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597. Why Do Your Eyeglasses Cost $1,000?

Freakonomics Radio

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Disruption in the Eyewear Industry

The eyewear market has traditionally suffered from information asymmetry, leading to consumer confusion and inflated prices. Warby Parker disrupted this model by selling glasses online at a starting price of $95, promoting transparency and simplicity. This approach highlighted the significant markup in traditional eyewear, where glasses are often sold for 10 to 20 times their manufacturing cost due to multiple layers of wholesale and retail markups. Instead of relying on brand names and logos for pricing, Warby Parker designed their own frames and sold directly to consumers, effectively reducing costs. Consumer studies indicated that skepticism about quality arises at very low price points, but the acceptance increases up to around $100. The decision to price glasses at $95, rather than $45, allowed them to maintain a perception of quality. To enhance customer experience and alleviate concerns about product quality, they introduced a home try-on program, shipping multiple frames to potential buyers, fostering confidence in their products.

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