The Halloween industry is driven by imaginative adults longing to become someone else. Halloween affords children and adults the opportunity to be whomever they want to be for one night of the year. Perhaps one of the largest price drivers in the industry is the appeal of becoming someone else for a day. This year it is estimated that Americans will spend $8 billion on Halloween. Billions are spent each year on costumes, candy, decorations and plenty of other things pertaining to Halloween.

You could do a lot of things with $8 billion, but Halloween seems to be what consumers are choosing to spend their money on at the end of October. What has driven consumers to spend like this? How have we reached the point where the demand for this non-traditional holiday is so great that there has been an industry created around it? How did Halloween become a business that earns so much money every year?

Costumes make up the largest portion of Halloween spending. Of all the money consumers spend at Halloween, 36% of it is spent on costumes. Years ago, Halloween primarily focused on children. Today, however, teens, children and adults alike are taking part in Halloween more than ever. With Halloween costumes averaging around $30 and sometimes extending to over $100, it is easy to see how so much money is spent on costumes alone. Children's costumes are only slightly cheaper.

Retail costume stores set up for a few months before Halloween, sell a ton of costumes, make a lot of profit and get out. These companies aim to make the most amount of money in the least amount of time and minimize the risk of poor sales in the months before Halloween. Since these companies generally rent out warehouses to sell costumes, the rent they pay is significantly reduced, which once again saves them a ton of money.

In 2011, $2.3 billion was spent on candy alone. This means that approximately 30%of Halloween spending is allocated to candy. The delicious treats that kids go running door-to-door for are costing consumers billions of dollars for one day. Some kids receive so much candy that they are able to stockpile it for months. To put things into perspective, according to the California Milk Processors Board, an average Jack-O-Lantern bucket holds about 250 pieces of candy, which is equivalent to roughly 9,000 calories or three pounds of sugar. With one pound of fat being equivalent to 3,500 calories, it's easy to see why many people can put on weight so quickly during Halloween.

Decorations account for approximately 27%of the $8-billion Halloween business. Starting with a simple Jack-O-Lantern and ranging all the way to smoke machines and strobe lights, the Halloween industry has it all. People go crazy when it comes to decorations. Gone are the days where turning a simple pumpkin into a Jack-O-Lantern would suffice.

Greeting cards account for about 6%of the total Halloween spending, and now pet costumes are starting to become a new common cost for consumers. Last year, consumers spent about $310 million on pet costumes alone.

The Bottom Line
Whether you're buying costumes for yourself or your kids, spending money on candies to give away or just buying decorations for your house, there's a good chance that you'll be giving money to the thriving Halloween industry.

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