Teach Soap

This may be the wrong place to post this question, so if this is not appropriate here, please point me in the correct direction
I was wondering how other soapmakers come up with the prices for their soaps (and possibly other toiletries). Is it based mainly on the "going rate" or do you calculate costs and go from there?
Also, once you have a retail price, how do you come up with a wholesale price? Are there general guidelines for this?
I have the opportunity to sell my soaps locally and have also been approached about selling wholesale potentially. Making the soap is the fun part.....pricing is not (at least to me!). Help!

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Carrie
Wife to my Best Friend and Homeschool mom to 7 beautiful gifts

I don't go by the "going rate". I calculate my costs and then take it from there. My wholesale is 40% off my retail and I do have a minimum order for wholesale. I have 600 soaps ready to go at any one time.

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Irena
Closed minds are like faulty parachutes; they refuse to open.

When you calculate your costs, do you include just materials or do you account for the time involved? And then once you have that base number, how do you get your retail price? Do you multiply the costs by a certain number?
I'm sure there are probably a plethora of different methods of doing this, so I'm just trying to gather some varying perspectives.

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Carrie
Wife to my Best Friend and Homeschool mom to 7 beautiful gifts

Hi Carrie,
I don't know if you've seen this article on the TeachSoap website titled "Pricing your Cold Process Soaps"? Hope this helps!

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Armi

Thank you Armi for the link. It's more then just the cost of your soap ingredients and labor. My wholesale prices vary depending on oils/butters used and if I use essential or fragrance oils.

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Irena
Closed minds are like faulty parachutes; they refuse to open.

Im pondering this myself, Im thinking that if you sell retail you make back your ingredients,time and profit both and if you sell on consignment you just get paid for your ingredients and time ,but wholesale , I don't see how it's worth the time). Cause it's not just the time it takes to make the soap, it's also, cleaning up, running for supplies, making lables , cutting soap ,wrapping, bookwork ,advertizing,driving to and time at shows. taxes, insurance, applications,permits, paperwork ect.ect.ect. I love what I do but if wholesale is 1/2 of retail seems to me your profit margin is gone and your just getting paid a little bit for your time. If Im wrong Soapbudy please tell me . I sell 4.5 oz. of soap for $4.50 thats unscented, scented and essential oils ( I stay away from the expensive EOs , that way they balance themselves money wise.

Echo-ing many of AutumnWoods' sentiments and curious as to what others think. I love making soap and hope that it can be both a profitable and enjoyable hobby for me. But is seems so difficult to balance getting a profit with making it affordable for the average consumer.
And thank you, Armygrl, for the link, as it does gives a good place to start.

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Carrie
Wife to my Best Friend and Homeschool mom to 7 beautiful gifts

HI Carrie,
I think that sometimes both your costs, profit, overhead, etc AND the going rate have to come into play. If you do the math on the first set of variables, then you come up with a number. But no matter what that number is, in any given area, the average consumer is only going to pay a certain amount. Yes, you can always say, "well, a discerning consumer who knows 'what's what' will pay $X for this great soap." Ok, maybe,... but are there enough of those kinds of consumers to make it profitable? And in most markets, there are probably a LOT of crafters who are only in it as a hobby, and they don't mind selling their soap and barely (if that) making their costs back. So that undercuts what you might need to charge and they get the sales instead of you.

ON the other hand, if you make a LOT of soap, you can buy in serious bulk and get your costs down that way. But that is a lot of money to invest on the front end before paying customers, either retail or wholesale, show up with their cash.

What we, or the consumer, might see as a really great soap (essential oils, natural colorants, expensive butters) may be hard to make a consistent profit on... but a simpler recipe, with FOs, less $$ oils, etc - might have a better chance.

Just my 2 cents. Personally, I do not wholesale my soap. It is a 'retail only' product, because the profit margins are just too low to be worth it. (I am also in Canada, where all supplies cost a lot more, but the price people will pay for handmade soap is still the same as the U.S) My other body products are available wholesale, and the margins are a lot higher there.

Your mileage may vary

One more thing: despite all the math and cost calculators, everyone will have a different feeling about that profit margin they are comfortable with. For me, if an average bar costs me $1.35 to make, then $3 wholesale and $6 retail (all our local market will bear) is not enough. The "multiplier" as my marketing hubby would tell me, is too low. My other products start (wholesale) at a 4x multiplier and go as high as 10x.

I don't do consignment. I want the seller of my products to have a vested interest. I've done it a couple of times and it just didn't work out.

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Irena
Closed minds are like faulty parachutes; they refuse to open.

I completely agree with soapbuddy about consignment - it is a potential minefield!!
I had a store that wanted to consign my candles at Christmas - and her contract was so lopsided in her favour - it was ridiculous!!!

To put things in perspective, someone just told me that Macy's are now selling CP soap on the same basis as Lush do (by weight) and they're selling it at $10 per 100g bar. To me, that is way over the top and makes the product into a 'fad'. My reasoning is that I can formulate a liquid 'soap' that works and smells even better than my best CP soap at a fraction of the cost of making the CP soap. My soap sales here are pathetic because everyone likes liquid "soap". It's all synthetic of course but there's nothing wrong with that providing harsh surfactants are avoided. I price my own CP at $3 per 100g bar and it hardly sells at all at that price. My cost is about 50c per 100g (ingredients only). There's a lot more labour involved in making soap, too. Basically I price my products at 6x ingredient+package cost.

I can only charge for soap what the market will bare. So the only way to make this work as a business is to buy in bulk, sorce local, grow my own herbs and make some unscented .Thats what Im trying to do to cut costs, any more ideas???

Thanks, everyone, for the variety of responses and for sharing your thoughts and experiences. Very helpful---I appreciate it!

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Carrie
Wife to my Best Friend and Homeschool mom to 7 beautiful gifts