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Soap Making Forum > Soapmaking & Candle Business Forum > General Business Forum > Pricing Time
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Old 04-19-2017, 04:24 PM   #1
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Default Pricing Time

For several months, my daughter has been after me to start selling a few things - primarily lotion bars - to her friends. I've been resistant, but she has asked me enough times to get me looking in this sub-forum. Reading about what is required to "do it right" for even the smallest sales presence has pretty-much affirmed my resistance. But I'm still curious about how you value your own time.

I've read the threads about properly pricing items for sale, including materials, labor and overhead. I have a business and technology background, and work with cost justifications all the time in my real job, so it's second nature for me to include all that. The tough question is "How much am I worth?" I know how much I'm worth in my daily job, but I've got degrees and 25 years of experience informing that. I know how much people who work for me are worth, because I know how much they produce, the local job market, all that stuff. But I have no similar basis for how much I might be worth making a lotion bar or a batch of soap?

So how much do you pay yourself when you calculate COGS?


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Old 04-19-2017, 04:38 PM   #2
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I pay myself $10 an hour because it's easy to figure out. With inflation and minimum wage going up (at least in California) I might have to start paying myself more!


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Old 04-19-2017, 04:49 PM   #3
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I've sold a bit at a few small craft shows. I usually charge around 2X materials. This is because I like making soap, etc and I am happy to send it to a new home to make more. For something like a lotion bar I usually tack on about $1 for packaging, assuming it's in a roll up tube.
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Old 04-19-2017, 06:33 PM   #4
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Speaking from the experience of my day job of leather working -- What number I use for labor depends a bit on what I'm doing. If the work to be done is something my co-worker can do, I use her labor rate adjusted for FICA-medicare -- that ends up being about $13 per hour. If the work to be done is something only I can do, I use my higher labor rate. If the work requires both of our talents, then I'd use a labor rate somewhere in the middle.

You could argue that low-skill tasks should only be paid at minimum wage, but here in Iowa, the minimum wage is stupidly low and inequitable. I can't do that and still like the face I see in the mirror. On the other hand, I have advanced degrees in engineering and a fair bit of professional work experience, but I can't put a value on my labor using that basis. (Wish I could, though!)

I also make adjustments for the time needed for each task in a project. If I'm new to a task, it will take me longer than if I'm an old hand at the work. I generally don't expect the customer to pay for time spent learning to do my job, so I usually figure the labor cost based on the time needed for a moderately experienced person to do the work.
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Old 04-19-2017, 07:52 PM   #5
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I don't have a specific number for you but I did want to say don't sell yourself short. Consider the expertise you've gained through all the time you've spent doing R&D to create and perfect your recipes. That experience and knowledge should be reflected in your labor rate.
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Old 04-19-2017, 08:17 PM   #6
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My recent research into this very subject said to charge double whatever you would pay untrained labor as the cost for yourself. I wish I could remember where I read it, though! (Of all the things I've lost, I miss my mind the most!)
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Old 04-20-2017, 02:07 AM   #7
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Quote:
Originally Posted by dixiedragon View Post
I've sold a bit at a few small craft shows. I usually charge around 2X materials. This is because I like making soap, etc and I am happy to send it to a new home to make more. For something like a lotion bar I usually tack on about $1 for packaging, assuming it's in a roll up tube.
I am like Dixiedragon, I love making soap and what do you do with tons of soap but sell. It is a small cash business so I simply do not stress at pricing and keep the accounting very simple. I get $7.00 per 5.5-6 oz bar and know I am not losing money. My little business buys my groceries and all my supplies, plus it makes me happy.
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Old 04-20-2017, 04:08 AM   #8
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I don't sell, but it seems to me the price of these types of products is pretty well established. Around here it's $5-7 for handmade bar soaps; not sure about lotion bars but a little market research should tell you. It seems doubtful there's a wide range in what you can get unless you're willing to purposefully undercut others in the biz. Go too high and it stays in your bins.

If you're still interested in pricing it out, to me the bigger question is not hourly rate, but how to get back the amount needed for insurance. That has been enough disincentive to me. But I suppose that would be a non-issue if you already have business insurance in place.
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Old 06-12-2017, 02:39 AM   #9
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I know this is the wrong way to think about stuff like this, but here goes:

I price things based on the maximum the market will bear. If I want to make a B&B product or a piece of jewelry that could not sell for considerably more than it cost to make it- I opt to make something else instead. A very few things I make 2x materials. Others are 5x, 10x or 20x or more (my jewelry supplies are often upcycled "junk" and just as often, dirt cheap).

As for how I think of valuing my time, it's similarly highly thought out, but informal. I want to make more profit on some things than others. My time is worth less to me when I'm making something I enjoy. When it feels like work, I need to make more money if I'm going to do it.

So- as an example- I make typewriter key bracelets (I know it's not bath and body stuff, but I hope it illustrates my point well). I feel that at $49 I'm pretty maxed out at the upper end of what they could sell for. They have approximately $13 worth of materials in them, and about an hour of labor to make. Once upon a time, that was fantastic! Then it was great- but maybe I quit wholesaling those suckers. Now... meh. I'm SO FLIPPIN TIRED OF MAKING THESE. I may discontinue them. On the other hand, if I can find a way to sell these babies for $99- I'll be back in business with that design and super enthusiastic about the whole thing.
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Old 06-12-2017, 04:19 AM   #10
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For starters, you shouldn't be thinking in terms of 2x or 5x material costs. Wholesale is 2x ALL costs. Materials, time, overheads (power, rent, insurance etc) and retail is 2x wholesale. That's a general rule of thumb, if the end price is 6.37 then you might round it to something more useful.

For many people that might well price them out of the market, which means that their costs are too high or everyone else is under pricing.

If costs are too high, lower the material cost or decrease the time taken.


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