# Profit Margins



## greensara

So, I am hoping that by sharing my business profit margins that others might be willing to share and help us all to shed light on reasonable pricing while growing our businesses.  

The longer I'm in business, the more I realize that my prices should be higher (ideally).  Currently, my bars have a 69% profit margin if I pay myself ONLY $18/hr through my OWN store.  Margins fall to 35% when I sell retail through stores/wholesale.

As time goes on, I see that I should be using at least a $23/hr labor to cover the cost of payroll (when I hire later this year) etc.  That would bring the cost of my bars to around $7/piece (again, disclosing this only because I am hopeful that others will be willing to share as well).  I am hesitant to raise my prices this high, but I must account for the cost of expanding my business.

I've accounted for raw materials, packaging, overhead and labor.  If you aren't sure of your profit margins, check out this link (it's super easy): http://www.calculatorsoup.com/calculators/financial/margin-calculator.php

What are your profit margins?  How do keep your pricing reasonable while also pricing for profit?  Any thoughts, insights would be appreciated!


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## MarisaJensen

in St. Pete, FL I have found most soap makers are selling their bars from $8.00 to $10.50 (decent sized bars). There are some that sell for less but their soaps are microscopic in size. There is a small shop where the lady sells glycerin soaps for $8. I about died when I moved here this August. Back in Melbourne, FL the going rate was more like $4.50-$6.00. It was a bit of a change for us. We will be selling soon and I've had a hard time (morally charging so much). Supplies cost me a bit more though, so It's a numbers game. We still haven't decided what we will charge but it will probably be based on location/ supplies/ cost of production (there's only one of me making soaps).


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## lsg

If a profit margin was essential to my soap making and bath & body making, then I would go back to the job I had before I retired.  No Thanks!


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## shunt2011

I'm with ISG.   No thank you!  I'm not retired but would rather work than have to have a large profit margin to make my products.  Good Luck to you.  I make enough to support my business and have some extra. No complaining here.


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## OliveOil2

I have noticed that the cold process soap prices have increase on Etsy over the past year. I make bars that are on the large size with almost everything over 5 ounces, however I would not feel good about selling for such a high price. If I was trying to make a decent profit I would do wholesale sales again with a minimum purchase amount.
I am happy to make enough to cover the cost of my supplies and have a little extra. I'm not up for the pressure of large production, deadlines, and the things that it would take to be profitable. This is a hobby that I enjoy, and I don't expect to make a lot.


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## Earthen_Step

greensara said:


> So, I am hoping that by sharing my business profit margins that others might be willing to share and help us all to shed light on reasonable pricing while growing our businesses.
> 
> The longer I'm in business, the more I realize that my prices should be higher (ideally).  Currently, my bars have a 69% profit margin if I pay myself ONLY $18/hr through my OWN store.  Margins fall to 35% when I sell retail through stores/wholesale.
> 
> As time goes on, I see that I should be using at least a $23/hr labor to cover the cost of payroll (when I hire later this year) etc.  That would bring the cost of my bars to around $7/piece (again, disclosing this only because I am hopeful that others will be willing to share as well).  I am hesitant to raise my prices this high, but I must account for the cost of expanding my business.
> 
> I've accounted for raw materials, packaging, overhead and labor.  If you aren't sure of your profit margins, check out this link (it's super easy): http://www.calculatorsoup.com/calculators/financial/margin-calculator.php
> 
> What are your profit margins?  How do keep your pricing reasonable while also pricing for profit?  Any thoughts, insights would be appreciated!




Price, design/labeling, and web design have been the biggest pain for me.  I started off selling my bars at a very low profit margin.  With my prices so low I could not get into any stores.  They mark up quite a bit, I would make nothing and so I was stuck.  I plan on expanding into more shops over the upcoming years, and to do this I needed to increase my prices.  I have been told by many people "people will pay what you charge".  If you price too low, people will assume your product is inferior.  If you have a high quality soap, don't sell it for too low.  You can always have sales and other things.  

