The Australia Tax Part V: Putting it all together

In the final article in this series, I'll put together all the information looked at thus far.

In the first article, I used a few case-in-point examples to opine that we do pay substantial price premiums in Australia for a number of products.

In the second article, I looked at exchange rates. It is obvious (though that data is a bit out of date now; the Australian dollar has retreated substantially of late) that the Australian Dollar is a very volatile currency, and retailers may try to build a worst-case scenario into their pricing to avoid having to adjust prices repeatedly.

Then there's the issue of wages. A key issue here is that wages in Australia are high even by developed-country standards, and that they always need to be paid in local currency. So the high cost of labour for Australian-based staff (especially relevant to department stores) will always add a premium to the price. And this premium will be in Australian dollars regardless of how the imported cost of a product changes. This can severely limit the margins by which retailers can adjust their pricing.

Next, I looked at real estate. Using data from CBRE in that article, it is easy to conclude that rents in Australia are very high. 

Lastly, the issue of whether the Australian consumer can actually pay more. In most cases, and having some knowledge of economics (being a qualified accountant myself), this can be a key issue in determining pricing for local markets for a number of products. 

There's a couple of key measures used for the 'average' income. The median income is a good one (I'm not going into the technicalities of why and how). Australian Bureau of Statistics in this publication has the average income at $58,817 per year (scaled from $1128 per week by a factor of 52.143). 

Median income is harder to come by, but this article in ABC RadioNational says it's about $55,000 or thereabouts. They peg the mean average at AU$75,000.

Whichever way we look at it, it's obvious that Australians earn quite a fair bit. According to NATSEM, the average Australian household has a median disposable income of $43,100 in US Dollar equalised terms. More extensive comparison of household incomes is very difficult because of the differences in exchange rates and purchase parity.

Which essentially means this in laymen's terms: we earn a substantial amount of money.

So all-in-all, a volatile exchange rate, high wages, high rents, and the consumer having more disposable income make for a recipe where we end up with more load on out credit cards when buying things. But more income means we don't necessarily have trouble keeping up with it.

Does this mean I endorse or condone high pricing beyond what can be reasonably explained by all these factors? No. And a lot of products are still priced at levels where even all these factors combined dont account for the entire difference in price.

The Australia Tax Part IV: Real Estate (Rents and Prices)

So far, in my "Australia Tax" series of articles, I've covered a few things. Starting with the fact that we pay sizeable price premiums on skincare, cosmetics and fragrances (among a whole lot of other products; this phenomenon is replicated across almost every category, and some software companies such as Adobe would get a gold medal on the wall of shame). I have had a look at exchange rates, and wages. And while exchange rates do little to explain our price gaps post-2006, the wages part was a bit of an eye-opener.

So what other components factor in when it comes to retail? After costs of inventory and wages, the next most important point is overheads. And the biggest component of overheads can often be rent.

It can be quite difficult to get accurate data on retail rents, because large retailers can often negotiate deals that are not made public. However, this article in SMH, using data from this publication from Colliers provides some interesting information. According to Global Retail 2013 (Colliers), "Rents along prime CBD mall locations in Australia consistently rank among the highest in the world".

Information from CBRE, published in another SMH article also points to retail rents in both Melbourne and Sydney being high enough to give other large cities a good run for their money. Concrete data for rents paid by large department stores has evaded me so far.

I think even with the relatively small number of articles pointing in that direction, it is not an unreasonable conclusion to draw that Australian rents are very high. They are high enough to compete with the prime locations of New York, London and Shanghai, which is saying something.

So we pay the highest minimum wages in the world, have high rents that retailers pay (and eventually pass on to the consumer), have a potential issue with volatility of the Australian dollar, and in general, the relatively high purchase power of the Australian consumer also adds to the mix. So far so good? Perhaps. But there still remains one key question...

After paying high wages and high rents, high freight costs and what not, does the Australian retailer keep the same in his pocket as a comparable retailer in the UK or USA? That is something for the next article.

The Australia Tax III: Costs of Doing Business

Carrying on from the last two articles in this series, I think it is now reasonably established that we do pay a premium in Australia when it comes to prices on skincare and fragrance products. Also, the exchange rates don't really keep up with price movements, and post-2005 increases in the exchange rates of the Australian Dollar haven't really shown through in entirety at the sticker-price level. However, products launched post-2010, especially by some brands do seem to have better pricing down under than what would be historically expected.

