They’re a bit of a status symbol, aren’t they? Women, as well as men, love designer sunglasses. And why not? We wear them almost daily, so why should we not pay for them? And since we pay for them, why should our friends not see the cool designer name etched on the side?
Ray Bans are the thing of now–for men or women, at any age in any size, any style. We do love our Ray Bans–classics, they are. This might have been the biggest fashion comeback (from the 80s), maybe ever. But at $200 (and that’s not including a prescription), the question is: are they worth it?
According to the Wall Street Journal, most sunglasses are made by the same company. I REPEAT, they all come from the same place! And guess what? This goes for your spectacles, too. Italian manufacturer Luxottica pretty much has a monopoly on…well…everything. Glasses, included. Perhaps what you’re paying for is the idea that your designer glasses are being manufactured in Italy (because doesn’t it sound better than Taiwan?). About 70% are and the rest in America or China. But still…same glasses, lower manufacturing cost. So that is ultimately what you’re paying for: the cost to do business in Europe. All have the same UV rays requirements.
You are probably buying your sunglasses from Luxottica, no matter where you purchase them. So unless you need Gucci plastered on the side, opt out of expensive sunglasses.
The markups are as big as they seem. Whenever I have bought a new pair of regular eyeglasses, I have always reflected on how little I seem to get for my money. I can sort of understand why lenses are so expensive, as the material has to be made and ground precisely. But $100 or $200 for frames? These are bits of metal or molded plastic. Once I bought tiny slivers of hollow titanium that weighed considerably less than the bills I was handing over.
The cost of a new pair of glasses will of course reflect materials and labor. But the price will also reflect brand values and marketing–and how much consumers will pay. Luxottica says it makes a gross profit of 64 cents on each dollar of sales. Even after deducting sales and advertising costs, overhead and brand licensing royalties it’s still making 52 cents. That’s some margin.
While the company’s return on equity has fallen since the global economy turned down, last year it still managed a respectable 11%, according to data from FactSet Research Systems. A few years ago that number was as high as 20%. And investors are confident on the company’s future. The stock has jumped from $13 to $25 from last year’s market lows. It’s about 20 times likely earnings, an optimistic rating.
Expensive sunglasses are not better for your eyes! You are not paying for the quality of lens–you are paying for the brand. Don’t be fooled into thinking that higher prices mean higher quality. Making lenses that protect against UV rays is not an expensive technology and most sunglasses have it. You can get 100% protection for forty bucks. Beyond that, the only extra money you should be spending is on a polarizing lens, which might run you $70.