What I have done is priced it where I can sell to retailers in bulk and still make enough profit to make it worth doing.  With a higher profit margin you can offer great deals that you otherwise could not afford.  Right now I'm doing buy 3 get 1 free.  I have offered free shipping, $2 off, and have plans for other deals.  With my higher prices I was able to adjust to a flat rate shipping cost for all sized orders.

I think it's better to start off on the higher end then starting too low.  I had to change my prices because they were too low.  When I did that I gave every past customer a 35% coupon code valid for for 2 purchases through the rest of the year.  This helped ease people into the new prices.  But, it would have been better to have started where I needed to.  

When you start selling, you can always offer a 20% off intro sale.  Something like this to draw people to try the product.  But if they know your price will normally be 20% higher that's not a big deal.  If you raise your price later by 20% that's a much bigger disappointment than a sale ending.

I hope to make a living out of this someday.  If all I am doing is covering costs that is fun, but there is no potential to make this a living.  It's completely up to you and what direction you want to take.

*Morally I find this an honest and amazing career potential.  The products we make take development time, cure time, money and care.  Most jobs are much less sincere IMO.  Working for a massive company/government exploiting people and resources and causing pollution is very common.  We can pick more sustainable ingredients and packaging materials.  We have control over what this business is all about, working for others we have not had that luxury.


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## OliveOil2

I should probably add that if I am at a craft fair with other soap makers I am respectful not to undercut those that make their living making soap. I am at a point where this isn't a business for me, I know how high handcrafted soap can retail and yet every time that I see it the wheels start turning. I have seen bars for $9.00 at the nice winery a few miles away.


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## The Efficacious Gentleman

greensara said:


> So, I am hoping that by sharing my business profit margins that others might be willing to share and help us all to shed light on reasonable pricing while growing our businesses.
> 
> The longer I'm in business, the more I realize that my prices should be higher (ideally).  Currently, my bars have a 69% profit margin if I pay myself ONLY $18/hr through my OWN store.  Margins fall to 35% when I sell retail through stores/wholesale.
> 
> As time goes on, I see that I should be using at least a $23/hr labor to cover the cost of payroll (when I hire later this year) etc.  That would bring the cost of my bars to around $7/piece (again, disclosing this only because I am hopeful that others will be willing to share as well).  I am hesitant to raise my prices this high, but I must account for the cost of expanding my business.
> 
> I've accounted for raw materials, packaging, overhead and labor.  If you aren't sure of your profit margins, check out this link (it's super easy): http://www.calculatorsoup.com/calculators/financial/margin-calculator.php
> 
> What are your profit margins?  How do keep your pricing reasonable while also pricing for profit?  Any thoughts, insights would be appreciated!



3 words for you  - Lower.  Your.  Costs.

It's that simple.  Materials is straight forward - get your supplies cheaper, either cheaper product or buy in bulk/direct for the best deal.

Wages isn't an easy one to reduce per se, but if you increase batch sizes you then reduce the time taken to produce one bar - wages cost per bar is likely to be one of the biggest issues.

Playing with the prices is dangerous - if you go low, you can damage the market.  Many people would ask "so what?" to that statement, but go and ask a business advisor how important it is.  

If you go low and then have to increase the price, people will want a good reason for it.  "Now I need to make a profit" is not an answer that will go over very well.

To all who sell - 

Prices should always be market appropriate.  That might be higher or lower than the average - it might be the cheapest or the most expensive.  But always appropriate for the market.  If that means that the formula (all costs x 4 = retail cost) is too low, then you need to look at your costs (see above).


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## shunt2011

I agree with Effy...However, I already purchase in bulk. 50 lbs at a time for most of my supplies. I also make anywhere from 15-20 lbs at a time. I'm not willing to change my recipes as they are what my customers are accustomed to and come back for. However, I have been able to increase my prices a bit every other year. I do small increments .50 at a time. I still will make a profit and continue on. Each year gets better for sure. The economy in our area is slowly getting better.

I would also like to sell a lot of product at my current prices than sell very little. My business has been building and I'm happy with that.

So, we each have to do what works best and keeps customers coming back. The upside is I'm also  able to get more than 2 x cost for my wholesale accounts. So that evens it out a bit more too.