This brings us to the next part of the issue: Are there other factors at play which limit the amount of ammunition that a retailer can have in their arsenal to pass on price reductions from exchange rates? 

There's something common across the board when it comes to luxury brands: they all rely on high levels of interaction between sales staff and the customer. You don't just walk into a Chanel Boutique and chuck things into a shopping basket like you would at Priceline. Even picking up something that you know well about would involve interacting with the sales staff at some level. It does get a little cumbersome at times not being able to simply pick up a bottle of Pureté Idéale and being on your merry way, but that's besides the point.

So here's the catch: the product itself can have its price changed to reflect exchange rates, but the costs of actually selling it, which would include paying all the lovely sales assistants, and renting the shop-floor space in all the prime locations department stores generally occupy, don't change with exchange rates. They need to be paid in local salaries regardless.

I will look at real estate and rent in another article. This time lets focus on what gets paid to the sales staff.

While most companies are quite secretive about what they pay their staff, I think a comparison of the minimum, median and average wages across a number of countries will help this comparison (Median/Mean wage are more useful for another section I'll cover later though). Australia is consistently known to have one of the highest minimum wages in the world. Here's a quick look at minimum wages for a number of countries (equalised where possible by comparing 21+ age group):

Minimum Hourly wages from various countries compiled from official sources. The blue bars show the wages in native currencies, while the overlapping pink bars show the same amounts in US Dollar equivalent.

To illustrate the relative scale, I have expressed them in current (1-Nov-2013) US-Dollar terms as well. Because these wages need to be paid exclusively in local terms, there's nothing exchange rates do to reduce these. And since this is a substantial component of the price of the product, it can explain to a point why exchange rates have limited effect on the end-user price.

There is something that really stands out: Australia has the highest minimum wage by a distance. And not surprisingly, the difference of wages is greatest between the countries Australia tends to have a large price gulf with. We have probably the highest price differential with the USA of all countries which have a minimum wage, and our minimum wage is more than twice theirs. We also have a gap of almost 50% over the UK wage, and nearly the 25% more than French and Kiwi ones.

Singapore doesnt even have regulated minimum wage (the politics of it is not of concern here).Which is potentially another good indicator of why prices over there are a fair bit cheaper than Australia (proximity to the manufacturing hubs Taiwan, Malaysia and Hong Kong is perhaps another reason).

So yes, the answer to the question is clear-cut. Part of the reason we are paying higher prices in Australia is the fact that we get paid more. While this is not quite the same chicken-or-egg conundrum that median/mean wages will pose, it does clarify the fact that the human service element of the product price in Australia is substantially higher than other comparable countries.

So the next time you notice prices in Australia and try to compare them to the US website, perhaps the realisation needs to set in that the lovely ladies who man (so to speak) the counters here are paid much more than the ones across the Pacific, and in general, we in Australia are paid more than our trans-Pacific friends.

Since the end-user price of something is the sum total of various costs over the chain, the labour cost component in Australia is fairly high, in fact it might very well be the highest in the developed world. And this reflects at every step of the process, not the just the sales assistants or checkout operators. The products get handled at customs by public servants who get paid a fair dime, then transported by people who get paid a pretty penny, and then stacked in warehouses by staff who get paid in the same proportion more than their counterparts from other countries, and so on. So it's easy to visualise how our high wages can quickly add up the costs of a product over the value chain.

But does that mean Australian retailers actually make less money? That's for another article.

Sources:

USA: Dept of Labor

UK: gov.uk

Australia: FWA

New Zealand: Department of Labour

Japan: Ministry of Health, Labor and Welfare

France: EuroStat
Singapore: Ministry of Manpower

The Australia Tax Part II: Exchange Rates

So in the previous write-up, I did a little holistic overview of the issue of Australians paying significantly more for the same products compared to our peers elsewhere. I personally think this is a debate well worth taking up, and this article will show part of the reason why.

The Australian Dollar has always been a relatively volatile currency. Using data from OzForex, and a little analysis in Excel, here's the graph I obtained for the Australian Dollar's exchange rate versus the US Dollar starting from Jan 1990 to Sep 2013:

Things are actually a lot simpler than they look. The blue line tracks the monthly averaged exchange rates, the red line takes yearly averages. The orange dotted line is the average over the entire 285 months, and the black lines are averages over 5-year periods.

