After Covid-19 hit and we got into the swing of the pandemic, the world economy took us all for a ride. Prices rose dramatically across the board for gas, food, and pretty much everything. And, in many cases, they stayed high even after it made no sense and reports of companies making record profits came up, destroying much of the narrative around supply chain issues. But incredible markups are nothing new in business, and we all pay through the nose for many items that should be much cheaper.
10. Mattress Markups Range from 40% to 900%
It’s a strange system we’ve set up in the retail world. As you may have heard, grocery stores tend to have very thin margins. The cost of growing a head of lettuce, harvesting it, shipping it to the store, and putting it on display doesn’t leave much room for profit when it’s finally sold. Grocery store margins are around 5%.
On the other hand, a mattress has a markup that can range from as low as 40% to as much as 900% in some cases. That’s a massive increase. The justification for this is that you might need a head of lettuce every week, but you might only change your mattress after a decade or more. So mattress manufacturers must sell at a higher price to stay in business. That said, a mattress store may only need to sell 20 mattresses monthly to stay in business. Sometimes they won’t even sell that much, but because they’re part of a chain, it doesn’t matter.
9. Funeral Homes Can Markup Caskets as Much as 500%
The median cost for a funeral with burial in America is nearly $8,000. Funeral homes are known to charge massive markups on caskets due in no small part to the fact they were the only source of caskets for years, and they’re still the most likely place you’ll look for one when you need one. They can charge up to five times the wholesale price, with some elaborate caskets costing $25,000 or more. Markups from 200% to 400% are par for the course.
Between 1986 and 2016, the price of caskets increased by more than twice that of all other commodities, far outstripping inflation or any potential economic reasons for such an increase.
8. Text Message Marksup are Staggeringly High
How is your cell phone plan? Do you have unlimited data? What about unlimited texting? In 2015 it was estimated that about 88% of US cell phones had unlimited texting plans. Based on the rates that carriers charge, this is an absolute necessity. Carriers like Verizon charge $0.20 per text if you don’t have unlimited. It costs them three-tenths of a cent to send that text, however. That’s a 6000% markup.
That might not seem like much, but if 12% of phones don’t have unlimited texting and there are 320 million cell connections in the US, 38.4 million phones don’t have free texting. One source estimates Americans send and receive an average of 32 texts per day. That works out to $245.76 million per day that no one needs to spend, and that costs the carriers almost nothing.
7. Printer Ink Has Huge MarkUps and Sells at Lower Volumes
Few things are more frustrating than a home printer. This has been a joke for years now. When you can get them to work, you still have to deal with running out of ink and buying expensive new cartridges all the time. Ink is the real money maker for printers, and manufacturers offer the hardware very cheaply while making a killing on the ink. It’s based on the same principle as razor manufacturers, which sell the razor itself low and charge bigger markups on replacement blades.
6. HDMI Cables Have Massive Markups
If you head to Amazon right now and look for HDMI cables, you’ll find some under $5 and many more under $20. But some cables cost anywhere from $40 to $80 or more, depending on where you look. In 2018, WireWorld had a $10,500 HDMI cable that claimed to have “a 24-conductor DNA Helix design, composilex 2 insulation, and solid silver conductors.”
Is an expensive HDMI cable with a DNA helix design a thing anyone needs? Not really. Cables are where electronics stores make money. Ten dollars worth of cable can be sold for $100 at a high-end store to maximize profit. In one case, an HDMI cable sold at Best Buy for $40 was found at another store for $4, giving a 1,000% markup.
Most higher-priced HDMI cables are only necessary to play high frame-rate games on your TV. For just watching TV, you can upgrade from a normal TV to a 4K without bothering to switch cables in many cases.
5. Wedding Dresses Are Dramatically Marked Up Compared to Identical Non-Wedding Dresses
Like the funeral business, the wedding business is known to be a cash hole. You just keep throwing money into it and hoping things turn out for the best. One of the biggest scams seems to be wedding dresses. In 2016 a research company concluded that dress retailers would mark up a white wedding dress 3.9 times more than what a nearly identical white dress would sell for if the word wedding didn’t have anything to do with it.
A counter-argument was made that more craftsmanship goes into the actual wedding dress than just the white dress itself. However, if you look at dresses for bridesmaids, the same thing happens. A bridesmaid’s dress will cost nearly twice as much as a nearly identical dress that hasn’t been listed as being for bridesmaids.