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## girlishcharm2004

Living in the 5th most expensive city in the U.S. (which is also right next to the 4th most expensive city), I can sell at a farmers market for a "reasonable" price anywhere from $10-$15 for a 4oz bar of soap.  Go online to Etsy where everything is half that and I see hobbyists selling a 5oz bar for like $3. *facepalm* Don't be ashamed of $7 if that's what you need to expand.  If anything, you need to work on your marketing to tell people why your soap is worthy of that cost.


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## judymoody

To me $7 seems like a totally reasonable price for a 5 oz. handcrafted bar of soap.  If you want to sweeten the deal, offer 4 for $25.


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## JustBeachy

The market will always dictate price. It doesn't matter what you have to spend to make it. It doesn't matter if you have to hire 20 people to supply the demand. The market will bear what it wants, relative to the demographics of your region. This is universal, and it doesn't matter if your selling soap, TV's or as Newbie would say, "rendered chipmunk tallow"(that little gem may stick with me for life  .  You can try to set a price, as Craig refers to as 4x the costs. However, if that calculation drives your price beyond what the market dictates in your area, then you aren't going to sell any product. 

For example, Girlishcharm says the soap in her area is selling for 10-15 dollars, for a 4 oz bar. If I tried that in South Texas, I'd find myself laughed out of the business. The market here will just not bear the price that the market in SoCal dictates. 

Your options are again universal. Lower your profit margins or, as Craig said, lower your costs. It's the only fiscally sound method to adjust your profit margin. If you had the last gallon of water left within a 500 mile radius, you could sell it for whatever you wanted. Unfortunately, there are plenty of other people to buy soap from. If your price doesn't stay within the realm of what the market in your area is willing pay, then you will not have to worry about your margin for very long. You won't be in business. A old saying in the new home construction business comes to mind. "We lose money on every sale, but we make it up in volume."   It was a saying we used to describe some of the competition that we figured would soon be out of business. 

I know this was a little long winded, and please don't take any offense to it or think of it as preachy. I've learned to never claim to be an "expert" on anything. There is always more to learn.  But I do know a little about running company's and profit margins. I've managed what some would consider to be large entity's, started built and sold a couple of businesses, etc.  Not sure this will pass any filters and/or if it's out of line (if so moderators feel free to delete it), but another great saying about any business venture is, "the market is a fickle *****, and she suffers for no one."


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## Earthen_Step

JustBeachy said:


> The market will always dictate price...



This is all very true, but there is room for price fluctuation for quality/luxury items.  If you have higher prices you need to justify that increased price to your audience.  If you go too high and no one thinks it's worth it, you won't make any money.  For many people handmade soap is a luxury item, sometimes only bought on special occasions.  For others they can't stand the typical soaps available and it's a must.  But because we are in the luxury for most category I think it's a more flexible market.  

I charge higher than the competition around here, but I also sell more soap than them.  Why?  Because my soap lasts longer, smells real, has quality ingredients, and people love what it's done to their skin.  If I charged the same price as my competition I would be nearly breaking even.  So my market area has adjusted to an increased price for higher quality.  Just because everyone around is selling bars for $3.50 doesn't mean there is no room for $10 bars.

This does not mean the market did not dictate the price, your underlying principle is real.  But I wanted to comment that it can be flexible if you have an item that can stand out superior in some way.  If there is no real difference from your bar and the cheaper bars around you will not have repeat customers that have tried the other bars.

*Good points being brought up on this thread!


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## girlishcharm2004

I want to add to what JustBeachy said.  "If your price doesn't stay within the realm of what the market in your  area is willing pay, then you will not have to worry about your margin  for very long. You won't be in business."  While this is true, on the brighter side, there are _many_ markets! There's the vegan market, the "all natural" market, the animal fats market, the egg yolk soap market, the milk soap market, the "old lady" market, etc.  Find your niche. Figure out who you sell to, what they want, and price they are willing to pay.  This goes back to marketing and explaining why your soap deserves it's price... to the right people!  