There is significant volatility in the exchange rate, so this rules out any quick price adjustments. And here's where the 5-year averages are important. If the averages from the first 3 five-year periods are ignored (we are well past 2003 now), it's obvious that the AUD averages around 80-odd US cents over the 2004-2009 period. And from 2010 to date, it averages at parity with the Greenback. 

Prices for a number of products in Australia, especially those made by US-based companies still seem to be reflective of the lows our Dollar hit in the early 2000s. It seems that some brands still seem to take the worst-case rates rather than longer term averages.  And since majority of currency exchange contracts can be negotiated on a lock-in, forward-looking basis, this hardly seems excusable.

The other major source of products for the luxury sector is Europe. The Euro was instituted in 1999, and I have compiled a graph of the EUR vs the AUD here:

The AUD remained rather stable against the Euro still the late 2000s. From 2010 onwards, it really has shot up, and has remained high owing to a number of economic and geo-political causes. 

Lastly, lets have a look at the British Pound vs the AUD:

The Aussie Dollar shows a very similar pattern against the British Pound as it does against the Euro.

I am not going to dwell on why this whole pattern is exhibited; the technicalities of how and why exchange rates move is irrelevant here. The question then is: have prices in Australia reflected the fact that for the last 5-odd years, our Dollar has clocked in much higher value than its historical average would be? The distance between the orange dotted line and black lines for the 2010-onwards period is significant for every single currency. So have the Australian retailers adjusted for this, and passed some of this on to the consumer?

Yes and No. While prices for a number of brands have retreated towards more sane levels, many brands still seem reluctant to adjust prices outright. Anecdotal evidence based on my personal observation points to other methods: Gift-with-purchase (GWP) offers, bundles and packages have become a lot more common since the Aussie Dollar became dearer. This is one way of increasing the value the customer gets for his dollar while paying the same. 

Some brands, however, keep stubbornly high prices (Chanel for example). Chanel's female perfume range sells in Australia for over twice the US-market price. Even if the exchange rate against the Pound is used, a 150ml bottle of Eau Premiere should be about AU$175. The Australian price at retail is AU$70 more than that. However, the exchange rate over the 15-odd years before that would give a price of about AU$250. So they do have an excuse here.

Estee Lauder's entire lineup has a price premium in Australia of around 50% over their UK/USA pricing, sometimes even clocking in at twice the price here. Their subsidiary brands like La Mer (USD250 to AUD 365 for their "Oil Absorbing Lotion" as a singular example), Clinique (converting USD to AUD at about 2 to 1, and GBP to AUD at about 2.5 to 1), Tom Ford (converting Pounds at about 2:1) and Donna Karan to name a few are still almost obscenely overpriced here.

Singling out more and more brands is very possible, as almost every brand seems to see Australians as "soft-touches" who can be charged higher prices. However, there's hardly a need to list them. Almost every brand, in one way or the other is guilty. Cue L'Oreal's new "Shine Caresse" lip colours costing US$10 in The States, and AU$25 in Australia. Or YSL's "Cinema" costing GBP81 in the UK and AU$195 in Australia for 90ml. Brands from LVMH are similar.

There is another problem: newer product releases from the L'Oreal group (and to an extent other brands as well) seem to have better pricing. The older products seem to be stuck at the prices from the early 2000s; there is a distinct reluctance to lower sticker prices in this segment of the market, which also leads to situations where some products have much higher price premiums in Australia than others. Even if taking into account costs of freight to Australia, I think UK prices make for a decent comparison because they include 20% tax (VAT) compared to 10% for us (GST).

So this does settle one issue quite clearly: For the most part, we in Australia do pay a sizeable price premium compared to other countries if the exchange rate is the only factor taken into account. I have taken due care of not using instantaneous exchange rates; I have used the 5-year averages instead. Some of the prices we pay could be excusable at 80 US cents for every dollar, but not even close for parity.

For products that originate from Europe, it is very possible that the currently high position of the Aussie Dollar is simply seen as an aberration rather than a long-term issue. If that is the case, European brands do have an argument, but US-based ones don't.

There's another view here: Could it be that USA pays lower prices than the rest of the world? I observed pricing for some brands unusually low in the USA compared to other regions (some Chanel products for example). But that argument holds little water considering the GCC countries pay similar prices to USA too.

