Teach Soap

Hello All,

I am helping my wife, Leslie, the awesome soap maker, as we prepare to launch our new handcrafted, home-based soap business. We love the soap business and appreciate this very helpful online forum to share ideas, suggestions and best practices.

One thing I would like to know in order to optimize our sales out of the gate is what you all have found most effective--selling retail or wholesale, or a mix of both? We have been advised that selling retail gives you much more control and you can better keep your soap prices consistent. Also, selling retail allows you to stay more personally involved with your clients. Commission normally is 15% or so when selling retail.

Any suggestions from your experience?

Thanks so much, and we really appreciate this forum!


Michael

This is a question that I have wrestled with for some time. At this point I am only selling my soaps Retail ie. at craft fairs,festivals, and from our website. That way I have been getting the profit margin I need/want for my product. The costs of retail though can be an issue different fairs cost different amounts to get into from 15 to 150 dollars in our area. If you have a poor fair, or business is just slow you can end up with a loss for the day if you don't at least sell enough to cover the table costs. Not uncluding travel meals etc depending on how far from home you have to travel.

Doing some research on the fairs you want to attend can help eliminate this but it is still a bit of a gamble until you get to know the market. So this sort of retail can be risky but has good potential for profit once you get going.

Setting up a retail store or selling out of your home is another sort of retail. I won't go into a store since there are some serious overhead involved but if your market can bear it this is a good way to sell. Selling out of your home can be a problem depending on zoning. Some cities just don't allow it. There is also the insurance issue homeonwers does not cover you for this so you have to buy a commerical policy plus get any required licenses.

Selling wholesale on the other hand you have none of the expenses of setting up a shop or the expenses that go along with making sales. But you will get less for your product. Finding a good place to sell you product is not always easy. Are they professional will you sell on consignment? will they purchase the product from you to resell it? what about product that doesnt sell how often will it be rotated and who does it? ( I am not a consinment fan without a wriiten contract btw )

Assuming you find a place to wholesale it how do you price it? Most stores will not sell product that they can not make a minimum of 30% gross profit on. That means a bar that retails for 5 dollars would have to have a wholesale cost of 3.50 . Thats 30% gross profit NOT markup. You may find stores willing to make less on a product but they may well require you to consign it or you may bear more responsiblity for unsold, rotated, or stolen/missing product.

What ever deal you make you have to decide if you can afford to sell wholesale and what is a reasonable price for you. Then you can approach the wholesaler with your pricing and they will determine if they can sell your product at a reasoanable profit.

If you do both you have to be careful that your retail price doesn't undercut any of your wholesalers in the market. This makes for unhappy sellers. I don't know if that helps but these are the things I have thought about on our journey to selling soaps

Jethro