What affects a price of a formula?

I want to thank Alisa for giving me the idea to make this post. If you have a post idea that everyone would benefit from, let me know. ​

I want to thank Alisa for giving me the idea to make this post. If you have a post idea that everyone would benefit from, let me know. 
I know in a saturated market, it is hard to know if what you are paying for is worth it. In this post, I will be breaking down what is factored in a product's price.
First, I want to say that regardless of the product's price, if you enjoy it, it is worth it. I don't want to take that away from you. If you can't afford it, then that is another thing.
The first factor that is not discussed (maybe because it is implied) is that businesses need money to survive. Any business will create a product that fits what they need for profit. Think about it this way. Depending on the store you purchase from, the brand may have a shelf fee. The brands have to pay for their product to be on the shelf. That fee is why those store brands will always be cheaper because they don't have to pay for the shelf space. Brands also have to pay for marketing, which includes (normally) a photographer, makeup artist, models, equipment, props, etcetera. Then employees have to be paid. Rent for their building, manufacturing, and packaging facility. All the employees that are associate with that. You can't also forget about the large quantity they have to purchase to make the product too. As you can see, there is a lot of costs to run a business. The profit margin is solely based on the company and varies significantly.
Now that we have broken down the business side, we can talk about the actual product. 
So what makes a product so expensive? 
To clarify, a more expensive product does not mean it is better. Often, they will market the product because it is a higher price than it will work better. The reality is that it is not the cost; it is the formulation. If you want to understand the ingredients list better, then read this post. (Link) There can be multiple things that make a product higher priced. Using higher percentages of extracts [and quality with efficacy], essential oils, vegetable oils, and actives make a product more expensive. Again the quality of an ingredient or the grade is not mentioned in the ingredient list. If they are making claims about their extract, saying it has an X concentration of X substance, it can mean they did testing to know the concentration of the extract's constituents. However, this is not always true, unfortunately. Coffee extract having X% of caffeine, for example. Also, for actives, they typically have research behind them. It can mean the ingredients were tested or that it was in a clinical trial. Even for inexpensive ingredients, suppliers do have studies. These are not normally published as companies can steal this information. Research is, unfortunately, time-consuming and a huge financial investment.  
Don't forget about marketing too, natural brands, organic, "chemical-free," cruelty-free, etc. They know that you will pay more for it. I am going to be doing a post in claims, so stay tuned. 
What makes a product less expensive?
Using more water in a formula generally reduces the cost. A large water portion is not a bad thing either. Without water, your favorite actives like niacinamide, vitamin c, hyaluronic acid would not work. Water ensures that Everything is in the correct usage rate. It is using less percentage of extracts, essential oils, vegetable oils, actives, humectants, colorants, etc. Commonly, you will see these ingredients under the 1% line. I do want to point out that Phenoxyethanol is typically used at 1%; however, it is not a broad-spectrum preservative. It needs another preservative to work, so it may not be at 1%. Essentially, You want it down to the functional ingredients and only small or what was stated in a study and no more. Also, having fewer ingredients means less processing, and that way, a product can be less expensive. 
The real question is, should you buy it?
Here are some questions that you should answer before you purchase. To make it clear, you should never go into debt for beauty; it can wait. 

• If, after a month in my cart, will I still want it?
• Is this different than what I already have?
• What is it trying to claim? Is that something I want?
• Are the ingredients appealing to me?
• How much product are you getting?
• Do you agree with Brands Marketing?

I hope the post helped let you know the cost of beauty products. Let me know more information you want to know.