All-in-all, as far as the exchange rates go, we in Australia might have been paying a moderate premium pre-2005, but post-2010 we are simply overpaying. In this case, I think as far as the nominal prices for products go, the consumers do have a very valid point.

Acknowledgement: Monthly and annual currency average exchange rates sourced from OzForex. I have no commercial affiliation with OzForex or its associates.

The Australia Tax Part I: A Debate Worth Having?

"Australia Tax" is a phrase used frequently to describe the price gulf that exists between identical products sold in Australia compared to other countries, particularly USA, Canada, UK and the Eurozone. I am no stranger to products being priced through the stratosphere, but there is something rather different about the Australian price differential: it is consistent, and exists across practically every segment of retail. The price premium we pay in Australia for identical products over UK, USA and the Eurozone is large enough make one think.

In this series of articles, I will try and make sense of the "Australia Tax". Luxury brands are by no means the only offenders, but they do seem to have the widest gaps between Australian and overseas pricing. And to compound issues, luxury brands often present the consumer with the problem of difficult to circumvent price boundaries.

Some companies are particularly bad offenders when it comes to price discrimination (Hello Estee Lauder Group, YvesSaintLaurent, Giorgio Armani, Elizabeth Arden, Dior and Chanel). Granted, the Australian Dollar is a volatile currency and product prices are set to take into account the worst-case scenario, but in this debate who has the right of way,the customer or the seller/distributor? I will take a look in this series at the different points of view around the issue, both from the customers' and retailers' perspectives.

I will use data from factual external sources to support arguments from both sides in this series; I intend to cover the different facets of this issue such as exchange rates, taxes, price parity etc. There's a few points to consider, and I will try and cover as many bases as possible without getting overly technical.

In this first part of the series, I take a holistic look at the issue, and consider if this debate is something worthwhile in the first place. As you will find out while reading, it very well seems to be. However, the deeper I looked into this issue, the more I realised that there is always more than one side to a story.

From the customers' perspective, the argument centres on one issue: majority of high-end brands simply have too much of a price premium in Australia. And before I get apologists throwing nonsensical excuses at me like the Chanel salespeople at one well-known department store, that "luxury brands are inherently pricey" or "we use high quality ingredients that cost a lot", let me make it clear: I am considering prices for identical products across different countries, and these excuses go right out the window for the same reason. High material costs are possible, but I don't believe your raw materials suddenly double in price for Australia-bound products, and neither does Chanel become the equivalent of Garnier in the USA when selling perfume for less than half of what we pay. 

From the sellers' side, their claims are a combination of factors leading to higher prices: high wages (indeed we have one of the world's highest minimum wages), high rents at desirable locations, high costs of freight owing to relatively small market size and isolated location, and so on. Ultimately, these costs are passed on to the customers, and that manifests as high prices for the customer at the tail end of the chain.

An oft-used complaint from customers is that prices havent moved with exchange rates; using data from OzForex, I had a look at the exchange rates of the Australian Dollar vs the US Dollar over the last 23-odd years (1990 onwards). As it seems, the retailers may have some semblance of an argument, although not strong enough to sway things entirely in their favour.

As a customer, the general idea is simple. If a product can be found cheaper elsewhere, it's a go. Online retail may be cheaper due to whatever reasons as there may be, it's not the customers' concern. If the pricing set by the vendor is seen as too high and is easy enough to bypass, a savvy customer will do it. And therein lies the rub with luxury goods: their limited distribution, and with some brands, the iron-fisted controls over the supply chain (e.g. Chanel) mean it can be incredibly hard to source products from other regions easily.

At the expense of sounding sexist, but the tendency to price-hunt, especially among the female cohort (by a distance the larger of the target audiences for most skincare/fragrance/cosmetic companies) doesn't appear to be as strong as that in males. I am seeking more concrete data to back it up, but anecdotal evidence does point to it in a few places. On a popular Australian forum for skincare and beauty products, a number of members seemed convinced that an online retailer selling products cheaper than Australian street retail was "dodgy", the fact that the prices were on par with USA notwithstanding. And there lies another problem: if the majority of consumers are not aware that a product is overpriced in Australia, why does the seller care to make prices more realistic?