At least one source claims a wedding dress could cost as little as $200 to make, but then it will retail for $5,000. These can often be brand name “cookie cutter” dresses, but the store selling them hides the manufacturer’s names, so you don’t know you’re getting a factory-made dress that could be cheaper elsewhere. Keeping brides in the dark allows the whole industry to thrive on markups.
4. Restaurants Mark Up Little Things by Huge Percentages
We all know that when we go to a restaurant, we will pay more for food than at home. You’re paying for the convenience and the experience, and the price will include the cost of the product, the cost of the labor, and the cost of all the restaurant overhead. After that, there has to be enough for them to have a profit to make it worthwhile. None of this is a mystery, and we all accept this as the price is going to a restaurant.
However, it is interesting to note how much things in a restaurant can get marked up. We often don’t stop to think about what it means when we see on a menu that sour cream will cost you an extra 50 cents or guacamole is nearly three dollars.
A meat pizza can have a markup of as much as 636%. That guacamole may cost Chipotle just over 50 cents to produce, making the markup close to 500%. Hamburgers can be marked up 355% or more, while extra pizza toppings at maybe $2 each or more can be over 500%.
One of the biggest markups comes in the form of soda. A two-liter bottle of Coke can be as little as two dollars or about $0.03 per ounce. A small McDonald’s Coke is 12 ounces, which would retail for $0.36. They used to charge $1 for those, but they’re up to $1.79 in some markets. That’s nearly a 500% markup. In casual dining restaurants, the markup can get even higher, over 1,000% in some cases.
3. Glasses Markups Can Get as High as 1000%
If you wear glasses, you probably dread anytime you need new ones. Aside from the inconvenience of getting your eyes checked, the cost of new glasses can be very intimidating. Things have become much more reasonable in recent years thanks to online stores that offer you glasses at greatly reduced prices.
How does an online store sell you a pair of glasses for hundreds of dollars less than you pay at an eyeglass store? Not having as much overhead as part of it and having the production facility on site also helps, but glasses were just horribly marked up before because you didn’t have any other options, and they could get away with it.
Two former Executives from LensCrafters admitted that glasses are marked up as much as 1,000%. The reason is that the same company produces most glasses. Luxxotica has nearly cornered the market on glasses and owns most stores where you buy them. They make frames and lenses and own the stores. They even own an insurance company that covers vision benefits for customers, so they get you to pay them to pay themselves. This allows them to artificially increase the prices because they have little to no competition.
2. Bottled Water Markups Can Get Astronomical
Bottled water is a huge industry. It was worth over $283 billion in 2021. It was only in the mid-90s that bottled water became a ubiquitous thing. The idea of paying for a bottle of water was considered stupid before that. However, in the following decades, it has become something people expect everywhere.
Many bottled water companies will try to market their water by saying it comes from a fresh spring, a mountain somewhere, or whatever. Not all bother to do that. Many brands of bottled water are just tap water. Dasani water is the same water that the Coca-Cola company uses for everything else they make and comes from the municipal supply at their factory.
San Francisco has some of the most expensive tap water in the United States. You’re going to pay $6.07 per cubic meter for tap water. There are over 33,000 oz in a cubic meter of water. So, per ounce, San Francisco’s tap water costs $0.00018. A single 20 oz bottle of Dasani costs about $2.12 at Walmart, or $0.106 per ounce. That makes Dasani, which is tap water, 589 times more expensive than San Francisco tap water. And that’s at the low end of the scale.
The price difference can change dramatically based on sources. In some cases, the markup gets as high as 280,000% for “designer” water that’s grossly overpriced.
1. Movie Theater Popcorn Markups are Over 1,000%
The economics of the film industry is one of the most baffling things you’ll ever try to understand. A studio can spend over $250 million to make a movie and then another $300 million on marketing so it needs to make a billion dollars to be considered a success. At some point, these numbers get so big that they barely make sense to the rest of us. And that’s just ticket prices at the box office.
Movie theaters make very little off selling a ticket to see a film; they kick about 70% to studios. They have to get most of their bank from the concession stand. And that’s why you go to a movie theater and pay $20 for a medium Coca-Cola and a bag of popcorn. You can make the same thing yourself and maybe pay $2 at the supermarket for what went into it.
A small bag of popcorn costs at least $5.50 at the movie theater. Keep in mind popcorn weighs almost nothing. Per ounce, that’s more than the cost of filet mignon. Making popcorn costs about 10 cents per ounce, so the markup in a movie theater is around 1,300%. In 2010 that markup was 1,275%, so it’s only increased slightly in over a decade.