# Mark up?



## swgoats (May 21, 2010)

How do you determine how to price your products? If this has been covered already, I can look for the threads. We are going to do a couple colonial reenactments, and I'm trying to figure out prices. Folks in the reenactment world seem to have high prices, but I'm wondering if we wouldn't do better striving for volume with small items that just cost a dollar or two. We don't have to pay a fee cause we will be demonstrating goat milking.


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## hsmomof4 (Oct 31, 2008)

Just don't underprice yourself. It's fine if you want to sell things that are truly small at low prices, but don't sell larger items for less just because you think you'll move more. I would offer a variety of things at a variety of prices. So my 5 oz soaps and 2 oz lotions both sell for $6. If I do smaller soaps (like 2 oz) they are less, obviously. Sometimes I have an discount soap basket where they are less (I cut them too small, they are being discontinued, etc).


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## smithurmonds (Jan 20, 2011)

Have you really nailed down your costs? Not just of soap supplies and shipping expenses, but your time, your molds, labels, business cards, gas to and from the post office if you're shipping soaps, etc. How small does your bar of soap have to be for a dollar or two to actually be profitable?


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## Kalne (Oct 25, 2007)

I figure my cost and time and pay myself a decent hourly rate that will still have some left over after all the taxes are paid.


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## swgoats (May 21, 2010)

I took floriculture in high school, and they taught us a formula of writing down the cost of each item in the arrangement then adding a certain % mark up, but I can't remember what that % was. The mark up was to account for labor, overhead and profit. I remember it being pretty high, cause of course as a teenager and DIYer, I was thinking "I will never buy a flower arrangement when I can make one". I hadn't reached the point in my life were time was precious yet.  Doesn't sound like we have a nice neat formula for soap pricing...


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## NubianSoaps.com (Oct 26, 2007)

Nobody can help you with your pricing because we don't know your costs. My lye is about half what most pay, my shea much lower, I do not have a small business loan to pay back, I buy my scent, and most things I use every day in bulk. So my costs are lower. Vicki


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## a4patch (Oct 7, 2009)

There are several discussions on this already. Your time is valuable, whether you are milking a goat or wearing a long skirt in the summer. 

All your ingredients
your electricity.
replacement cost of all your tools(your stuff will eventually break or wear out.)
your time
your insurance
sales tax
mistakes
packaging
product loss
The list goes on.

The value of your product should reflect all of this.


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## Horsehair Braider (Mar 11, 2011)

Try this little exercise: Imagine that for whatever reason, you are totally bed-ridden for one month. You can not so much as answer the phone; you are at a hospital and totally unavailable. 

How much would you have to pay someone to do what you do? And that means everything you do for your business - answer emails, talk to customers, order things, etc. etc. 

This usually helps to add perspective.


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## Anita Martin (Dec 26, 2007)

And then you could always do market research and find out what others making similar items are selling theirs for. A great place to look is Etsy or at any of our websites/online shops. Then knowing the price you want to charge, keep your costs as low as possible to make the most profit possible. If you start out selling a $6 bar of soap for $2, then people will always expect you to have very low prices. 

I do sell $1 bars of soap but they are not really bars, they are samples of less than an ounce. I cut a full sized bar into about 11 pieces and put them in a glassine bag with a label stapled on. They are very pretty. (I got that idea here on this forum). They are not labor-costly. I also make a mini-bar that is a full size bar cut into 6 pieces of just under an ounce each. I wrap them in a coffee filter, a paper band, and apply an oval label. They are quite costly in terms of labor and I only sell these in "milk buckets" or "santa bags" of six or eight soaps for $10 or $12 dollars. 

If you buy your lye from the hardware store and your coconut oil from walmart and your scents from some of those high-priced places, your costs could double or triple what I pay. I know what my market will bear and strive very hard to keep my costs low enough so that I can make a nice profit on each item. Not taking into consideration what the market will bear, but only going by what your costs are, could give you a $12 bar of soap that nobody will buy  But, if you only take ingredients into account, and decide to do what some people say and double that cost, the bar of soap that costs me a dollar to make, would retail for $2. And that would be soap made at a loss once all other factors were counted, like booth space, online shop fees, my own labor, packaging, electricity, etc. I like to make sure I have a large enough built-in profit buffer than even with my haphazard record keeping, I know without a doubt that I am making money.


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## swgoats (May 21, 2010)

Yes, I was thinking of little things like hotel sized soaps then have some larger bars for folks that want to pay more. I just can never shake the poor kid mentality. If I was lucky enough to go to such an event, there was never money for souvenirs or if there was it was a dollar or two. Kids just want to buy *something*. I just want to buy something. :/ I figure with the goats our demo will attract children. We want to make lip balm in the tins and little sachets, nosegays, maybe corn starch powder - it all has to be 1700s. I plan just to make simple olive oil Castile with goat milk, no fragrance. I like soap smell, hopefully I'm not the only one . My understanding was Castile was considered higher quality than tallow soap because of the clean smell.

The only article I've really figured up is lip balm. I think I can make it for $0.75. Most of the cost the tin container. Williamsburg sells it for $3.50. I've seen it online between $3-4. But I wanted to sell it for $2. I'm not sure if I'm under shooting it. I guess I'll just have to make it, and see how much time it takes me. Reenacting is a hobby we wanted to pursue. I'd like to make enough to recoup the cost of out clothing and gear. Then if we make a little income future years, that would be nice. We just want to do these two events a year. At this point with homeschooling and managing the livestock, that's about as far as I want to go with a soap business.


