Why USANA Products Are So Expensive - USANA's Own Words

A new USANA document written for their customer service employees shows them how to explain to customers why the products are so expensive. Why bother contacting USANA for the answer when yours truly can give you the document they provided for their customer service?

http://www.usana.com/UPLOADS/usana/2014/115/115-1_KAA.html

Product Pricing (Why the Products Are So Expensive)

Occasionally, we receive questions as to why our products are so expensive. You can use the following in response to this question:

Before pricing our products, we do our research to ensure that we not only supply the finest quality products, but at the best price possible. There are many factors that go into pricing: research, formulations, raw materials, costs associated with batch size, manufacturing, packaging, transportation, commissions, regulations, inflation, taxes based on the market, etc. All of these add up to the cost of doing business and impact the price USANA is able to offer on a product.

Posted: 25-Apr-2014

Lets break this down so we can see exactly why the products are "so expensive" as USANA puts it.

- Research and Formulations would be categorized under "Research & Development" and represents a measly 0.7% of the price of the product.

- Raw Materials, Costs associated with batch size, manufacturing, packaging, and transportation would be categorized under "Cost of Sales" and represents 18.5% of the price of the product.

- Commissions are categorized as "Associate Incentives" (which also includes bonuses, and certain awards and prizes) represents 43.2% of the price of the product - the biggest reason why the products are overpriced. It is also worth mentioning that two thirds of all USANA associates have never collected a single commission. Most of the commission is paid to the top 1% of associates. Last but not least, 99% of USANA associates do not make a profit. This category is the heart of the pyramid scheme.

- Regulations and Inflation. well I'm not sure where these fits in with the cost. However, even USANA's 10K SEC filings state this about inflation: "We do not believe that inflation has had a material impact on our historical operations or profitability." So why does USANA want their customers to now believe otherwise?

Interestingly enough, nothing about voluntarily manufacturing to "pharmaceutical good manufacturing practices" even made the list of excuses, although that would be considered part of Cost of Sales anyway.


So lets look at the price of the USANA Healthpak100 which can be purchased through auto-order (formally known as autoship) for $105.75

Healthpak100 Auto-Order price: $105.75
Cost of Sales: $19.61
Associate Incentives (commissions): $45.73
Selling, General, & Administrative (SG&A): $25.84 (Includes Research & Development of $0.74)
USANA Earnings: $14.56

How do USANA customers feel about this? Only 74 cents toward research and development! Now lets remove the commissions from the price of the Healthpak100. Instead of $105.75 for the Healthpak100, the product is now only $60.02 (We'll call it $59.95 for marketing purposes). Wouldn't you rather pay $59.95 for the product as a distributor (or customer) and be able to mark up the price yourself if you choose to retail the product? Remember, 66% of USANA associates never make a commission and 99% of associates never make a profit. So then what good does it do to overcharge 99.9% of USANA customers for an incentive they never benefit from? It only benefits the top 1% of distributors who are out primarily selling the "get rich scam" rather than selling the product...

USANAWatchDog answer to why USANA products are so expensive: 
To fund the pyramid scheme.

USANA Sticks It To Their Distributors With Product Price Increases - Merry Christmas!

As if the U.S. economy hasn't suffered enough, now USANA Health Sciences, Inc (USNA) claims they are forced to raise the price of their products because Vitamin E Succinate is becoming very expensive. This will be in effect on January 5, 2013. Even though USANA has never experienced any problems maintaining a "large profit" every quarter for the last 20 years, USANA feels they deserve more by raising the price of their products. They must do whatever they can to get their overall revenues and profits up without regard for their distributors. Consider this the equivalence of a tax increase on distributors since they are the only ones who will suffer from this.
  

PRODUCT	2008 Prices	Current Price	New Price	New Price Increase	% Increase	Total Vitamin E (IU)
HealthPak100	$107.00	$110.00	$114.00	$4.00	3.6%	11200
Essentials	$39.95	$42.50	$45.45	$2.95	6.9%	11200
Body Rox	$17.95	$19.95	$22.50	$2.55	12.8%	5600
Usanimals	$12.50	$12.50	$13.95	$1.45	11.6%	2800
Mega Antioxidant	$30.95	$32.50	$35.50	$3.00	9.2%	11200
Mega Antioxidant without Vitamin K	NA	$30.95	$35.45	$4.50	14.5%	11200

Poor distributors just got through experiencing a price increase and now they are faced with another. Good thing shipping is free. Oh wait, it's not? So add on about $8 to $10 in shipping and you got yourself a product nobody is going to pay for, except distributors. Looks like USANA simply pulled some numbers out of a hat and thought nobody would notice their inconsistency. USANA even increased the price of the Usanimals by 11%, and you thought it was all about the children.

I believe the reason they increased the Usanimals by 11% is because distributors will continue to buy it as part of their "Charitable Donation". USANA makes a killing on this one. Charge the distributor full price ($13.95) and claim it as a "Charitable Donation". USANA then sends a single bottle of Usanimals to the Children's Hunger Fund charity at their cost (about $2). USANA pockets the rest of the money. That's very sleazy and is proof enough to me that it isn't about helping children. USANA should send $13.95 worth of Usanimals to the Children's Hunger Fund, which might be about 5 or 6 bottles, not just 1.

Now 90% of USANA products sold are purchased by USANA distributors who are paying over $110 to $220 every 28 days to meet their personal sales volume "Personal Purchase Volume" business requirements. Only 10% of product is actually purchased by someone outside the business opportunity. The only people who are going to suffer from these higher prices are the hundreds of thousands of USANA distributors that make up the lower 99% of the distributor force who are unable to turn a profit. They are the ones who have no chance at ever making a profit and now they have to fork out even more money to participate in USANA's compensation plan.

In order to participate in USANA's business opportunity, distributors must "personally purchase" a certain amount of product every 4 weeks (13 times a year). If the distributor fails to make this personal purchase, that distributor loses (stolen back by USANA) any points they may have accumulated from their preferred customer sales or from their downline distributor's own personal purchases (who also face the same dilemma). The distributor is also no longer eligible to collect any commission. This is the main premise of USANA's pyramid scheme. Your not paid upfront to recruit. However, you are paid commission from your recruit's required personal purchases, which is still a pyramid scheme. USANA would collapse if they removed this personal purchase requirement.

There is some good news though. Retail customers do not need to worry about these price increases because they (the retail customer) do not exist. So at least there is one group of people who will not suffer, imaginary as they are.


I'm all for capitalism and believe companies have a right to succeed and profit. But they should be required to do it legally and legitimately. Running a pyramid scheme is illegal. According to the FTC "...a multi-level compensation system funded primarily by payments made for the right to participate in the venture is an illegal pyramid scheme." It then goes on and states "Modem pyramid schemes generally do not blatantly base commissions on the outright payment of fees, but instead try to disguise these payments to appear as if they are based on the sale of goods or services. The most common means employed to achieve this goal is to require a certain level of monthly purchases to qualify for commissions." So USANA would be a pyramid scheme by this definition.