While residence in South Texas may not be willing to pay $15 for a bar of soap, I also doubt they pay $1500 for a studio apartment nor $18 for a gallon of milk.  You can't just do 4 times the cost of goods like others suggest because I bet a lot of soap makers get their oils from, say, Soaperschoice which doesn't factor in the cost of living in the different regions to make a fair price.  You have to price your soap at what it takes to expand, but market it to the _right _people.


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## girlishcharm2004

We must have been typing at the same time.  You are spot on, EarthenStep!


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## JustBeachy

Earthen_Step said:


> This is all very true, but there is room for price fluctuation for quality/luxury items.  If you have higher prices you need to justify that increased price to your audience.  If you go too high and no one thinks it's worth it, you won't make any money.  For many people handmade soap is a luxury item, sometimes only bought on special occasions.  For others they can't stand the typical soaps available and it's a must.  But because we are in the luxury for most category I think it's a more flexible market.
> 
> I charge higher than the competition around here, but I also sell more soap than them.  Why?  Because my soap lasts longer, smells real, has quality ingredients, and people love what it's done to their skin.  If I charged the same price as my competition I would be nearly breaking even.  So my market area has adjusted to an increased price for higher quality.  Just because everyone around is selling bars for $3.50 doesn't mean there is no room for $10 bars.
> 
> This does not mean the market did not dictate the price, your underlying principle is real.  But I wanted to comment that it can be flexible if you have an item that can stand out superior in some way.  If there is no real difference from your bar and the cheaper bars around you will not have repeat customers that have tried the other bars.
> 
> *Good points being brought up on this thread!



There is nothing wrong in what you've stated and I applaud you for producing a quality product that is noticed as being "above" the competition  It really means more than even you might think.  People will buy want they want, faster than they'll buy what they need. 

The idea of "better quality" is a sales technique that i would say Mercedes Benz has epitomized. No doubt it is a great car and  most would say , one of the best cars built. Yet, I can buy a "luxury" car for less than I can buy a Mercedes and if I've never really owned a Benz, not realize the difference . If you look at the market saturation of cars being sold, Mercedes is lower than most of it's competition. Does this mean Mercedes is doomed?  Not hardly. They've had years to establish a name and a loyal following. As so, they charge a premium for their product. Yet, if you look at the financials, the "competition" to Mercedes actually has a higher profit margin and will outsell them hands down every year. 

A friend of mine from high school will soon inherit a "precious gems business" from his father. They are extremely well known,  in the high end of the jewelry business. Great reputation, actually world re known as diamond buyers, that have been  in business since the late 60's. We were out for drinks the other night and were talking about this exact situation. As he put it, there is without a doubt a big difference between a high grade diamond and something you buy at amazon.com. Yet, through some marketing genius, one company, (not mentioned here, but he went to.....), will always out sell and out profit him. Is his product superior? Absolutely. Does he charge more per karat?  Every day.  But the bottom line is, they will always sell more product, at a higher margin than he will. And they will always be more profitable. Will he go out of business without adjusting his "luxury" status.  Absolutely not, but even he admits, his luxury status is dependent upon  the repeat business. His stability is a commodity within itself. 

Again, in all sincerity, I bow to your accomplishment of setting yourself above the competition.  It's a feat that I feel very few company's even strive for these days.  I'm just saying for the mainstream of the industry as it relates to this thread, price point at a reasonable profit,  is an easier goal to achieve. :0

The goal of any of the businesses I've been a part of or owned has always been to be one of the best in what i do, but still outselling the majority of the competition. Not always possible, but without lofty expectations, what's the point of even trying. :wink:

And I agree, best marketing/sales strategy I've seen on these boards.


