Please note that this analysis is intended for informational purposes only. Your actual cost of goods may vary depending on shipping charges, ingredients used and time spent on each batch of soap.

How to Price Your Cold Process Soaps- Part II

An updated and more detailed breakdown regarding pricing your cold process soaps:

PRICING OPTION #1 - THE PROFIT DRIVEN FORMULA:
[Materials + Wages + Overhead + Incidentals] x Profit Desired % = Price to charge

Example: Materials Cost for a 11 lb. batch of CP soap:

PRICING OPTION #2: Figuring out total expenses for month

This is essentially the same type of pricing formula as Option #1 but it’s explained in a way that may be easier to understand if you’re not a big math equation fan!

1. Decide how much you (or your employee) what you want to be paid. Note: you may have two different pricing schemes based on what you’re paying yourself versus what you’re paying an employee.
2. Multiply the individual hourly rate by the number of hours a week that will be spent producing crafts. Example: 45 hours per week at $12/hour = $540 for the weekly cost of labor.
3. Save this number. You’ll use it later! =)
4. Calculate the total cost-of-materials needed to make one bar of soap/bottle of lotion/jar of salt scrub etc…. This involves figuring out your batch cost and dividing by number of bars. Example: Batch costs $60 and it will make 34 bars 60 divided by 34 = $1.76/bar
5. Realistically decide how many bars/jars/bottles you (or your employee) can actually make in one week.
6. Multiply the cost of bars/jars/bottles (individual amount) by the number of products produced in a week. For the batch example, if you make 30 batches per week, that’s 1020 bars per week. Thus, 1020 x $1.76 = 1795.20
7. Add this figure to your weekly labor costs. In our example, it’s $540 + $1795.20 = $2335.20
8. Divide this figure by the number of bars/jars/bottles made in a week. $2335.20 labor/materials divided by 1020 bars of soap per week is $2.29
9. This should work out to your *wholesale* price. If you plan to retail your products, you never want to undercut your stores, so be sure to mark your product up accordingly.
10. Compare this cost to similar products on the market. Again, what will the market bear? Is $4.60 per bar too high or too low?
11. If your price is more than similar products, you’ll want to work on sourcing out cheaper supplies (buying in bulk, buying closer from you, buying from a co-op), making larger batches (same amount of labor for more soap at a time) or cut the amount per hour that you want to be paid.
12. If your price is less that comparable products, it is okay to up your pricing to be more competitive and comparable to other soap. Nothing says that you can’t tack on additional funds on top of your wholesale/retail price with the thought of paying yourself more, expending more on advertising etc…

Note: The above series of steps does not take into account any expenses other than labor and materials. An optional step would be 6.5) Figure in weekly costs of any other business expenses that you may have (rent, electricity, advertising, printing etc…) and add it in step 7 along with your labor and product costs