Bringing down the high price of fashion eyeglasses was the goal that four friends set out to achieve when they founded Warby Parker in 2010. The business idea grew out of co-founder Dave Gilboa’s personal experience. When he was a graduate student, he lost his glasses while hiking and was so outraged by the high price of replacing them that he squinted for months rather than buy new glasses. Eyeglasses are made from wire, plastic, screws, and glass, yet the retail price is often many times the actual cost of the materials, yielding a hefty profit margin. Adding a designer logo to a pair of frames pushes the final price even higher. Talking with friends, Gilboa learned he wasn’t the only person unhappy about having to spend a lot for eyeglasses. So Gilboa teamed up with Neil Blumenthal, Andy Hunt, and Jeff Raider to create a business plan for a new kind of eyewear company, selling quality eyeglasses directly to customers with a price tag below $100 per pair.

Direct marketing keeps Warby Parker’s distribution costs low and avoids the kind of intermediary markups that typically increase the final price. In-house designers  develop all frame styles, which means no licensing fees for the right to use famous fashion logos. Customers benefit because Warby Parker passes the savings along in the form of affordable price tags for quality eyewear. The company also has a social conscience: It donates a pair of glasses to someone in need for every pair it sells. 

Questions for Discussion

1. Based on your knowledge of pricing concepts, why does Warby Parker stress that the price tag for frames starts at $95

2. Given Warby Parker’s original idea of selling online to minimize distribution costs and keep prices low, do you agree with its more recent decision to open dozens of stores? Explain your answer.

3. Should Warby Parker charge more for frames purchased in stores than for frames purchased online, to offset the higher cost of rent and store employees? Why or why not?