# First private label inquiry - help!!



## AshleyR (Sep 15, 2009)

So I got my first private label inquiry today for a local motel. They want a quote on a large quantity of 1 oz. guest sized soaps with a custom label that has their logo on it.

I haven't really thought much about private label services yet, so I'm kind of freaking out!

I'm thinking I should charge a base price for an unscented, uncoloured, base-recipe soap. Then charge extra "fees" for things like FO scent, EO scent (since it'll be a bit more expensive), colour, additives, label design, and actually labelling the soaps for them.

How does this sound?

I sell most of my soaps for $5.00 retail, at about 5 oz. This would mean my little 1 oz. guest bars would be $1.00 each retail. Wholesale .50 cents each.

Do I go with the wholesale price for the plain unwrapped soap - then add additional fees on to that - or should they be getting the whole soap (coloured, scented and all) for the wholesale price + a label fee?

I am notorius for under charging (I do it with my cakes all the time and am always kicking myself for it). I don't want to under charge this customer as it may become a very regular large order that will end up being a lot of work. Then again, I don't want to overcharge as the lady let me know she is currently buying commercial soap from a large distributer for merely pennies. She doesn't seem like she is really willing to spend a ton.

I don't want to get too excited about this as it's only an inquiry and she may not want the soap once I give her the price - but I still want to try my best to impress her! I'm sending out samples and info (that I still need to write up) next week.

Any help with this is greatly appreciated! I would love to hear how the rest of you deal with private label orders.

TIA!!


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## Saltysteele (Sep 15, 2009)

man, i'm following along with you on this, Ashley.  This is quite scary  :shock: 

well, i guess not so much scary, as "wth do ya do?"


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## Galavanting Gifts (Sep 16, 2009)

Far out Ashley, I felt like I was reading a post I thinking of doing. I've been made an identical offer by a lady I know whom is running  the rentals of 50 apartments not far from me, she is looking at using guest soaps with the logo on them instead of their usual "guest cookies".
 I will be watching this thread like a hawk now lol.


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## kevie192 (Sep 16, 2009)

I intend to have a base price for a basic base with colour and FO and then add things on if they want a GMP or shea base and add more for EOs rather than FOs.

I will also charge extra for wrapping the bars (only a couple of £ per 10 bars or something) and extra too for labelling, whether that's with my logo or theirs. Otherwise I just supply them all wrapped together and with one sample label per batch.

After all, a label is easy to edit to put their logo on it and if they are paying for labelling anyway I won't charge them for designing their labels - this may be a sweetener for her seeing as she is going to be a big customer.

I hope that helps a little,

Kevin x


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## Bigmoose (Sep 16, 2009)

Myself I would keep that list of extra charges for added items as short as possible.  Just set a fair base price.

Bruce


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## donniej (Sep 16, 2009)

Bigmoose said:
			
		

> Myself I would keep that list of extra charges for added items as short as possible.  Just set a fair base price.
> 
> Bruce



+1.  When I worked at RadioShack many years ago, we were always taught to inform the customer of only the choices that we thought were important to them.  The reason is that if you give a customer too many choices, or decisions they have to make, the often walk away confused and don't come back.  

Also, I doubt that this hotel owner is going to want to package or label her own soap.  If I were in your position I would only offer the options of scented or unscented.  Considering the soap she's using now, it's a fair guess to say that she probably doesn't care if you use EO's or FO's.  I'd use FO's to keep the price down.  

About deciding on a price, this is tough and I'm struggling with the same thing myself.  What I have decided on is to have a fairly high price for "small" orders and a very low price for "large" orders.  But you still need to know all your expenses, how many hours of labor it takes and what you want for your hourly labor rate.  

BTW, what molds are you using for 1 ounce bars?  I'd like to make the same and was thinking 2" PVC...


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## Manda (Sep 16, 2009)

Hi Ashley,

I am excited for you, this could be a great opportunity for you to get your name out there more and of course make some $!

I have not personally sold my products to businesses before nor undertaken large quantity orders, however, at my work one of the aspects of my job is to calculate product "sell prices" or quote prices for individual customers, so I feel like I can offer some advice.. 

When pricing I have to take into account factors such as; 1) how price-sensitive the customer is, 2) what price they have been given by a competitor, 3) what the current market price range is, 4) what the product cost is, 5) the quantity they will purchase, 6) how much they already spend with us, 7) prices we have sold the item to them for in the past, etc!

I think the most important thing for you to establish first is your Job Cost. If you don't know what the job is costing you, you risk going to all that effort for free - pretty much volunteer work.  It may be a bit of effort the first time but I think it is definitely worth it, and you could develop a template or spreadsheet to make it easier and quicker next time. Once you know your Job Cost you will be in a much better position to work out an appropriate selling point for your product.  You will then be able to see exactly how much profit you will make at different price points and you will be able to set your limit on how low you will go if they ask you to do better than your initial quote. It may also highlight expensive areas where you could look for alternatives or solutions to bring your cost down.

I would suggest working out the total cost of making the entire quantity of soap they are after. Work out the quantities of each material you will use on the job as a whole, and the cost of that material (make sure you include reasonable rough freight if you have materials delivered) - this is your Materials Cost. Then write down the time you will take on each step of the job, start to finish, and then multiply the hours by how much you think your time is worth - this is your Labour Cost.  I would then calculate a Packaging Cost to account for the cost of packaging and labelling materials. You could even do a few different variations on Packaging Cost to see which packaging and labelling styles would work out cheapest.  Remember to account for design time if you are going to design specific labelling.

Add together your Materials, Labour and Packaging Costs and you have your Total Job Cost.  Divide by the quantity of soaps and you will see how much each little soap will cost you to make. Remember though, if the quantity changes, usually your cost will change too, because buying in bulk and making things in bulk is more efficient. Likewise, if the weight of the soap changes this could also affect your cost because you may find that making 100 x 20g soaps is more costly than 20 x 100g soaps simply because there are more of them and thus they take longer to package, use more packaging/labelling, etc.

At this point when you know your Total Job Cost you can move on to working out an appropriate reasonable selling price.

As for selling somebody a product which is significantly more expensive than what they can alternatively buy, you must justify your price. You have to sell her on why your product is better than the product she has been buying. I would make a list of all the points you can think of (handmade, quality ingredients, locally made, better service, able to customise to their packaging & labelling, etc) and even if you have already gone over those points with her, still include this information at the time of your quote so that she is reminded of all the benefits of your product instead of simply comparing prices.

If you are having trouble working out how much you think you can get away with on your selling price I would suggest going with the upper price. She may accept straight away which is great, or if not, follow up and find out what the sticking point is (it may be something other than the price) and if you find price is the problem then you could offer to look at the quote again and go back to her with a lower price or even simply say that you made a mistake and the actual price quoted should have been lower or you have found a cheaper supplier which will allow you to lower the price. However you go about it, keeping in contact is really important. The follow up is absolutely key. If you find out what she sees as problems (impediments to the sale) or potential problems it gives you the opportunity to address these issues for her, which she should see as helpful and help to build trust with you.

My gosh... this is turning into a book! I hope you can find some use out of the above.

Please keep us posted on how you go!


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## AshleyR (Sep 16, 2009)

Wow, thanks so much everyone! Especially Manda... that was so helpful!!

I do need to sit down and find out what it will cost me to do this (price and time wise). I do not really have the equipment to make these tiny bars on a large scale (would need a new wire cutter to make it go faster), so it's hard to know right now how long it would take me, having not done it before! 

Hmmm, lots to think about! Thanks for all your points!


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