragrance line) is By Killian, not Dior or Channell. In a sense, the luxury brands have already lost their price=quality cache to the specialized public.

    *The New York Yankees, one the premier American baseball teams has just announced his and her fragrances. The reaction in the sports chatter rooms has not been enthusiastic. February 23, 2012 at 3:04pm Reply

  • Victoria: D, thank you for your interesting comment! There are so many good points that it is an article in itself. I wouldn’t say that it is easy to recognize a perfume by name, especially when the majority of new fragrances today smell very similar to each other. And to recognize an ingredient–that can hard even for professionals, which is why perfumery schooling is so hard and timeconsuming.

    Chanel is still privately owned, a rarity in today’s market. February 23, 2012 at 5:32pm Reply

  • Lynn Morgan: Makes me want to devote my money and praise to genuine artisan perfumers like Sage, Strange Invisible Perfumes, Le Labo,and the nice hippy ladies of BadaanBody.com. And by the way, what has become of Scent by Alexis? The amazing artist turned perfumer behind Black Valentine, Femme Fatale et al? I can’t find her website. February 23, 2012 at 5:38pm Reply

  • annemariec: Lovely anecdotes. I’m fascinated by this kind of thing. There are accounts too of women wearing vanilla essence during war time, instead of perfume. Lipstick sales tend to go up in times of economic depression, so I have heard. February 23, 2012 at 5:45pm Reply

  • Victoria: The vanilla essence! I've read this in several wartime memoirs, and it always struck me as a very touching reminder of the need for small pleasures.
     
    I have a small bottle of Shalimar from the 1940s when it was packaged in plain refillable bottles. The shortages made Guerlain cut down on packaging, but they still offered their clients' favorite fragrances. The house also worked to keep the perfume formula alive despite the fact that many raw materials suddenly became unavailable or very expensive.  February 23, 2012 at 5:57pm Reply

  • Victoria: Oh, is it gone? I haven’t tried her fragrances, but I know many perfumistas here who loved her work. February 23, 2012 at 8:37pm Reply

  • Jessica: pssst… Alexis is still around, although I don’t think she’s producing the Scent by Alexis line anymore. She’s collaborating with Maria McElroy (of Aroma M) on a teen line called Cherry Bomb Killer Perfumes and on a limited edition (and higher-priced) fragrance called Immortal Mine. Hope this helps! February 23, 2012 at 8:52pm Reply

  • Victoria: Thank you, Jessica! Sounds like a fun project. February 24, 2012 at 9:38am Reply

  • Henrique Brito: Victoria, do you have the impression that this is going into the niche market too? My impression is that the line between what is called niche and luxury/massmarket is tenuous lately. Chanel showed that with Jersey and 19 Poudre last year.
    When i think that i’m paying only 6% of the price in what is bottled is an alert. Maybe we should start supporting more indie and artisanal fragrances, where you really see that what you pay goes into what really matters if you are a fragrance lover, the fragrance itself. Of course, and i imagine that you have mentioned on the second part, expensive and good materials will not produce distinctive fragrances itself… February 24, 2012 at 9:13pm Reply

  • Milda: Dear Victoria, a very fascinating article! Would it be possible to provide a link to Le Nouvel Observateur´s article to get a better insight?.. May 21, 2012 at 8:30am Reply

    • Victoria: It doesn’t seem to be online. May 21, 2012 at 9:26am Reply

  • Joana: I would have expected 50/50 ratio but this is shocking. Actually CHEATING. I do want to support the true perfumery and appreciate the fragrance but paying 3 dollars per juice and 97 for anything else but juice, makes me an angry consumer. I feel like I was robbed in daylight by my own naivety. March 6, 2013 at 11:46am Reply

  • Kaye: When you say “in the 1950s a perfume brand would be prepared pay around $300 for a fragrance”, how much fragrance do you mean? $300 per bottle seems impractically high… Maybe I’ve been taking too many chem classes, I want to know the molarity of everything now, even money ;) This is a fascinating article, though, I love getting to peek behind the curtain at how things are made. September 24, 2013 at 5:34pm Reply

    • Victoria: Kaye, it means per 1 kg of fragrance concentrate, not per bottle. And today some brands pay a little as $5 per kg of perfume oil! Imagine what a difference in quality it means. September 25, 2013 at 3:29am Reply

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