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## a4patch (Oct 7, 2009)

It still sounds like you are undercutting yourself.


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## MF-Alpines (Mar 29, 2010)

a4patch said:


> It still sounds like you are undercutting yourself.


I was thinking the exact same thing.


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## MF-Alpines (Mar 29, 2010)

It's a business. I'm not here to give stuff away. I've got a good handle on my costs. I price the same way Anita does. I look at what other's are charging and also take into account what the market will bear. I charge $5/5 oz bar. Could I charge $6? Probably. Sample bars (< or = .5 oz/bar) are $0.50/each or 3/$1. I have customers that I know don't have a pot to piss in and still come and buy my soap. Do I feel bad? Yes. But it is their choice and again, I'm not in business to give something away. I also have a customer that constantly tells me that I should be charging $8/bar. She says something like, "You know in California you get so much more for your bars. You are undercharging." She says this every time she comes to my booth. Well, we're not in California, we're in the mid-West. Totally different.

And when it comes to kids, if I see they are interested and are happily smelling all my samples and I can see that the parents are not going to spend that kind of money on "fancy soap", I'll ask them which is their favorite and then give them a sample bar.


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## hsmomof4 (Oct 31, 2008)

> The only article I've really figured up is lip balm. I think I can make it for $0.75. Most of the cost the tin container. Williamsburg sells it for $3.50. I've seen it online between $3-4. But I wanted to sell it for $2.


If you can make it for $0.75, then you will lose money selling it for $2. I definitely would not go under $3, but probably more like $4. (I include the tax in my prices at the markets that I go to, the legality of which varies from state to state, and I don't want to deal with making change. So even numbers it is.)


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## VickiLynne (Feb 8, 2008)

Why would you even expend the energy in something to not make a profit? I don't know about you, but I do this for the money. If I wanted just a hobby, I would go the beach, or whatever. If you are doing this for fun and the kids, just give samples out from your demo of soapmaking in the 1700's. But don't undercut your competition in your area by selling too low. It hurts the market. 
Ok, I'm stopping before I stick my foot in it.

Vicki/NC


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## swgoats (May 21, 2010)

I definitely do want to make a profit. I wish to include my manufacture time and ingredients, and then mark it up appropriately to make a profit. I was just trying to figure out if there was a conventional percentage mark up. $2 is over 150% mark up on 75 cents - but maybe that isn't enough. For soap a $1/oz is about what I was thinking. 

I guess I am just working backwards from what most people do (but not most giant conglomerates). If I want to sell an item for $2, then I'm looking to see if I can get costs down low enough to do it. If I can't I can't. Maybe I'll make some floating soap - that could be sold a little cheaper since half the bar is air! Lol I don't remember when that was invented...

Thanks for the feedback. I am listening, just trying to figure it all out.


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## VickiLynne (Feb 8, 2008)

Angie, I get exactly what you are saying. I am sorry if I came over too harsh. It was not my intention at all. 
Yes, the markup seems high, but out of that overage of what the cost of goods (what it takes to make it) is comes all the "other expenses" that people don't think about. And there are many to consider. After all is said and done, what is left over is a lot less than what it looks like. 

There are so many factors to add in. Anita's post is a good one about the expenses to consider.

Lots of luck to you and have fun at the re-enactment. I live an hours away from Colonial Williamsburg and and go several times a year. I love that place.

Vicki/NC


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## swgoats (May 21, 2010)

Is it the height of nerdiness to get so excited about putting on a corset and gown to demonstrate goat milking and about camping in a canvas tent a few feet from my goats? I guess I always liked to play pretend. 

Thanks for your help!


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## MF-Alpines (Mar 29, 2010)

Angie, even "conglomerates" will charge what the market will bear regardless of "markup".


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## NubianSoaps.com (Oct 26, 2007)

Angie, there is no way you can make a profit at 75cents on lipbalm. How much are you paying for your labor? Labels, containers, flavorings, sweeteners, shipping, ink, paper, your raw products? And as for whipped soap....you are not thinking about the reality again...it takes longer, more labor, more electricity, more wear and tear on your equipment, to make whipped soap than regular soap, so it would be more expensive, not less. I takes the same amount of room in your molds, to cut, to clean, to wrap, to cure....


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## Aja-Sammati (Oct 26, 2007)

You have to figure out ALL of your costs- including paying yourself a wage on a batch of something (soap, balm, whatever), divide that by the number of items, then at least double that. If it is less than the competition, raise it a little more.



> She says something like, "You know in California you get so much more for your bars. You are undercharging." She says this every time she comes to my booth. Well, we're not in California, we're in the mid-West. Totally different.


Only in certain parts of CA. Mid-west soap makers actually charge more for a product similar to mine than I do here in CA. Of course, I live in a very high unemployment area, where people have very little money for good soap


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## swgoats (May 21, 2010)

Vicki McGaugh Tx Nubians said:
 

> Angie, there is no way you can make a profit at 75cents on lipbalm.


No I wasn't going to sell the lip balm for 75 cents. Expenses are 75 cents. I wanted to sell them for $2. Not doing any labeling. This is going to be very rustic. I can't use anything they wouldn't have had in the 1700s.


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## Aja-Sammati (Oct 26, 2007)

Lip balms have to have correct, legal labeling, or you cannot sell them. Soap doesn't require labels if it doesn't make claims, but lip balm does, no matter what the ingredients. Such is the government...


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## swgoats (May 21, 2010)

Oh thanks for telling me, I'll just scratch that then!


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