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heartsong

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watching the econony tank on the evening news, and having several long-time customers close their doors or stop ordering, has given me a heads-up to do a little personal evaluation of where my industry as a whole and my personal cottage-industry is going. i fear this is going to be a hard-money economy at least into next summer if not longer.

i've seen at crafts fair lots of people, but not spending as they did last year.

the cost of shipping is a killer, when it almost doubles the purchase of a few soaps.

operating virtual e-stores has a monthly overhead cost whether you sell or not.

then there are the crafts fairs-some are very expensive and theres no guarantee that they'll buy. plus the hassle of set-up, take-down and travel and other out-of pocket expenses, like motels and paid parking. you have to travel alot to make a steady income.

if you sell to stores, you have to sell to them cheap enough so they can "key-stone" the price. in other words, if you sell your soap to them for $2.50, they have to be able to sell it for at least $5 to cover their overhead and make a profit. after a recent field-trip to at least a dozen nice health-food stores, i don't see soap flying off the shelves...and there's a lot of competition.

it has been my experience that you can look at all the pictures of pretty soaps on the internet or in a catalog, but nothing sells soap better than when they can pick them up and smell it up-close and personal.

my father, who lived during the great depression, always said " in good times or bad, after food, clothing and shelter, you still need soap and toilet paper."

this is true-soap is a luxury, a vanity and a necessity! in hard times we can skip going to the movies, or eating out, but we still need soap to stay clean and smell nice and feel special.

i've spent a long time reflecting upon this and these are my thoughts:

i've had to go back to a regular job to pay the bills, but i have weekends to soap.

i have revamped my recipies to offer a fine quality soap without the more expensive oils.

i've stream-lined my soap production to make the most efficient use of what time i have.

i have researched and targeted my most-likely-to-buy customer base.

i am working on aan avon like network based on sales incentives which will almost eliminate my overhead.

i live in rural alabama about 12 miles to a small town and 50+ miles to a big city. most people are low to middle income, or on fixed retirement. one thing about the south, everyone knows or is related to everyone else. there are no friendlier or kinder people than southerners!

my targeted customer group are women over 30.

my targeted price for a 3.5 oz soap is $3.75

i know this doesn't sound like much, but bear with me-there's a method to my madness!

my bars are small-2x3.25x1.25 and weigh 3.75 oz. they have been the best selling size, since i can keep the price down and get multiple bar sales.

it costs me $1.00 to produce and package one bar of soap. there are 18 bars per batch, and i can make up to 6 batches (108 bars) per weekend with little or no stress. it takes about an hour of my labor to produce and package one batch, so i add .25 cents to each bar or $4.50 per batch.

i take the $1.25 production costs and double it-$2.50-and that it my profit.

the other $1.25 is for my sales rep. for that profit, she uses her car, uses her phone, delivers the orders, takes the money and comes back with a check or cash for my share of the sales...no more credit cards, pay pal, bounced checks, etc.!

my first rep is our retired mail lady. she's living on a modest income is active in her church group and knows half the county, since she's been delivering their mail for the last 20+ years!

we will begin this weekend. and hopefully do well. keep your fingers crossed for us!

i would appreciate any ideas or advice.

good luck to us all in these lean times!
 

Deda

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Sounds like a well thought out business plan.

Perhaps once you have your mail lady promoted up to project manager you can host a seminar for auto industry execs!

I like the way you think!
 

Zenobiah

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How on earth do you manage to make them so cheaply? I have spent a few days pricing my favorite recipe and can make it for under 50 cent per bar....but then there is the FO and the packaging which kills any chance of profit for me.

I would love to know any info you can tell without giving your trade secrets away of course.
 

mandolyn

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Thanks heartsong! I've done the same thing & came to the same conclusions.

I, too, keep my bar size & price about the same as you. I've found it works!! I don't do art soaps, so I don't try to compete with those prices.

This was my first year in business, doing craft fairs. I never sold less than 4 times my table/booth fee at any craft fair this year & often did better than that.

When I cost out my soap I include:
Materials
Mold
Prep Time
Production Time
Label
Wrapper

I had to seriously consider my profit margin. I continue to price wholesale at cost times 2 & retail at cost x3. In my state & with the economy, it works. I still make what I consider quite a profit & I don't undercut my competition to do it.

I've expanded to include lotions & scrubs, but soap continues to be my main seller.

Here are some things I do to keep costs down:

The thing that cut costs the most was to cut out the middle-man & go directly to the manufacturer whenever possible.