There's also the age-old debate of "charge whatever the customer is willing to pay". It centres on the issue of purchase power. If customers in Australia can afford to pay more than their US counterparts, and are willing to do so, there is no incentive for the seller to price goods lower than what the customer' comfort threshold is. It is also sometimes a trade-off between margins and volume. The USA, for example is a much larger market, and retailers over there can make up for smaller profits on individual products by simply selling more.

And adding to what is now looking like a cocktail, there's manufacturing locations. Many brands have localised manufacturing facilities for certain regions, which can mean some countries get the same product a lot cheaper than others.

As is obvious by now, there's a number of different issues at play, and all have some part in determining what a product scan at the checkout for. In the next part of the series, I will look at exchange rates.

"Australia Tax": The Price Conundrum

Chanel Coco Mademoiselle 100ml Eau De Parfum...US Cost US$105+tax (about AU$125 tax-inclusive), UK Cost GBP95 (about AU$165). Australian cost? AU$234(!). Elizabeth Arden Visible Difference Oil-free lotion, US price US$39+tax (about AU$50), Australian price AU$78. Clinique Post-Shave healer 75ml, US price US$19.5+tax (about AU$25), Australian price AU$40.

Is there a pattern in the aforementioned products and their prices? I certainly see one. And this is just 3 products picked randomly because I see them in my wardrobe or shopping stash. This pattern is repeated across entire brands and lineups. For some reason, US-based companies seem to be the worst offenders (companies owned by Estee Lauder lead the pack, and Elizabeth Arden isn't too far behind).

Ever had a look online at what customers in USA and UK pay for the same products as we do in Australia? Ever had a feeling our wallets are burdened significantly more than their American and British counter-parts? You're hardly alone. Anecdotal, and even more extensive data shows that we in Australia pay through the nose for identical products compared to UK and USA. 

In an upcoming series of articles, I will look at this issue in detail.

These articles will most likely be interspersed with perfume reviews, but the concluding article will be synoptic and link back to all of them.

Q&A: How do I score/rate scents?

Having written a few reviews, the response from my readers has been positive so far, and I intend to follow largely the same format for future reviews too. Of course, I will improve the format of my reviews based on suggestions as I go along, so eventually the reviews may look different to what they look like now.

So far, I divide my reviews into a few somewhat distinct sections: a brief intro about the house that makes the scent, a little history of the scent itself and the nose behind it, then a detailed analysis of its notes, followed by appraisal of its longevity and projection, and suggestions for alternatives. I also have distinct sub-headings for prices, stockists and bottle sizes.

One important issue that has been raised by some readers is the apparent lack of transparency as to how the scents get allocated scores/ratings. And it is a very valid question indeed. While I think it would be possible to get an idea of where I docked marks and where I awarded them based on reading the summary attached to the scoring and the body of the review itself, some explanation won't go unwarranted.

The answer to the transparency question is: deliberate opacity for the detailed breakdown of the scoring. And the reason is not sinister, it's to make it more convenient for the user. However, I will explain in this blog how I score a perfume, and going forward, readers should be able to get some idea of what would have caused the score to be as low or as high as I allocate.

I score a scent based on the following criteria:

• Balance of notes; a perfume that has a complex note profile handled well generally gets a high score in this category. I'm not looking for complexity as such; I look for a good balance of the different components in the accords, and more complex blends being more difficult to handle get higher scores if they strike the right balance.
• Longevity; this is a directly proportional score. A scent that lasts longer will get higher scores.
• Projection; this is not a proportional score. Scents that are meant to project further, and actually achieve it over their life get high scores, but a scent that maintains a decent projection over its life also gets high scores. I rely on information from the brands themselves, and online feedback regarding how far scents are meant to project. If my review aligns with the majority opinion and claims from the brands, I consider it as performance par for the course. More intimate/sensual scents generally wont (and should not) project as far as night-oriented scents, I rate them accordingly.
• Value; this is by far the most complex of the bunch, because of the volatile exchange rate of the AUD. I use the following:
• Use the price for a singular retail packaged bottle, as bundles or packs differ across retailers. Use only prices from bottles available across both countries where I get prices from.
• Assume 1 USD = 1.25-1.33 AUD, 1 GBP = 2AUD and 1 EUR = 1.6 AUD
• Add 10% GST and 5% freight to GST-inclusive price to USD and EUR prices; only add 5% shipment to GBP prices
• Multiply USD prices by 1.44375 or 1.54, GBP prices by 2.1, and EUR prices by 1.848 is the one-step method to get tax/freight/exchange-rate adjusted price.
• The AUD has't held at a level lower than 89 US cents for a fair while now, so I will be using 1.44375 as a multiplier for US prices rather than 1.54. Ideally, I would be using about 1.283 (90 US cents to the AUD plus 15.5% for freight/GST) but I do allow for leeway here because prices are slow to react to exchange rates, especially for a jumpy currency like the AUD
• If the RRP price in Australia is lower than what my adjusted price is, I rate the product higher for value.
• If the Australian RRP is higher, I deduct marks based on some subjective judgement; Higher priced items can get away with higher absolute deviations, and items that are very rare in Australia can slip through with smaller penalties.
• If the product is obtainable easily through B&M channels at prices lower than RRP, I will increase the value scores.
• If the consensus in other online forums leans towards the scent being overpriced elsewhere, I penalise the value score.
• Finally, I weigh the different scores and assign a final value.

