When
determining how to price your products, there are several things you
need to consider. Obviously, you want to price it within the range
that your target market is willing to spend. You also want
to price it good enough to recover your costs and keep a nice profit
for your efforts.
Depending
on how you plan to market or to sell your product, you may need to
have more than just one price for a certain product. You might want
to have a retail price and a bulk selling price. You might
also want to think about giving a percentage off or a commission to
re-sellers and sales agents who are willing to help you promote and
sell your products.
Before
you can price your item, the first step is to identify your costs.
To
identify your costs, you need to list down all the ingredients you
need for each bar of soap and put a dollar value to it. And I mean
ALL the ingredients - every drop and every ounce.
Once
you've accounted for the cost of the ingredients, you need to add a
value to the labor costs that went into product creation. That means
identifying how much time each person involved in the process
spends in creating a bar of soap, and the computing the cost of those
minutes or hours.
Next,
you need to account for the cost of the packaging material that you
will be using for each bar of soap.
Once
you have these 3 components of your product cost, you can now compute
for your wholesale and retail prices. You can use this formula as a
guide and adjust as necessary:
Wholesale
Price
[(Cost
of ingredients) + (Cost of labor) + (Cost of packaging)] x 2.35 =
Wholesale Price
Retail
Price
(Wholesale
Price) x 2 = Retail Price
If
you would like to read more about pricing and marketing strategies
that you can apply when setting up your soap business, this book has
it - "The Super Soap Making Book". It has what you need to
start a soap making business, including information that will teach
you all about making unique homemade soap that you can create for fun
or for profit. Head on over here to learn more:
In
our next lesson, we'll talk about ways that you can reach out to your
target market - cheaply and effectively.
All
the best,
NOTE: Picture (s) and content are original and should not be used without permission of the author - Christophe Leroy - aka cleroy61, Copyright 2013, All rights reserved.
All third party products, brands or trademarks listed above are the sole property of their respective owners. No affiliation or endorsement is intended or implied.
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