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Raw Materials + I GOT IT TAB!

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G

Guest

The time has come to set my prices in black and white.

I want to make sure I am doing this right because I hate math!


Is there an easier way of doing this..

I added up a particular item.
the raw materials came to $35.00 to make 15 jars 4ozs.
(includes container, lid, and sealing disk to it)

Labor: I am paying myself minimum wage. 8.25/hr

Overhead. I came to 715.00 a month.
this covers
gas,
electricity
shipping costs & boxes
insurance
phone
webhosting
internet fees etc...

It says to

Raw Materials + Wage + Overhead = Cost of product.

I divided the overhead by how many of these items i can make a month
I said 50 jars.

715.00 divided by 50 = 14.30

so
35.00 (raw materials) + wage (16.50) 2 hrs + 14.30 (overhead) =
65.80

65.80 divided by 15 jars (right? from the batch) = $4.38 each jar

cost me to make right...

x's 2 = 8.76 for wholesale (round off to 8.75)
x's 4 = 17.52 retail(round off to 17.50)

This is for a 4oz container of Shea Butter Foot Balm.. isnt this high..
the 8oz container would be higher because instead of 15 jars it makes only 7 jars... so it would be price close to 25.00... thats high..

Help please?
 

Tabitha

Well-Known Member
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I would say the overhead is wrong. You are making other items too right?

If you overhead is 715.00 a month & you are making 50 jars of shea + 50 jars of lotion + 200 cupcakes plus 200 bars of soap, that equals 500 items a month. Divide 715 by 500 for $1.43 per item.

I would not figure in shipping costs or boxes because your customer already pays shippping & your priority boxes are free from the post office. You only pay for packing peanuts & tape & you should have plenty of peanuts from boxes you get from your suppliers.

The other thing is, you can not penalize your customers because you are new or your production is low or you are paying too much for your supplies.

For example, if I am out of jars that normally run me .50cents & have to get local jars in a hurry that cost $1.20ea, I only factor in the .50cents it should have been. I don't make my customers pay more because I ran out or make a bad choice.

When I started out, I knew if I bought soap in bulk I would be paying $1.50 a pound ($2.50 if you figure in shipping). But I needed to buy it at the hobby shop for $6.00 a pound because I couldn't afford a bulk purchse. I based my retail price on the $2.50 per pound beacuse hat was reasonable & again it was not my customers fault I couldn't buy in bulk.

Where I am going with this is, it does not seem reasonable for you to be putting out $750.00 overhead for just a few items you make each month. It sounds like you might need to take a buisness loss on a portion of your overhead untill you are producing more monthly.

Why is your overhead so high? Do you realy have a seperate phone line just for your buisness? is that necessary or could you share your home phone or cell phone w/ your biz?

Just some queastions.

Shea butter is selling natinwide for 2-3$ per oz so you need to look at your expenses & see how you can cut them to fit into the normal range for that product. $8-$12 for a 4oz jar seems to be the norm. I charge $12.00 cause I don't like to make it & hope if my price is hgh no one will buy it & I won't need to make it as often-awful huh?
 
G

Guest

Thank you Tab, I made some adjustments last night to my overhead.
phone, gas, etc.

I am going to post it again and see if it looks ok then.
 
G

Guest

Alright, I estimated that I can make 500pcs per month (give or take)
It could be higher cause I can roll out some soap.. especially when I get Paul's molds!

Ok.. here it is.

Shea Butter Foot Balm
4ozs $12.00
8ozs $16.75

"So Cool" Whip
2ozs $11.00
4ozs $ 14.50

Body Butter Balm
2ozs. $ 9.25

Soap 4-5ozs
$5.50 each

*HOW DO I PRICE LOGS??*

Whipped Shea Butter
2ozs $10.95

Standard Cupcakes
$6.95ea

Mini Size
$3.95ea

I am much happier with this. Thank you. I had to reconfigure somethings, but I got it.

I just do not know how to do the logs, I decided this time around I can sale soap by logs as well as wrap, and unwrapped.

Now I have to make a wholesale contract etc. Terms etc... How fun for me! This is what happens when you dont have any oils..

YOU GET MORE PAPERWORK DONE! LOL
 
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