Why Are Sunglasses So Expensive?

As someone who started his own sunglasses company, I’m hardly in a position to tell you that sunglasses aren’t important.

In fact, I regularly tell people that they’re the most important accessory ever.

(To be fair, I’m a bit biased)

But I get it.

Most sunglasses are way too expensive.

I won’t point any fingers or name any names, but if you want to share your thoughts in the comments below…well, I certainly can’t stop you.

In any case, when I began looking into making my own sunglasses, I assumed that I’d have to charge similarly high prices.

But it turned out that I could make the high-quality versions I always wanted and only charge $45.

So, what gives?

Why aren’t much larger companies that manufacture their sunglasses in much greater numbers able to do the same? Shouldn’t they be able to charge even less?

The truth is that they absolutely can, but the reasons why they don’t will shock you.

There are three I’m going to cover in this blog:

Most popular sunglasses are basically made by one company
These sunglasses come with a markup of at least 1,000%
They’re what’s known as “Veblen goods”, which is why high prices don’t hurt their popularity

Most Popular Sunglasses Come with a 1000% Markup (and Are Owned by One Company)

If you Googled “Why are sunglasses are so expensive?” looking for a breakdown of what it costs to make sunglasses compared to how much most companies charge, I’ll get to that in a minute.

However, the main reason sunglasses cost so much is actually a lot simpler than that.

A lot.

It has nothing to do with how much the various materials cost. In fact, at this point, adding extras like polarized lenses and UV protection don’t actually increase overhead much at all. I can tell you that from personal experience.

Instead, the reason so many shades cost a fortune comes down to one simple word:

That’s right.

One gigantic sunglass company pretty much owns all of the other ones that make the expensive, high-end versions so many of us buy without thinking twice.

Ready to go down the rabbit hole?

How Two Companies Took Over the Sunglasses Industry

Before 2018, if you owned sunglasses, there was a good chance you had two companies to thank.

The first was a French company, Essilor, which was one of the world’s largest manufacturers of lenses – both for glasses and contacts.

The second was an Italian company, Luxottica, which made a large percentage of the frames for sunglasses and eyeglasses in the world.

In 2018, they merged to form one gigantic company, EssilorLuxottica.

Now, to be clear, this merger doesn’t technically represent a monopoly. According to a 2018 article in the Guardian about the merger of these giant glasses companies:

“The new firm will not technically be a monopoly: Essilor currently has around 45% of the prescription lenses market, and Luxottica 25% of the frames.”

Okay.

Fair enough.

But the article went on to add:

“…in the seven centuries of spectacles, there has never been anything like it. The new entity will be worth around $50bn (£37bn), sell close to a billion pairs of lenses and frames every year, and have a workforce of more than 140,000 people.”

The result of this merger means some of the most recognized names in sunglasses are all owned by the same entity. See if any of these names ring a bell:

Armani Exchange
Burberry
Chanel
Coach
Dolce & Gabbana
Emporio Armani
Giorgio Armani
LensCrafters
Michael Kors
Oakley
Oliver Peoples
Pearle Vision
Polo
Prada
Ralph Lauren
Ray-Ban
Scuderia Ferrari
Sears Optical
Sunglass Hut
Target Optical
Tiffany & Co.
Valentino
Versace

As you can see, EssilorLuxottica doesn’t just own popular manufacturers. They own some of the most popular retailers, too.

Now, again, this company doesn’t constitute a monopoly, but you can probably appreciate why it’s easier to charge more for a pair of sunglasses when you own so much of the market.

Yes, Most Sunglasses Come with at Least a 1,000% Markup

Recently, I covered a similar topic,why Lululemon leggings are so expensive, and found that their famous product may carry a markup well over 3,000%!

So, maybe we shouldn’t feel so bad about the fact that most sunglasses come with a 1,000% markup.

Maybe?

And unlike in my Lululemon article, that percentage isn’t an estimate, either.

Instead, it comes from two former LensCrafters executives who were interviewed for a Los Angeles Times article about the high price of glasses. As one of them put it, “It’s ridiculous. It’s a complete rip-off.”

And here’s the thing: for the really high-end sunglasses with the brand names that everyone immediately recognizes, the markup may be significantly more.

According to that same executive, manufacturers can have high-quality frames made in China for between $4 and $8. For designer-level – “like what you’d get from Prada” – it might be $15.

Adding “first-quality lenses” will only run companies about $2.50 for both. So, for about $17.50, some of these companies are enjoying markups anywhere from 2,000% to 5,000%!

The Advantage of Selling a Veblen Good

So, how exactly do these big companies get away with this?

Well, for one thing, it doesn’t hurt when you own so many of those big companies. When so many high-end brands all charge similar prices, it’s easy to assume that must be for good reason.

However, there’s another concept at play here, one that also underpins why brands like Lululemon can charge so much more than their competitors and seemingly enjoy even more popularity as a result.

A “Veblen good” is one in which demand actually increases as its price increases.

Generally, we expect the exact opposite to happen. We’ve all had the experience of switching brands when we realized the company behind our favorite go-to option had sneakily increased the price.

This doesn’t happen to Veblen goods because they tend to be high-quality and – perhaps more importantly – they have tremendously-effective marketing strategies boosting their appeal. In fact, the most defining aspect of a Veblen good may be that it’s seen as a status symbol.

So, for many people, wearing $500 sunglasses is totally worth it because it tells everyone you can afford it…and, also, they don’t know it only cost about $20 to make them.