Expensive or Cheap Skincare – What’s the Difference?

Feel vs. Effectiveness

I was asked by a friend for a recommendation for a good night cream. My first question was, "What do you want it to do?" I expected her to say she wanted it to be hydrating, firming, or to magically diminish fine lines. Instead, she responded that she wanted it to feel luxurious. She seeks an experience when applying cream to her face at night, and any effectiveness against her (in my opinion, non-existent) fine lines around her eyes would be a bonus.

This response caught me off guard. Being the skincare nerd I am, I know the ins and outs of ingredients and what they do. I can recommend products based on specific skincare goals. However, I rarely consider whether a product feels luxurious or not. One notable difference between cheaper and more expensive skincare is indeed that luxurious feeling. High-end products are often marketed skillfully, creating an illusion of luxury, but that doesn’t necessarily mean the formulation is superior or more effective.

To understand why some skincare is expensive and others cheap, it's essential to break down what contributes to the costs in skincare. I categorize it into four parts: ingredients, formulation, marketing, and margins.

Ingredients

For a long time, I thought good ingredients were what made products expensive. However, it turns out that ingredients represent the smallest portion of production costs. The most effective ingredients, which actually deliver results, are often quite affordable. Take glycerin, a fantastic moisturizer that's inexpensive and found in many creams.

It’s not the ingredients themselves that are costly; rather, it's the formulation—how the ingredients are combined.

Formulation

This is where the real costs come into play. The formulation is crucial for a quality skincare product. If we compare it to baking, the ingredients for making a bun (flour, yeast, milk, sugar, salt, cinnamon, cardamom, and butter) are relatively cheap. The art and knowledge of creating a delicious, moist, and visually appealing bun require an understanding of how ingredients interact (adding salt directly to yeast often kills it, preventing the dough from rising) and knowing how to maintain moisture (the ratio of flour to fat) while also having a sense for baking. How long to knead and let the dough rise, and how to shape it beautifully—this requires both skill and experience.

Another factor in this category is whether the company has its cosmetic chemists (the bakers of skincare) in-house or hires an external lab to develop formulations. Having an in-house lab incurs costs for facilities, equipment, and staff. Using an external lab can reduce fixed costs, as these labs cater to multiple brands and can offer cost-effective solutions. The advantage of an in-house lab is total control over the development process, from start to finish, whereas an external lab doesn't provide the same level of oversight. That said, it doesn't mean you will receive a lower-quality product.

Marketing

Marketing is perhaps the largest expense when it comes to skincare costs. The old saying "Out of sight, out of mind" holds particularly true in this industry. The skincare market is enormous, and many players compete for market share, making marketing crucial. This includes packaging; an elaborate package can influence why we choose one cream over another. Additionally, if we see a celebrity using a specific product, it can significantly impact our purchasing decisions. When we've been exposed to a product's image and stories over time, we are more likely to choose it subconsciously and consciously.

Margins

When searching for how to price skincare, you often find advice suggesting a margin of at least 33%, ideally closer to 70%, for a sustainable business. The margin refers to the profit after all bills and salaries are paid. For instance, if a product costs 100 SEK to produce, 30 SEK should cover costs, leaving 70 SEK as profit.

Do you feel cheated? Don’t! Many companies reinvest their profits into developing new products.

What’s Best?

So, is expensive skincare better? I would argue that it's impossible to answer definitively. It depends on what you are looking for. My friend wants her skincare to feel luxurious, so a high-end brand might be necessary to achieve that feeling. For me, the focus is more on the ingredients and the concentration of active components in the product. If that’s what matters to you, you can find both inexpensive and expensive products that deliver.

If you’re interested in organic products, the higher price might reflect the cost of raw materials, but that doesn't necessarily mean those products are superior.

My best advice regarding skincare and finances is to choose products based on your budget. Today, there are options that are both affordable and effective. Consider what you need and how much you're willing to spend, and shop accordingly.