I order in as large quantities as I can, & I do one large order rather than several small ones to cut shipping costs.

I avoid buying too many EO's & FO's & make my own blends. The major cost of soapmaking is in the oils & EO's & FO's. I've spent the year inventorying after every show to see which scents sell & which don't. I'm discontinuing the slow sellers. I have 10 really good sellers & that's what I'll focus on & then add only a couple seasonal scents as the year progresses. It's fun to be a foho, but it does nothing for a profit margin. :lol:

I keep all those really espensive & exotic oils & butters for leave-on products instead of using them in my soap. I don't use the cheapest oils, my basic formulas are 45%-50% Olive Oil, but there are lots of less-expensive oils like Avocado that are wonderful additions to a soap formula, & it only takes a little bit to boost a formula.

My basic premise has been to keep it simple:
recipe of 3-4 oils (additives only if they enhance the formula)
simple, inexpensive packaging (I soap round & oval & use coffee filters for wrapping & a label to hold it all together.)

This is as fancy as it gets:

 

heartsong

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thanks for the input-it would be nice to keep this thread alive thru 2009 so we can compare notes and see if any of our views change as the economy struggles along.

MANDOLYN: very clever packaging! thanks for sharing your thoughts. it's comforting to know that there are others out there with the same concerns.

if one is not careful, your packaging costs can either be very time consuming or expensive. i have found these little brown boxes that my soap fits in perfectly for .11 cents each per 100- but i only use half a box-the top and bottom are almost identical in size- and do a pretty pre-printed cigar-band wrapper which leaves about 1/4" of my bar peaking out on the ends so you can see and smell the soap, but it is totally protected and stacks perfectly. i can print 4 wrappers per sheet and using nicer paper and 1/2 box and a few glue dots makes my packaging less than .10 cents per soap. if packaging goes up very much more, i'm thinking of shrinkwrap.

i wish i could download some pics, but the mickey-mouse net i have only lets me surf, and email-can't download anything. hopefully this will change in the near future.

bringing down the cost of materials-obviously the larger the purchase, the cheaper the item. i also have a restarant supply in town where i purchased 2 35# pails of palm oil they had discounted for $24.95 each so i got a bargain, and saved on shipping. they also sell coconut oil by the pail for about $8 more than soapers choice-which would still be cheaper when you count in shipping.

fragrance oils-you've got to pay for quality- i like peak candle, soapsupplies.net and bittercreek. i am paring down my line to 6-8 fragrances, with maybe a couple for holiday or change of seasons. not having to buy so many, i can purchase in quantity-at least 16 oz. which brings down the cost per oz on f/o oils by 30-50%.

i am using colorants in my soap because it complements the scent. i found that i do not have the patience or the artistic nature to swirl!

i stick with a pretty simple scent pallette, but one of the best sellers has been bendel bean from soap supplies.net. i call it vanilla cream, and even my fussiest customers like it because it is a wonderful NON DISCOLORING vanilla, and does not conflict with their personal perfumes. i get an awful lot of reorders on this.

one of the things i do to streamline my time and cut down on prep-work is that instead of measuring the oils for each batch, i melt in a great big canning pot 10-12 batches of all the oils together, and then store in an unheated pantry next my kitchen. i have 3 large mixing/measuring bowls- 3quart with handle and spout-about $5 at walmart. i just scoop it out and weigh it.

another thing, i pre-measure a bunch of lye- some pre-mix it with water, but i'm a little nervous to have the stuff "lying around" so i pre-measure the lye into ziploc bags and the put them in a larger plastic container.

another thing i've changed is to the no-liner hdpe soap loaf molds instead of my tray molds, which are very nice, but it takes up some time to line with paper, since i'm such a perfectionist when it comes to wrinkles!

let's stay in touch and compare notes when we can.
 

mandolyn

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Re: avon

heartsong said:
thanks for the input-it would be nice to keep this thread alive thru 2009 so we can compare notes and see if any of our views change as the economy struggles along.

MANDOLYN: very clever packaging! thanks for sharing your thoughts. it's comforting to know that there are others out there with the same concerns.

<snip>
another thing, i pre-measure a bunch of lye- some pre-mix it with water, but i'm a little nervous to have the stuff "lying around" so i pre-measure the lye into ziploc bags and the put them in a larger plastic container.

another thing i've changed is to the no-liner hdpe soap loaf molds instead of my tray molds, which are very nice, but it takes up some time to line with paper, since i'm such a perfectionist when it comes to wrinkles!

let's stay in touch and compare notes when we can.

