Working out finances

[Guest]

Just curious as to how people who sell their soap work out the cost of each bar presuming they have a few different bars which all use different ingredients (a few the same/different variants). I'm sure there must be more than one way to do this. I haven't worked out how much each of my bars cost but i'd like to know how to.

 

[Guest]

Maybe there's a more efficient way, but I take all the supplies for a particular batch -- oils, EO's, etc -- and divide the cost of each by its specific weight in ounces, whether it's a gallon of coconut oil or 4 ounces of EO. I then figure out how many ounces of each I'm using in a batch, total the costs per ounce of each, then divide by the number of bars I get out of the batch.

It's harder to factor shipping costs in, since they are spread out more than I can easily keep track of. But I at least get a basic idea of what I'm spending per bar of soap (which for me is somewhere in the realm of $1.50 per bar).

 

[Lindy]

I use SoapMaker and it gives me my exact cost per bar including packaging - I then mark it up 2x for wholesale & 4x for retail.

HTH

 

[pepperi27]

I use this called the cost calculator

http://www.saratogascents.com/cost_calculator.html

 

[kaseencook]

Don't forget overhead and to make the profit vs time realistic, as well as a price that fits your demographic.

All the things like heating, internet costs, phone and material depreciation will indirectly affect your profits, so it is important to consider that these things are accounted for in the cost of the soap (I would say to estimate, add 10-15% of materials cost just to make it easier)

If you had a bar of soap that cost $0.50 to make, but took you 20minutes to make and wrap, then $0.50x4=$2 a bar would prob not be realistic to support yourself and you will end up putting in a lot of time with not much profit. I make sure that the profit per time is in line with the hourly wage you need to earn to support yourself.

There's also the market you want to sell to. If it is the upper crust spa/luxury market those people expect to pay more and therefore would not buy cheap priced soap, so in that case raising the price to fit the market demographic can work to your advantage.

There are so many factors to check your sale price against, I think that it is important for the longevity of the business and your work load and sanity to consider them all, not just the materials costs.

 

[rszuba]

kaseencook, --so you say calculate materials and add 10-15% to it and that would be a good estimate for utilities, phone, shipping, gas price or milage--travel,internet, ... and maybe mailing list-postage and materials?

---so a bar that cost 1.00 in materials would be 1.15 , then times 4 for actual sell price?

renee

 

[Guest]

I use SoapMaker and it gives me my exact cost per bar including packaging - I then mark it up 2x for wholesale & 4x for retail.

HTH

I'm tempted to get that. It's a shame they don't accept paypal

 

[ElenaCoralSoaps]

most soapers charge about $1 or $1.25 an ounce but heres a sight that you can follow step by step guide to pricing soap

http://www.teachsoap.com/cpcosting.html

 

[kaseencook]

kaseencook, --so you say calculate materials and add 10-15% to it and that would be a good estimate for utilities, phone, shipping, gas price or milage--travel,internet, ... and maybe mailing list-postage and materials?

---so a bar that cost 1.00 in materials would be 1.15 , then times 4 for actual sell price?

renee

Overhead doesn't include shipping, because the customer pays for shipping separately, unless you undercharge for shipping (in which case that should be added on separately). We have modest phone and electricty and prob don't pay as much as people in other countries - so if you pay a lot in these items, as well as additional advertising, perhaps the overhead percentage should be increased, but it's just an estimate as it would be difficult to really calc these costs in relation to each bar of soap - it's a buffer.

I don't use the x4 equation right away, I look how much I want to make per effort time to support myself.

An average wage in Aus is about $20/hour, so if I can make and package 20 soaps an hour, I would need to make min $1 profit per soap. So if it cost me $1 to make the soap, plus %15 over head, plus the dollar profit, then I would not sell the soap below $2.15 (this would likely be the wholesale price). For retail I would then look at what other people in my area/client base are selling soap for successfully - which is about $3.50-$5, and I would prob choose a retail price within this range (perhaps twice the min sale price) = $4.30/bar. Or if you are selling to a more luxury market, I would increase the price to about $5.

So this way the sale price doesn't leave you working hard for little to support yourself with, and you are not charging too little or too much for your client base/target market. I suppose the ole retail being twice the wholesale is helpfull to check values against or if the final value could be in a range of values, but it can be detrimental if the formula does not represent what your target market expects to pay, is not competitive, or what you want to earn, though it works well in some cases.

 

[rszuba]

thanks for the breakdown info. i appreciate it.

renee

 

[Guest]

Yeah, it's been a really interesting read. Thank you all very much.