Does pricing soaps and candles have you scratching your head? Do you feel you price soaps or candles too high or to low? Do you have a pricing formula or do you wing it? I can say yes to all three questions.
Simply stated, not pricing your candles and soaps properly will leave your business in the poor house. It will leave you frustrated and disappointed because there is nothing to show your time and effort. When you started your business you didn't go in with the intention of being left penniless.
Before you begin pricing I would suggest to check out your competition. Your competition will give you a good idea what market they are targeting and also the price range that target market is willing to pay. Remember the style of your candles or soaps will determine the price range. People will pay more for a unique hand crafted candle or soap. (Little note - Make sure you let them know how unique and special your products are)
I know more about candles than I do soaps, but you can still use the same method for soaps.
Gather a list of expenses that go into producing your candles and pricing soaps:
- Cost per ounce of wax
- Any additives you may use
- Fragrance Oil
- Stearic Acid
- Universal Soy Additive
- UV inhibitor
- Rent of Building
- Internet Service - including all costs for running your website
Not every pricing formula is going to fit your business. You will have to decide the candle pricing according to the situation you are in, but a general rule of thumb is to mark up your candle or soaps total cost 3 to 4 times for retail and 2 times for wholesale. Don't make this rule of thumb too rigid. Sometimes you will be able to increase the price for your products and sometimes you have to decrease the price.
Formula #1 For Pricing Soaps and Soaps
This is your basic candle and soap pricing formula that is very easy to figure. Take the total cost involved in making your product and multiply that amount by 2 for a retail price. This method does not include overhead costs like rent, internet service or electricity.
Formula #2 For Pricing Soaps and Candles
Here is another simple formula. After you figure out the total multiply it by 2. Many people use this formula to figure out candle or soap pricing that includes room for catering to wholesale accounts.
The formula would look like this:
- Cost of making the product x 2= Wholesale x 2= Retail
Formula #3 For Pricing Soaps and Candles
This formula shows you how much you have to make on a given product. This formula provides a good foundation to how you want you need to recoup to pay expenses.
The formula looks like:
- Profit + Indirect Costs + Cost Of Goods Sold = Product Price
Cost of goods sold - is the total of material costs plus the labor cost for making one item.
Indirect costs - totals up the overhead costs, such as, rent, internet service, website cart and blog.
Profit - is the amount you want to make after the expenses are covered.
Formula #4 This is Wholesale For Pricing Soaps and Candles
Material + Labor + Overhead Expense = Wholesale
Your retail price is 2 x wholesale. Once you figure out your retail price, ask the question if the soap or candle pricing is within the range of your competitors. Also, ask if it will sell within your economic area.
Remember to take into account time spent getting supplies, making the candles and soaps, packaging, shipping or delivering and selling them.
Yes, that is a tall list of what to include in your soap or candle pricing formula.
You may not have all of these to add to your pricing formula or you may have more overhead fees to add. Adjust the list to fit your particular situation.
Correctly pricing your products will allow you to evaluate each and every fragrance oil, wax, soap base that you put into your candles or soaps. It will help you determine whether or not you need to shop around for better prices or stick with what you have. It will also help you determine what market you want to attract. Your efforts and energy will be used exactly where you need it to be.
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