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## JustBeachy

girlishcharm2004 said:


> I want to add to what JustBeachy said.  "If your price doesn't stay within the realm of what the market in your  area is willing pay, then you will not have to worry about your margin  for very long. You won't be in business."  While this is true, on the brighter side, there are _many_ markets! There's the vegan market, the "all natural" market, the animal fats market, the egg yolk soap market, the milk soap market, the "old lady" market, etc.  Find your niche. Figure out who you sell to, what they want, and price they are willing to pay.  This goes back to marketing and explaining why your soap deserves it's price... to the right people!
> 
> While residence in South Texas may not be willing to pay $15 for a bar of soap, I also doubt they pay $1500 for a studio apartment nor $18 for a gallon of milk.  You can't just do 4 times the cost of goods like others suggest because I bet a lot of soap makers get their oils from, say, Soaperschoice which doesn't factor in the cost of living in the different regions to make a fair price.  You have to price your soap at what it takes to expand, but market it to the _right _people.



In my opinion, you are exactly right. There is no magic number for projecting your price point. Your examples of product cost is right on the money. This is an industry that is maintained by the median. Meaning that the majority of the business is being done  by people all buying their material for same average price, but selling in different regions and markets. You being in SoCal, should be able to average a higher profit margin, than little ole me, can do in a market in South Texas. Our suppliers being equal, with our market being worlds apart.


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## greensara

Wow, this has been so helpful!  Here in Ohio, I'm largely competing with businesses who sell their bars of soap for around $5.00 for 4.5-5oz bars.  We have product in all of the major malls in our area as well as small shops and the pricing tops off at around $7.00; these soaps tend to sit on shelves for months with the occasional specialty buyer.  Local craft shows are more of the same and I can't count the number of times I've heard customers look at my soaps, compliment my soaps and then see a $6.50 price and gasp!  Online, pricing varies (Etsy) but again you've got a lot of $5.00 bars.

Niche markets have been our goal-women with a high degree of disposable income within the LOHAS market.  The balance between pricing for our immediate community as well as the global market (online) has been a little tricky.  I'm blown away by the pricing by state-wow!  Great food for thought, especially considering the fact that none of us are really limited by geography.  

Cost-wise, I've gotten raw materials just about as low as I can although essential oils continue to be our largest cost.  We buy in bulk to get the lowest price possible but getting costs down to increase margins is a great point.  The cost of doing business rises as we expand and it has been a balance to price for that growth without pricing ourselves out of the market.  Business and accounting aren't my forte, so at times I do feel a little clumsy in this area.

Earthen_Step, great point about being able to offer sales with a higher price point!  Our pricing structure right now doesn't allow that.  Our lip balm, however, retails higher than almost of our competitors but that also means that we are able to offer multiple discounts!    

The points made about using quality as a differentiator are true, yet tricky.  In the handmade market, small batch, all-natural and quality ingredients are sort of the norm, no?  I have loyal customers who swear by my soaps and so I do feel that we could fetch a higher price.  In fact, I may need to in order to be around next year!

I'll stay tuned for more discussion-great conversation and tremendously helpful!!!


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## OliveOil2

I have really enjoyed all of the input on pricing, and production costs. For me as someone who doesn't sell on a regular basis it always involves studying the market that I am selling in. I know my local market and the top price point, but across town at the country club craft fair I can charge more, and people will buy; in fact if I charged less they may view my product as inferior. When I am in Southern California I am not usually there to sell soap, but when I have, in certain neighborhoods I can charge quite a bit more. For me it is knowing my customers and setting the prices so they are not out of line.


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## JustBeachy

greensara said:


> Wow, this has been so helpful!  Here in Ohio, I'm largely competing with businesses who sell their bars of soap for around $5.00 for 4.5-5oz bars.  We have product in all of the major malls in our area as well as small shops and the pricing tops off at around $7.00; these soaps tend to sit on shelves for months with the occasional specialty buyer.  Local craft shows are more of the same and I can't count the number of times I've heard customers look at my soaps, compliment my soaps and then see a $6.50 price and gasp!  Online, pricing varies (Etsy) but again you've got a lot of $5.00 bars.
> 
> Niche markets have been our goal-women with a high degree of disposable income within the LOHAS market.  The balance between pricing for our immediate community as well as the global market (online) has been a little tricky.  I'm blown away by the pricing by state-wow!  Great food for thought, especially considering the fact that none of us are really limited by geography.
> 
> Cost-wise, I've gotten raw materials just about as low as I can although essential oils continue to be our largest cost.  We buy in bulk to get the lowest price possible but getting costs down to increase margins is a great point.  The cost of doing business rises as we expand and it has been a balance to price for that growth without pricing ourselves out of the market.  Business and accounting aren't my forte, so at times I do feel a little clumsy in this area.
> 
> Earthen_Step, great point about being able to offer sales with a higher price point!  Our pricing structure right now doesn't allow that.  Our lip balm, however, retails higher than almost of our competitors but that also means that we are able to offer multiple discounts!
> 
> The points made about using quality as a differentiator are true, yet tricky.  In the handmade market, small batch, all-natural and quality ingredients are sort of the norm, no?  I have loyal customers who swear by my soaps and so I do feel that we could fetch a higher price.  In fact, I may need to in order to be around next year!
> 
> I'll stay tuned for more discussion-great conversation and tremendously helpful!!!



