Retail Pricing of CBD Oils Creates Consumer Confusion
Like other aspects pertaining to CBD including marketing claims and regulatory status, the pricing of CBD oil products creates additional consumer confusion that threatens the credibility of manufacturers.
Key Data Points
• CBD Validator analyzed the MSRP of over 1,500 currently marketed CBD oils.
• Across all products reviewed, the average cost per mg of CBD was $0.12 ranging from a low of $0.03/mg to a high of $1.99/mg.
• The most popular container size is a one-ounce dropper bottle which accounts for 75% of the products marketed
• The six most popular strengths of CBD are 250 mg, 500 mg, 750 mg, 1000 mg, 1200 mg and 1500 mg
• There are enormous disparities in the pricing for the same strength. For example (see Figure 4), 122 products containing 1000 mg of CBD are marketed. The average price per one-ounce bottle is $97.66.
• The range of pricing is enormous. The least expensive 1000 mg bottle is $30 and the most expensive is $199.99 – almost a seven-fold difference (Figure 1)
• The popular strengths of CBD show a 3.3 to 6.7-fold difference between the most and least expensive product based on MSRP.
• Among the six most popular strengths, the huge price variations between the most and least expensive product reinforces consumer confusion about the CBD category.
• Manufacturers are not presenting a rational case for this huge price disparity between identical strength products. Furthermore, this may be an impossible task in the light of rapidly declining hemp prices.
• Premium pricing cannot be explained by quality processing and manufacturing, since some of the highest priced products score poorly on the CBD Validator’s proprietary rating system.
• Even normal pricing conventions seem ignored by CBD manufacturers. Consumers would reasonably expect to pay less on a per unit basis for a larger quantity bottle. However, the average cost per mg for the 1500 mg bottle is actually higher at $0.089/mg than the 1200 mg put up at $0.082/mg.
• Price disparities should be an alarm for CBD manufacturers and marketers. Price value is an important criterion for consumer purchase decisions. As CBD products become more mainstream, consumers will make a more informed determination on what is fair pricing and those manufacturers beyond the norm may face significant sales challenges.