Quite obviously, working out the scoring is a complex process, and I intentionally hide the details of how I work out individual ones. 

I hope this clarifies to my esteemed readers the criteria that underpin (and will in the future too) the scores I assign to the scents I review.

Armani Code: An example of the scoring process

To illustrate the above, here's the breakdown for my scoring for Armani Code (reviewed here)

Balance of notes: 4/5; it strikes a good balance of notes without being screechy, sharp or cloying.

Longevity: 2.75/5 (comparably priced offerings from Dior and Chanel perform much better)

Projection: 3.5/5 (nothing bad, but could be a tad higher for its category of scent)

Price: 3/5; details as follows:

Australian price is AU$140/75ml. US price is USD84/75ml and UK price is GBP 56.5/75ml.

The ceiling prices are therefore AU$121.27 based on USD84 multiplied by 1.44375, and AU$118.65 based on a GBP price of 56.50.

Considering the AUD has been holding between 0.9-1.05 USD and 1.4-1.5 to a GBP for a fair while, I rated this scent only 2.5/5 for value in Australia, and the ability to get discounts gets it up to 3/5.

Overall: (4+2.75+3.5+3)/4 = 3.31, which is reasonably rounded to 3.3/5

I will not display the detailed breakdown for each scent on its review directly, simply because it is a complex process that I don't want to bore or overwhelm readers with.

Eau De Toilette, Eau De Parfum, Eau de what!?

I've asked the very same question plenty of times when I was new to the world of perfumes, and I get it plenty of times now from others. A vast majority of perfumes even today are made in France (or may have roots in France even if made elsewhere). Even for perfumes made outside of the Francophone region, a few things still remain convention to label in French.

Most perfumes will label ingredients in both French and English, referring to water as "Aqua", and the fragrance oils that give the mixture its scent as "Parfum" for example. However, the most visible and ubiquitous use of French terms is for concentration. The relative concentration of the aromatic oils and compounds in a given fragrance is what the "Eau De" term indicates. Generally, the higher the concentration, the longer a perfume will last on skin, and in many cases may have stronger notes.

The terminology is quite imprecise, and the only reasonably straightforward comparisons are between two concentrations of the same fragrance, from within the same house. Here's the most common terminology I've come across:

Eau De Cologne ("Water of Cologne" in literal translation), abbreviated to EdC is generally the most dilute form of a fragrance with a proper term for it. It may be anywhere between 3-8% aromatic compounds. Typically, Eau De Cologne concentration is used for male fragrances, and these will usually not have a very long life on the skin. Many colognes tend to be based on citrus accords.

Eau De Toilette (EdT) is the next one up. And this is where things get really interesting. EDTs can contain anywhere from 5-15% aromatic compounds, leading to a huge amount of variation in their potency and longevity. They overlap EdC on the lower end, and EdPs on the upper end of their concentration.

Eau De Parfum (EdP) is the next concentration in line. These can have between 10-20% aromatic compounds, and hence the overlap between EdPs from some houses and EdTs from others. Generally, EdP is a concentration seen for most female fragrances, although a few exceptions exist on the masculine side too, such as Essenza (Armani), Dior Homme Intense (Dior), Terre D'Hermes Parfum (Hermes).