I want to preface this comment with the statement that I'm not advocating the belief that your soap doesn't need to be great.  A great product, almost sells itself. 

Almost.   That's where marketing, specifically target marketing, can be your best friend. You're absolutely right, in the soap market, everyone has a "natural, homemade, quality ingredients", soap, even when it's not exactly the fact. So you need to market in a way that makes people in your target market want to buy from you, instead of the 40 other brands that mimic your product. There's a bunch of ways to learn more about how to do this, schools, books, experience, but the easiest way is to piggy back.

You've designated your target market. "women with a high degree of disposable income within the LOHAS market." (Very good btw. A definitive targeting) Research into different products that the people in your area, who make up this demographic, purchase on a regular basis. Not necessarily soap, in fact, I'd look more at anything but soap. Once you find some different products, find some larger corporations, businesses that are selling these products. Study their advertising. Look for the common denominators, the buzz words, color patterns, graphics. 

Most of the time these larger entity's are going to have marketing teams, that have already done all this research, tested their marketing theory's and have designed their marketing to attract attention and produce sales. Look for the "triggers" they are using to get people to WANT, the product even if they don't NEED it. You can "piggy back" off of their experience and enormous marketing budgets to help you market your product. 

This is where I refer back to my opening preface, quality is a great aspect to work with. That said, a good quality product with great marketing will always outsell a great product with poor marketing.


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## samirish

I charge $7.00/bar and have absolutely no problem getting it.  I am looking at increasing that price next year to $7.25/bar.
My prices per oz are on par with Lush's when it comes to scrubs and lotions, etc.


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## choco_soap

This is good to know as I'm at a stage where I need to find out how to get pricing per bar.


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## smeetree

Considering how much time, work, and creativity goes into this I wouldn't take less than $7 (once I master this, I'm still learning). If you're making master level soaps $7 is reasonable no matter where the person lives. There is a TON of inflation in the world right now. It is mostly being seen in raw materials (and stock markets lol) rather than wages. The fact wages are stagnant is a problem when trying to sell high end soaps made of said raw materials, but I'd just hang on to it and use it yourself if you can't get the right price. Otherwise you're working for near minimum wage. Short of that you have to somehow reduce inputs, but I'm sure everyone is doing that to their best ability already. I don't see how you can sell soap for $5 and make good profit in this climate unless you can get huge volume. Then razor thin margins can be acceptable.


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## Lindy

You must take a look at your own market.  If you are in a lower income level you need to price your product to sell.  If you wanted to make it to use yourself then you wouldn't be selling.  Unfortunately not all areas will accept $7 for a bar of soap.  I know my area the max I can get and stay in business is $6.  But I make it up with high priced lotions and body butters so find the balance.  Know your COGS and work from there.


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## JustBeachy

Lindy said:


> You must take a look at your own market.  If you are in a lower income level you need to price your product to sell.  If you wanted to make it to use yourself then you wouldn't be selling.  Unfortunately not all areas will accept $7 for a bar of soap.  I know my area the max I can get and stay in business is $6.  But I make it up with high priced lotions and body butters so find the balance.  Know your COGS and work from there.



Right on the money and a great work around in your product line to offset the markets lower soap price per bar threshold.


