Teach Soap

I've been running into a chronic problem when figuring my cost of goods (cog): how to determine the cost of shipping the raw materials to me. I don't have many local resources; almost everything I use is purchased online and shipped to me. Shipping varies so much depending on weight, carrier, and distance that it's making me pull my hair out (I may be a little OCD about this). So after much fiddling with invoices, I'm estimating that shipping any given order costs approximately half to 2/3 of what I paid for it (some orders much more, some much less, depending on what I ordered, so it's an average). So I was going to take the cog and multiply it by .5 or .66 and add that result to my original cog. Does this sound reasonable?

What do you guys do to figure shipping costs into expenses? To be clear, I'm not talking about shipping costs to get product to customers; that cost I pass along to the buyer. I'm strictly speaking of my cost to have materials shipped to me.

Many thanks for your help. My hair stylist also thanks you in advance!

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Just living is not enough. One must have sunshine, freedom, and a little flower.
Hans Christian Andersen
www.etsy.com/shop/AngieLady
Sunshine Bath & Body

When I get an invoice, I figure how many ounces total that the shipment is charged for. I divide the cost of shipping by the total ounces and get a cost per ounce for shipping. I then add the cost of shipping per ounce to the cost per ounce of each item. For instance if I ordered 7 lbs of coconut oil @$17.22 and 7 lbs of Castor oil @$15.89, the shipping to my area is $14.22. Fourteen lbs is equal to 224 ounces. $14.22/224 ounces = $.063 per ounce shipping. I add $.063 per ounce to the cost of each ounce of my oils. The cost per ounce of coconut oil is $.153 per ounce. Adding $.063 per ounce for shipping makes the cost of the coconut oil $.216 per ounce. If you round the shipping down to just $.06 per ounce you will be cheating yourself out of almost one dollar on the shipping.
I always use a ruled sheet with columns to record the costs of ingredients, so I can go back and see what I paid per ounce for each ingredient and figure the cost of the ingredients for my soap, lotions, creams etc.
I figured this quickly so I hope it comes out right, but that is how I do it.

Ditto to what lsg said. The only time it is thrown a curve ball is when you order something like a mold... then I usually let the cost of the oils asorb the shipping for this. I will do my calculations as soon as I get an order in and then keep a running log so that if I want to know the price per ounce of a bar of soap it is easy to figure. But then I thougt about the shrinkage and that threw my numbers off a little. So if my recipe makes 48oz but once I cut it I only get 47 oz and then after curing there is only 45oz?????? Since I do not sell if really is not an issue for me.... just my problem with wanting all the details worked out.

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Susie
Sometimes A Mistake is so much fun, You just have to do it again!

_________________
Just living is not enough. One must have sunshine, freedom, and a little flower.
Hans Christian Andersen
www.etsy.com/shop/AngieLady
Sunshine Bath & Body

I've decided to come at this sideways. I created a spreadsheet with all my invoices from the last year. I figured shipping cost per ounce using total shipping weight. Then I averaged the shipping costs, which works out to be about $.12 an ounce. I wrote formulas instead of breaking out the calculator, so I can update it every time with each new invoice. Which means for every formula I make, I can just multiply the total batch weight by the current average. Woot! I can also chart it and easily see if my costs are going up from specific suppliers or at certain times of the year. Double woot! If anyone has Excel 2007 (I don't know if it's backwards compatible) and would like a copy of the spreadsheet, send me a pm.

PS Seeing my total shipping cost for the last year also nearly gave me a heart attack!

_________________
Just living is not enough. One must have sunshine, freedom, and a little flower.
Hans Christian Andersen
www.etsy.com/shop/AngieLady
Sunshine Bath & Body

I do what lsg said. Then, for the 24 bottles or what have you, I treat the total number of items just like they were an ounce of oil. So I calculate the number of droppers or bottles, not the number of boxes. 24 bottles is like 24 ounces, 100 droppers is like 100 ounces, not 1 ounce because it came in one box.
Then, whenever I make a lotion or soap or whatever, I calculate everything used for that product, including droppers, gloves etc. This way I get the total cost per product (less labor and the fixed costs of business rent/utilities etc.).

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Remember, it's not just that we weather the storm, but how we dance in the rain.

Tammy

Here is some great information from Teach Soap:

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