Thanks for the compliment about my packaging. It really is inexpensive & holds up wonderfully through packing & unpacking & being hauled to & from craft fairs. Being filter paper, you can smell the soap through the paper & the soap can still breathe. People like to smell the soap!!!

Your packaging sounds sooooo cool. Very innovative with having the bars protected & still be able to smell the soap. You're absolutely right about the cost & time one can invest in packaging! Making soap for me was easy, but labelling & packaging was a real challenge!!! I'm still agonizing about a business logo/branding & about to hand it over to a professional. I'm waaaaaaaaaaaaaaay too graphically challenged! :lol:

I forgot to mention it, but I soap back-to-back batches by measuring out oils for several batches all at once & then I soap at room temp. I cut my production time significantly by doing that. I've been toying with the idea of pre-measuring in bulk like you do. That'll probably happen in early spring as I gear up for craft fairs again.

I use mylar liners for my pvc molds. I hated fussing with paper, but I also cut costs there, because I don't ever have to purchase lining material again.

There are lots of ways to cut costs without compromising the quality of our soap.

Lets do keep in touch! :D
 

heartsong

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i have to ask you, do you iron the paper filters to smooth out the pleats or do they sort of work their way out? have you ever tried tinting or water-coloring them or stamping them?

there's nothing wrong with your labels-they show to me a kind of "country-chic" character, like you would find on a jar of the best peach preserves! i like to see the person's character show thru the soap as well as the packaging! i love things that don't look mass-produced!

there is a marvelous program for creating logos, labels, business cards, brochures, etc called PRINT SHOP you can get at any staples or office supply. there are like 4 versions from 19.95 to 199.95. i have the cheapest one and it's worth it's weight in gold! you can create a label, then buy the labels by avery and print your own, or go to www.onlinelabels.com, download your file and they print them up for you-even waterproof labels! there are hundreds of labels to choose from-colored, round, oval square, etc!

it's a pretty user-friendly program- in a couple hours you can be cranking out all sorts of sales related items. the price difference is the size of the photo gallery anywhere from 150,00 to i think 350,00 cut and paste graphic art. also kazoodles of print type and special effects. i've had this program for about 3 years and haven't seen all it's capable of yet!

to print your own labels, cardstock, soap wrappers, business cards etc you will need a laser instead of an inkjet printer because of the thickness of the paper. i just bought a brother for 69.95 with a $20 rebate! this prints black and white- the color printers are more expensive (and so are the ink cartridges!) if the labeling is clever and thoughtful, you really dont need color-i use really pretty marbled paper and then seal it with a matte sealer for paper from any hobby/scrapbooking resource. that way the print wont smudge if i stack them.
 

mandolyn

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heartsong said:
i have to ask you, do you iron the paper filters to smooth out the pleats or do they sort of work their way out? have you ever tried tinting or water-coloring them or stamping them?

there's nothing wrong with your labels-they show to me a kind of "country-chic" character, like you would find on a jar of the best peach preserves! i like to see the person's character show thru the soap as well as the packaging! i love things that don't look mass-produced!

there is a marvelous program for creating logos, labels, business cards, brochures, etc called PRINT SHOP you can get at any staples or office supply. there are like 4 versions from 19.95 to 199.95.

Thanks! That's exactly the look I was hoping for. I live in farm country where my customers are very conservative. Keeping my packaging simple, but fresh is important.

I've considered coloring the filters for a couple of my soaps, just haven't found the time to test the paint/dye for color fastness. The pleats help in wrapping. I place the filter on a roll of tape then place the soap on the filter & push it down into the hole. Easy, peasy wrapping. The oval soaps are a challenge.

I have the basic Print Shop, too. LOVE it!! I've created my business cards, signage & a brochure with it. My labels are done in MS Word, & I need to do them again in Print Shop. Time again. sigh.

I didn't rush into designing a logo/branding. I wanted to find my niche before I did that. I've done that, so I can move on to the logo now.

I think that's something that could be added to this thread. Finding your niche.

It was important to me to not feel like I was just competition for local soapmakers, but I wanted to add something to the whole. My soap had to be different to do that, though. Yes, I wanted to do the glitzy, pretty art soaps, but I saw an opportunity to carve a place for myself with simple, fresh, & homey.

I love the artist soaps & bow to the soapmaking artisans!! Their soaps are gorgimoose!! However, I see a lot of newbies jumping onto that same bandwagon & am seeing a lot of sameness as a result. There are a handful of soap artists who, when I see their soap, I know immediately who the soapmaker is. They're the ones being copied, which is a kudos to them for being such inspiration to the rest of us. It's really refreshing to see newbies copy someone, but then use that inspiration as a launching pad for their own creativity!!

