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Teach Soap • View topic - pricing

Teach Soap

Soap Making Recipes, Tips and Tutorials
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 Post subject: pricing
PostPosted: Tue Jul 26, 2016 11:35 pm 

Joined: Mon May 04, 2015 9:14 pm
Posts: 42
Hi
would anyone mind sharing how they determine how much to charge for a bar of soap or a candle? Say it costs me $2 to make, how much could I charge?
Also, how do you determine how much something like colorants cost? With everything else it is so easy because I use a specific amount, and that amount is easily divided into ounces. With colorants how do I decided how many little quarter scoops of a teeny spoon there are per container so I can figure out how much I use?
Thank you!
Wendy
Oh, also, for those of you who sell to stores, do you have any suggestions on how to approach them? Especially if it is not a store that typically buys from private parties?

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 Post subject: Re: pricing
PostPosted: Wed Jul 27, 2016 5:57 am 

Joined: Sat Aug 09, 2014 6:14 pm
Posts: 68
Location: Charlotte, NC
I don't make candles, but I'll share the process I use for pricing most of my items.

Let's say that I make a soap out of olive oil, coconut oil, and palm oil. I take the price of each item and divide that by the number of ounces in each package to get the price per ounce. Then I multiply the price per ounce to know how much money I am putting into each batch. I also do this for packaging and labelling. So my price per batch might be something like $15 total. I divide that number by how many bars I get out of a batch to get a price per bar. For simplicity's sake, let's say I get 10 bars out of a batch that size, so my cost per bar is $1.50 in materials. (Bulk pricing makes this number go down.)

Now I need to add in other costs, most notably labor costs. Pick a price per hour that you would like to make. Let's say it's $20 per hour, and it takes you about an hour to make a batch of soap. And since we know from above that we can get 10 bars out of a batch, then the labor cost per bar is $2.00. (Making larger batches makes this number go down too.)

So far a single soap bar is costing us $3.00 to make. We really should also add in a cost for overheads like electricity and rent/mortgage. You can choose to add a fixed amount, or figure out your average energy bill and monthly mortgage to get an idea of how much you typically pay per hour of each. Let's say your rent is $800 per month, so the price per hour is about $1.11, and your average energy bill is $75 so your average energy cost per hour is $0.10. That gives you a total added overhead cost of about $0.12 per bar (after dividing by 10 bars).

Each bar of soap now costs us $3.12 to make. That would be your MINIMUM wholesale price. Personally I would round up to $3.50 or $4.00 to give it a nice even number, but that's up to you. Your retail price would be double that, giving you a retail price of $7-8 per bar. That's a little high on the high side for a bar of handmade soap, but not terribly so. I've seen some for higher, and since I made up some numbers, it's not totally unreasonable.

Colorants.....those are hard to compensate for because you use so little of them. That's one of the reasons I pad my wholesale cost a little by rounding up. That way anything I use in such small amounts can be accounted for. It also helps me to offset one-time costs such as soap molds or other tools.

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 Post subject: Re: pricing
PostPosted: Wed Jul 27, 2016 7:21 am 

Joined: Mon May 04, 2015 9:14 pm
Posts: 42
Thank you.

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-Wendy
There are no negatives, only slow positives.


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 Post subject: Re: pricing
PostPosted: Wed Oct 05, 2016 12:16 pm 

Joined: Thu May 16, 2013 2:57 pm
Posts: 238
I agree that you need to make sure you are including ALL your costs. However, SoapingSoprano left out one very important thing. She added up all the hypothetical costs and said that was the minimunm wholesale costs.

WRONG.

What about profit??? Or are you planning to run a charity???

If not, and this is a business, or even a slightly profitable hobby, then you need to factor in PROFIT before setting any price, whether it is wholesale or retail. There needs to be profit even at the wholesale level.

These principles apply to all businesses, not just soapmaking!


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