The Lipstick Effect


I have a challenge for you. I bet you can’t tell what metal the necklace above is made of.

Give up? It’s silver plated brass. But if it was sterling silver it would look the same in a photo.

I was going to post this in a few days, but I am finding silver prices to be very frustrating at the moment. They are up and down and back up again, and they are way up from what they were a year ago. In hopes of being positive, I’m turning my frustration with prices into inspiration to write.

I recently learned a new name for a concept I’ve been experimenting with for a year or two now. It’s called the “Lipstick Effect.”

“The theory was first forwarded by Leonard Lauder, the chairman of the Estée Lauder cosmetics company. After 9/11, Lauder noticed a sharp increase in lipstick sales with a corresponding decrease in sales of more expensive offerings. His theory was that consumers were stepping back from more expensive purchases and substituting more economical indulgences–such as lipstick.”

Before I go too far, let me give you some definitions, just for clarity.

Sterling Silver: An alloy of silver containing 92.5% by weight of silver and 7.5% by weight of other metals, usually copper. Sterling silver is usually used in jewelry instead of pure silver because it is more durable than pure silver (due to the other metal that is added to it).

Silver (or Gold) Plated: A fine silver film is deposited on a base metal (often brass or steel) by electrolysis. The film can be as thin as seven millionths of an inch.

That said, there is an interesting theory running through some areas of the jewelry industry. The theory is people care more about having indulgences over having something of a higher quality. With today’s economy and unstable job market, people are looking for lesser-expensive items to substitute for the items they really want. Because of this, people would rather pay less money to have a silver plated piece of jewelry than spend a little more on a sterling silver piece.

Silver plated jewelry often gets a bad name. Over the past few years, possibly due to this very concept, silver plating has been getting better. People are not turning green from it as they once did, and it’s holding up to regular wear. I still wouldn’t recommend it for wearing every day.

I have experimented with this concept and I have found I sell an equal number of sterling silver pieces as I do silver plated pieces. I try to label my pieces with what they are made of. I do this in part to remind myself when a customer asks about a piece. I also do this to let customers know what they are holding. Oddly enough, I don’t think most people look at what it’s made of. People are more concerned about price. I find this interesting. I’d love to do a poll sometime to see what people really think about this.

Would you rather have one expensive piece or several less expensive pieces?

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