There are almost 1,000 soap listings on etsy today, & a lot of sameness. I guess sameness sells, though.

Part of a business plan should include finding YOUR niche. Find it, carve it, but get there. I've seen artisan soapmakers come to this forum to work out a new recipe, a new design or idea. They've gone out on a limb to share it to get some feed-back only to have it copied & their new design, idea or recipe peddled on etsy by someone else just as fast as someone else could get it posted there. :cry:
 

carebear

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sounds well thought out indeed. when calculating your costs though did you take into account such things as extra electricity to make the soap, extra water to wash up, paper towels and such? where do you recoop the cost of your molds and such? and what about your liability insurance cost? and taxes - if you make money you have to pay taxes on that income (please tell me you have liability insurance and that you pay your taxes). those kinds overhead cannot be ignored.
 

heartsong

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when calculating your costs though did you take into account such things as extra electricity to make the soap, extra water to wash up, paper towels and such? where do you recoop the cost of your molds and such? and what about your liability insurance cost? and taxes - if you make money you have to pay taxes on that income (please tell me you have liability insurance and that you pay your taxes). those kinds overhead cannot be ignored.[/quote]

that is all fully deductible on your income taxes at the end of the year, provided that you itemize. i even deduct 1/4 of my house for business use, mileage on my car, phone use, insurance, utilities etc. i have a very good friend- a retired IRS forensic business auditor who has been most helpful.
 

heartsong

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mandolyn: finding your own niche in the soapmaking universe is the ultimate reward for all the time, money, stress and personal creativity invested in your craft.

unfortunatly some people just look for a way to make a quick buck and they dont care if that's selling soap, tires or whatever. so many of us truly love soapmaking, invest so much of themselves and consider it an art form-a streak of personal creativity that contains love, pride and a lot of hard work.

we also have a problem on the consumer end of things, too. a lot of people buy because of the label, not the quality of the product itself.

example-i spent some bucks on some l.l. bean woolen socks last year. that's a good label, right? that represents quality, right? the socks were made in china, and when i washed them, i had one dark blue sock and one a lighter shade, because they were from different dye lots...for $10 a pair, where was the quality?

btw, i also changed from c/p to rtcp and love it! it saves so much time and is so forgiving, especially if you have a touchy f/o that likes to seize or play games in the pot!

i like your idea on finding your own niche...i'll have to think about it, as we might need to start a new post here in the biz forum.

bye for now!
 

heartsong

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Zenobiah said:
How on earth do you manage to make them so cheaply? I have spent a few days pricing my favorite recipe and can make it for under 50 cent per bar....but then there is the FO and the packaging which kills any chance of profit for me.

I would love to know any info you can tell without giving your trade secrets away of course.

if you can give me the dimensions of the bars and your thoughts on what kind of pkging you'd like to see and any info on if you're selling in a store, or on-line or crafts fair, etc then we'd be happy to help you, as others have helped us in this forum.

one thing i found most helpful is at the top right of the forum page you can click "search" and find everything that has ever posted on a certain subject without having to wade thru every post looking for certain info. it sure saves on time!
 

carebear

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heartsong said:
when calculating your costs though did you take into account such things as extra electricity to make the soap, extra water to wash up, paper towels and such? where do you recoop the cost of your molds and such? and what about your liability insurance cost? and taxes - if you make money you have to pay taxes on that income (please tell me you have liability insurance and that you pay your taxes). those kinds overhead cannot be ignored.

that is all fully deductible on your income taxes at the end of the year, provided that you itemize. i even deduct 1/4 of my house for business use, mileage on my car, phone use, insurance, utilities etc. i have a very good friend- a retired IRS forensic business auditor who has been most helpful.[/quote]

For anyone who doesn't have an auditor to guide them, be EXTREMELY careful in trying to deduct your normal household stuff like part of your house and utilities and such because unless they are clearly and exclusively for business you can run into problems. Learned that the hard way. My car, by the way, was not deductible even in part though I get a per-mile allowance to deduct, nor is my homeowners insurance except for a small up-charge for the business portion, and my utilities not at all because I don't have separate meters.