It would be misleading to say EdTs don't as long as the higher concentrations as a generalisation. While a lower concentration of the same fragrance from within the same range will necessarily be less potent than a higher concentration, the same cannot be said when comparing across houses or ranges. For example, Chanel's Antaeus for Men is an EdT, but is much more potent in my perception than Armani's Essenza, which is an EdP.

For male fragrances,  manufacturers seem reluctant to use the term Eau De Parfum, even though many are potent enough to be more than a match for most EdPs. For example, Chanel's Antaeus and Eau Extreme are both strong enough to be labelled EdP were they feminine. Whether it's a case of the makers fearing the "EdP" term being associated with feminine fragrance and perception of less masculine character in the scent by the buyer, or simply intertia, I can't say.

Essense De Parfum (ESdP) is a seldom-seem concentration that sits vaguely in between Pure Parfum and Eau De Parfum. These can have 15-30% aromatic compounds, and generally this concentration is always more potent than a corresponding EdT or EdP. This concentration is rare to say the least; so far in mainstream fragrances, I have only seem J'Adore L'Or (Dior), Miss Dior Le Parfum (Dior) and Parisienne L'Essentiel (YSL) in this concentration.

Pure Parfum or Extrait De Parfum can have anywhere from 15% to 40% (or even higher) aromatic compounds. Usually sold as dab-ons (most commonly seen in my experience in Chanel, who sell extrait versions of a fair few of their fragrances), these are generally very potent, and have the longest life on skin compared to lower concentrations of the same scent. These also tend to be very pricey (Australian UVPs can exceed $20/ml), and don't evaporate on exposure to the air very quickly.

There's another couple of concentrations used by some manufacturers that don't make appearances often enough to be common usage.

The word Légère is sometimes added to the concentration to indicate a lighter version of a fragrance. For example, Opium Vapeurs De Parfum (YSL) is listed as an "EdT Légère", which means it is lighter than what an EdT would otherwise be for the the same fragrance from YSL. Similarly, Lancome's La Vie Est Belle Légère is a lighter (softer) version of the same fragrance. A Légère EdP would be roughly in between what an EdT and EdP would be for the same perfume.

The world L'Absolu is the opposite in perfume terms of Légère. It indicates the more concentrated, or more often the version of a fragrance with more intense notes. Tresor L'Absolu (Lancome), and J'Adore L'Absolu (Dior) are prime examples. Both are more potent and have differing, stronger notes than their "normal" counterparts.

Armani and a few other houses use the term "Intense" after the concentration for fragrances more potent that the classification would typically indicate, but not enough to move up a notch to the next in line. This is a very grey area though; what Armani calls EdTI (EdT Intense) might be an EdP if another house were to sell it. Armani's Privé lineup has the black bottles labelled as "EdP Intense", which are again more potent than other Armani EdPs, but well short of being EsDPs.

Chanel uses the term EdT Concentré for Eau Extreme, which to me is a synonym for an EdP. I strongly suspect the only reason it's labelled as such is to keep the EdT terminology across their male lineup, even if in variants to avoid going the EdP way of labels. In terms of strength of the fragrance and its longevity, it blows most EdPs clean out the water.

While the common perception that extraits will be more potent than EsDPs, which in turn will be more concentrated than EdPs, which will be stronger than EdTs and EdCs is not necessarily false, it is not entirely true either when it comes to EdP and lower potencies. While an EdP of one fragrance will be stronger than an EdT of the same fragrance, it may not necessarily be the case across different fragrances.

Concentration has a direct relation to price; usually the higher the concentration, the more expensive a perfume will be. Which is partially explanatory towards female fragrances (generally EdPs) being costlier than their male counterparts (which are usually EdT).

In concentrations lower than extrait, EdPs and EdTs have plenty of overlap, and just being an EdP will not necessarily mean better projection or longevity. Moreover, sillage/projection (how far a scent trails around you) and longevity (how long it stays on the skin once applied) are not related to each other. It is very possible to have a fragrance that has very long life on the skin but doesnt necessarily project too far away from you; L'Instant De Guerlain (Guerlain) is a prime example. On the other hand, you can have fragrances that project very well but wear off very quickly.

Unitised Volume Price (UVP): Simplifying the Myriad of Bottle Sizes

Once you've settled on one (or more) scents, then comes the question of which one to get based on value for money, or more often, which size of the package to choose. What makes this less than easy is the fact that there is no standardised bottle sizing used by manufacturers. There's a myriad of sizes, ranging from 20ml to 200ml and beyond, and almost everything in between.

