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Beauty Pie, the membership-based beauty retailer sees success with its unconventional pricing strategy

To-the-point analysis about one of the five important stories from the week.  

Why it’s interesting

  • Beauty Pie was started as a cross between Netflix and Everlane. Customers pay $10 a month for the right to pay for beauty products at cost ($5.38 for a cleanser), while non-members pay full price ($32 for this same product). Members can buy up to $100 of product per month on the $10 plan, or max out at $300 of product per month on the $30 plan. (Amazon uses a similar concept in its bookstores and will do so imminently at Whole Foods, featuring lower prices for Prime members.)

Why it matters

  • While many companies have launched programs that aim to replicate the transformative effects of Amazon Prime, most just focus on fast shipping, which is only one reason why Prime is so powerful. On the other hand, Beauty Pie is the best manifestation of Prime’s learnings we have seen because the approach aims to change consumption behavior.
  • This pricing mechanism has an interesting effect: The monthly subscription guarantees a steady revenue stream for the brand, while the rock-bottom prices ensure people will buy lots of products, thus driving scale and reducing costs of goods.
  • But the big questions is whether this pricing structure will give the brand enough cash flow to scale its marketing to the large market it needs to hit.

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