The cosmetic industry in the U.S. generates $50 billion in revenues each year [source: Mont]. The price of lipstick, makeup and various skin care products is driven largely by advertising and marketing. Manufacturers know that cosmetics are often an impulse purchase, for which consumers are usually willing to pay more. They enlist celebrities in the marketing game, adding to the price. As a result, the average retail markup on cosmetics is about 50 to 60 percent [source: Crowe]
You can almost always find a cheaper product that will do the job of an expensive cosmetic item. For example, a 4-ounce bottle of facial cleanser that boasts caviar extract as an ingredient sells for $40. That's about 14 times what it would cost for a dermatologist-recommended bottle of Cetaphil skin cleanser [source: Stonefield]. Makeup is mostly clay, with wax, oil and fragrance added. Yet these simple ingredients can run you $30 for a few grams in a department store. Perfume also comes with a hefty 50 to 60 percent markup [source: McHugh, Mont].
You can save a lot by avoiding celebrity and designer brand names in the cosmetic department. Or better yet, make your own skincare items from natural ingredients.
The next marked-up item may be the last one you pay for: a funeral.