prices are a good indication of how important it is to understand consumers when setting prices. *There are magic price points for consumers, " says Allen. "Any time you can drop a penny off, the consumer responds to that price." Carmex has also introduced a premium lip balm product, Carmex Moisture Plus, at a retail price between $2.49 and $2.99. Moisture Plus is a lip balm that is packaged in a sleek silver tube, offers a slant tip-like lipstick, and is targeted toward women. The formula offers women a satin gloss shine and includes vitamin E and aloe for richer moisturization. The upscale package and additional product benefits help Carmex Moisture Plus command a higher price than the traditional Carmex jar and tube. CARMEX MOISTURE Carma Labs Inc. The cost of the ingredients that make up the Carmex lip balm formulas, the packaging, the manufacturing equipment, and the staffing are also factored into the price of the products. Volumes are a key driver of the cost of packaging and ingredients. For example, Carmex purchases up to 12 million yellow tubes each year for the traditional product, and 2 million sticks each year for the newer Moisture Plus product. The difference in quantities leads to a lower price for the traditional yellow tubes. Similarly, ingredient suppliers, label suppliers, and box suppliers all provide discounts for larger quantities. It is also more efficient for Carmex's manufacturing facility to make a large batch of traditional formula than it is to make a small batch of Moisture Plus. Carmex has also reduced its costs with efforts such as its new environmentally friendly Carmex jar, which holds the same amount of lip balm but uses 20 percent less plastic, eliminating 35 tonnes of raw material costs and the related shipping costs! Carmex also considers retailer margins when it sets its prices. According to Allen, "We typically sell our product to two types of retailers." There are everyday low pricing (EDLP) retailers such as Walmart, and high-low retailers such as Walgreens. EDLP retailers offer consumers the lowest price every day without discounting through promotions, High-low retailers charge consumers a higher price, but they occasionally discount the product through special promotions, which Carmex often supports with