But any deduction you can get is good. Course that is only helpful if you are making a profit in the first place - and if those aren't considered when calculating the cost of your soaps you likely aren't making that profit to begin with...
 

mandolyn

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carebear said:
sounds well thought out indeed. when calculating your costs though did you take into account such things as extra electricity to make the soap, extra water to wash up, paper towels and such? where do you recoop the cost of your molds and such? and what about your liability insurance cost? and taxes - if you make money you have to pay taxes on that income (please tell me you have liability insurance and that you pay your taxes). those kinds overhead cannot be ignored.

A lot of what you're asking was covered in my previous post, although I didn't list specifics under those headings.

Yes, I have insurance & yes I do my taxes. :lol: Will I owe taxes when I file? That's getting too personal. You can make a profit & not have to pay taxes, but there's a ceiling on how much that can be. This was my first year, & I managed to stay under that ceiling.

There are so many ways to save money. I don't use paper towels. I re-use old towels & launder them along with my other towels, for instance. Since I soap at room temps, the stove or microwave isn't being used. Ok, the stick blender, but that's minimal.

I couldn't afford to make hundreds of bars of soap if my soapmaking wasn't paying for itself, I assure you. Am I making enough to quit my 8 hr a day job? Nope! I don't want my soapmaking to become my bread & butter, because it wouldn't be fun any more.

There are lots of soapmakers who are actually making a living doing this, but they are soapmaking on a grander scale than I am or ever want to do. Wholesaling comes into the picture then, but that's veering away from this thread which was regarding a business plan.
 

carebear

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I didn't ask if you were making enough of a profit to pay taxes - I wouldn't ask about how much money you make. Heck I wouldn't ask my PARENTS about that.

I'm not speaking to just you, when I ask if the cost of running those additional loads of laundry or of paper towels or whatever were included, I was bringing that up for the benefit of the discussion.

There are indeed soapers who do this for a living - I'm not there nor do I expect to be any time in the next 5 years. But also there are soapers who (honestly, I know some of them) lose money on every sale without even figuring it out until way after the fact. Or, and I did this myself so I've learned, who made a commitment to sell at a certain price point only to find (when some kind soul pointed out overhead costs I hadn't thought of) that I would lose money on the deal. Talk about egg on my face. I hope to spare others the angst and aggravation I had to deal with by sharing this.
 

heartsong

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LOL! yes, we got a little "off message", but, oh well!

i'm getting together with my mail lady rep. this coming weekend 12/6. i released her with 60 soaps, dozens of samples and printed material and a lovely basket tote i made up for her.

i hope she did well, as i'd like to expand the idea into a network in the coming year. if it worked for avon (i read the history of the company-interesting!), and mary kay cosmetics, tupperware and countless others, maybe it can work for me!

keep your fingers crossed!
 

heartsong

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a brief update:

haven't been able to make it home yet, so i called my mail lady/soap rep. out of the 60 bars i gave her, she has sold 51-with more orders for oakmoss and bendel vanilla and mulberry! she says she just packs her little "tote" around wherever she goes.

i'm very pleased with the results so far. i'll be looking forward to sitting down with her over a cup of coffee and planning out our strategy for the months ahead. it will also be interesting learning her customer base and who buys what.
 

heartsong

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avon lady

finally had a chance to have a sit-down with my mail lady/sales rep. she sold the 60 bars of soap i had given her, and then got a little "creative" and started taking orders for soap. i should have explained in more detail that 1) i have to be home to make the soap, 2) it takes a month to cure and 3) i have to get home again to wrap them.

needless to say, all future sales would have to be subject to stock on hand!

anyway, i got the 30+ bars of soap orders cut and drying plus another 3 batches done and drying. we rounded up every soap left in my studio (plus most of my husband's stash) another 60 bars which will have to hold her until the other batches are ready.

she got a little ahead of me, but i'm working diligently to catch up! she says that selling my soap gives her an excuse to stop and visit with friends and acquaintances she was always too busy to see when she was working for the post office.

now that the holidays are over, i think this will work out very well for both of us. i think my biggest challenge will be building up an inventory while staying ahead of sales!

although some were purchased for gifts, most were bought for personal use. it will be interesting to see how many become regular customers.

she has another sister living in cullman (30 miles away) that has asked her about selling my soaps-and she is part owner of a hair salon.

i am very pleased, but i have to remember not to over-commit myself and to set reasonable goals, since i can only soap on a limited schedule. my job right now has to come first. if the economy wasn't such a disaster, i would be more tempted to take a gamble. where i work they've laid off over 300 drivers and god know how many support staffers since august. (175 the day after christmas!)

we'll just have to play it by ear-but all in all, i'm very pleased!
 
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