Good Question: Why Are Greeting Cards So Expensive?
MINNEAPOLIS (WCCO) -- This year, Americans are expected to buy 114 million Valentine's Day cards. A survey from the Greeting Card Association finds the average cost is about $4.50 a card.
So, why are greeting cards so expensive?
"The cost has a lot more to do with the perceived value of the card," says Ginger McClesky, a manufacturer's representative in the greeting card industry.
McClesky says there are two types of card companies – large ones, like Hallmark, American Greetings and Papyrus -- and small, specialized shops. She represents 40 of those small card makers and says, "none of them are rich."
According to IBISWorld, Hallmark and American Greeting make up 82 percent of the U.S. greeting card market. On average, the profits for the entire greeting card sector average 11 percent.
"When you have two companies exerting so much power over the industry as a whole, they have a little more power over how they choose to set pricing," says Taylor Palmer with research firm IBISWorld.
Palmer says greeting card companies have created higher quality and more expensive cards, partly in response to fewer people purchasing greeting cards. They are facing increasing competition from substitute digital products, like people writing on each others' Facebook walls.
"These greeting card companies are being looked at as more of a premium product," Palmer said.
Companies are adding foil, music, letterpress and video to their cards. The cardstock is thicker and the designs more intricate. Hallmark says it has 500 writer-designers on staff just for their greeting card division. They offer 1,500 varieties of Valentine's Day cards that range from 50cents to $10.
"There's such a wide variety in the marketplace, they are becoming more of a gift than a card," says Peter Doherty, executive director of the Greeting Card Association.