Mary Kay’s New Product Cash Cow

Since I told you over a year ago that Mary Kay was redoing their entire color cosmetic line, I have maintained that the only real reason to make this big change was money for Mary Kay. *gasp* You’re thinking: “But Mary Kay only does what’s in the best interest of the consultants!”

Yeah, right. Mary Kay does what’s best for Mary Kay. Believe me, the tiny little number of real retail customers for Mary Kay didn’t want or need new compacts or a different shape of eye color, cheek color, or foundation. They *might* have wanted new colors, which would have been easy to achieve with a new color that fit in the old compacts.

But that’s not enough for Mary Kay. They need a whole new round of ordering from consultants and directors who already have thousands of dollars of products on their shelf. What better way to do that than make everything you own obsolete.

Sure, once the new stuff is out, the few customers that consultants have will probably prefer to buy the new stuff. That is, if they’re not so turned off by having to replace their compacts.  But the retail customers don’t matter. All that matters is how much the consultants and directors are buying.

So here’s a little look at how much money Mary Kay might be raking in initially off these new products:

Pressed powder – 6 colors @ $16 retail each
Eye color – 6 colors @ $6.50 retail each
Cheek color – 2 colors @ $10 retail each
Compact – $18 retail
Bronzing powder – 4 colors at $12 retail each
Highlighting powder 2 colors at $12 retail each

Let’s assume that each sales director buying only has to buy half of the colors of all the powders. And I’ll estimate conservatively that she’ll buy 2 of each color she’s buying. We’ll also assume she buys all of the eye colors and cheek colors. How many will she be buying? Well I’ll suggest that sales directors will probably buy 5 of each eye color and cheek color: 1 to try, 1 to show, 3 to sell.  I’m also going to suggest that she’ll buy at least 5 compacts: again 1 to try, 1 to show, 3 to sell.

How much is that per sales director? 30 eye colors, 10 cheek colors, 6 pressed powders, 4 bronzing powders, 2 highlighting powders, and 5 compacts. That’s a total of $553 retail, or $276.50 wholesale.

Not much, you say? Well multiply that by the 14,000 U.S. sales directors, and you get a total of $3.9 million wholesale.

And then there’s the consultants.  Who knows how many of the 700,000 U.S. consultants will actually buy this stuff, but I’m going to conservatively estimate that 1/10 of the consultants (70,000) will also stock this stuff. With a wholesale cost of $276.50 each, that’s a total of $19.4 million for the consultants.

Add it all up, and Mary Kay has a payday of over $23 million wholesale just from this part of the color line overhaul. And remember how much we calculated from the new lipsticks? That was over $23 million too , so now we’re at $46 million and counting (at a minimum) for the new color products for Mary Kay.