Even more complexity arises from the different bottle sizes within houses and brands. For example, YvesSaintLaurent's female perfumes in the EDP concentration have bottle sizes of 30ml, 50ml, 90ml, whereas the male perfumes generally sell as 50ml or 100ml EDTs. Guerlain uses 30ml and 50ml for Shalimar, but L'Instant De Guerlain (EDP) has 30ml, 50ml and 80ml bottles. Almost every brand has a similar story.

So how exactly do I put them all on level footing to compare price? Simple: I unitise the volume and then price it. This gives a price figure for a single unit volume, and then I can compare prices without having to worry about different container sizes. The index that I get from this, I call it UVP (Unitised Volumetric Price). Essentially, UVP simply tells you what you are paying per unit volume for a product, regardless of brand and/or container size. 

To get the UVP, simply divide the price by the number of volume units in a bottle.

The most commonly used unit in Australia is the ml (millilitre), and that is my choice to standardise. So 100ml of perfume in a bottle that costs $200 has a UVP of $2/ml, and in my blog, I would say a UVP index of 2.

The lower the UVP for a given product, the more perfume you get for each dollar.

For Example :

Chanel's Coco Mademoiselle (and indeed most of their feminine EDPs) retails for AU$159 for 50ml, AU$234 for 100ml and AU$350 for a 200ml limited edition bottle. The 50ml bottle therefore costs $3.18/ml, the 100ml bottle costs $2.34/ml and the largest one (200ml bottle) costs $1.75/ml. The 200ml bottle offers the best value for money of the three, because you only pay $1.75 for each ml of perfume, whereas if you were to purchase a 50ml bottle, you'd pay $3.18 for each ml.

UVP is best used within a particular brand to compare value for money across different packaging sizes. However, it can also be useful for comparing and choosing across brands. If the buyer is equally satisfied with the scents and is making a decision purely on which one is better value, the one with the lower UVP should win out. 

This is the inherent limitation of UVP; it is simply a measure of how much you're paying for each unit volume of the fluid, and hence is only a quantitative metric for value for money. It does not factor in other influences, and indeed, most perfume purchases would be based on scent preference first and then value.

That said, I believe UVP is a useful tool to assist decision-making, particularly when deciding package sizes within a particular scent, or deciding between two similar scents from different houses in different package sizes. UVP immunises the measurement of value for money from both brand and package size, but is only true for the given price/size combination. Any sales/discounts should be taken into account for spontaneous comparison across brands or bottle sizes.

UVP is even more useful in skincare products, where choices can be made much more comfortably on price and value compared to fragrances.

Wait! But I use Ounces!

Most perfumes list their volume in both US fluid ounces (roughly about 30ml each, and this is the measure of conversion used by most houses) and millilitres (ml). Converting UVP from $/ml to $/oz is very simple. Just multiply the number by 30.

For example, Les Exclusifs De Chanel No. 22 sells for AU$220/75ml (UVP $2.93/ml) and AU$350/200ml (UVP $1.75/ml).

To get the UVP in $/oz, divide the price by the number of ounces. In ounces, 75ml is 2.5oz, which means at AU$220, it has a UVP of $88/oz. Similarly, the 200ml bottle , which is 6.8oz, has a UVP of $51.4/oz at its retail price of AU$350.

It does not matter whether you use US fluid ounces or millilitres; the relative proportion of the UVP values will be the same (i.e. $2.93/ml and $1.75/ml differ by the exact same proportion as $88/oz and $51.4/oz). However, make sure the units are consistent. Comparison of a dollar per ounce price with a dollar per ml price would make no sense whatsoever.

If you multiply a $/ml price by 30, it may differ slightly from the figure you would get by dividing the price with the number of ounces listed on the packaging. This is because a US ounce is not exactly 30ml (the exact value is about 29.574), and the bottles list rounded values.

The most common sizes encountered are (these are based on empirical observation of packages): 10ml (0.33 or 0.34oz), 15ml (0.5oz), 20ml (0.67 or 0.68oz), 30ml (1oz), 50ml (1.6 or 1.7oz), 75ml (2.5oz), 80ml (2.7oz), 90ml (3oz), 100ml (3.3 or 3.4oz), 125ml (4.2oz), 150ml (5oz) and 200ml (6.6, 6.7 or 6.8oz).