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## Earthen_Step

Not all soap is created equal.  Some soap I have seen costs under $1 to make and they sell over $10.  That is a huge profit margin.  Although most of the lower costing soaps I see go for $4.50 - $6.50 range.  Some soaps cost around $3 to make and sell for $6, that's too low.  So you can't just put all soap under the same category.  If you make soap that costs $1 to make, $5.50-$7.50 seems just fine.  The higher the price the higher you need to go, especially if you want to retail/wholesale.  

Say the bar costs $2.50 to make/package, and you sell it for $6.50.  That would be decent if you could move enough inventory and make enough at one time.  But if you are smaller scale and tried to sell wholesale/retail -- you would only be making around $0.75 per bar.  If you are not moving a TON of inventory that's rough.  If your bar only costs you $0.75 to make you would be making $2.50 per bar, much better.  If your bar costs $2.50 to make and you sell it for $7, that would only be $1.00 profit.  At $2.50 per bar you would need to sell at $10 per bar to make the the same $2.50 that the $0.75 bar made at $6.50 retail.

The basic idea is wholesale/retail will buy it from you at half price from what I have seen.


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## maya

I did a TINY (10-15 vendors) farmers market last year. My soaps are 6.50 a 7-8 ounce bar, so below the average of 1.25-1.50 an ounce for handmade soap, This farmers market is in a working class and immigrant neighborhood, the markets big advertising was they they took EBT/SNAP (what used to be foodstamps.) and a large portion of the shoppers used foodstamps. I sold about 4-6 bars a day, a couple of salves and that is about it. I should say, just for clarity that I love food stamps. No judgment about working class or immigrant people. I am one.

Now I've joined a collective of artists in a store in a hipster neighborhood, totally different customers, and my soap sells like wildfire. I am raising my prices, not based on this store, but over all because I need too. The new soap prices are going to be 8.00 a bar for 7 ounces and 6.00 dollars a bar for spa bars that are 3 -4 ounces. All the stores I currently sell at, my markets and the online store will have the price increase. 

I've only changed two things. One is that this is my JOB. It is how I feed my kids, how I cloth me. How I make a living. Two I've changed where I sell my soap.


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## cmzaha

I can tell you Just Beachy that So Cal is not a great place to be selling soap at the moment. My price point at outdoor markets is $6.00 for 5.5-6 oz bars. Salt bars are higher as are my facial bars and neem bars. If they want the $10.00 pearl soap they do not question the price. If I do seasonal craft fairs my bars go up to $7.00 per bar and it usually works. My weekly market now has a vendor selling soap for $4.00 per bar and she only gets the stray customer that does not know I am at the other end of the market. I spent my time building my reputation. I buy all supplies in bulk, oils and lye I will call so I avoid the high shipping costs. Granted I am not trying to make a living at this, I would go back to work if that was the case. We are retired, cannot travel due to elderly parents, I love making soap and this pays my gas, groceries, supplies. Plus we enjoy going to the markets and meeting new people. So Cal is saturated with soapmakers and it is even hard to find new markets and if you do the markets are not doing well themselves.


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## Susie

smeetree said:


> Considering how much time, work, and creativity goes into this I wouldn't take less than $7 (once I master this, I'm still learning). If you're making master level soaps $7 is reasonable no matter where the person lives. There is a TON of inflation in the world right now. It is mostly being seen in raw materials (and stock markets lol) rather than wages. The fact wages are stagnant is a problem when trying to sell high end soaps made of said raw materials, but I'd just hang on to it and use it yourself if you can't get the right price. Otherwise you're working for near minimum wage. Short of that you have to somehow reduce inputs, but I'm sure everyone is doing that to their best ability already. I don't see how you can sell soap for $5 and make good profit in this climate unless you can get huge volume. Then razor thin margins can be acceptable.



You would not sell a single bar here for more than $6, and then only if you were at the one Christmas market run by the local Junior League.  And then only because the JL gets a portion of everything sold.


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## smeetree

Susie said:


> You would not sell a single bar here for more than $6.


 
If that were true I'd just use them myself and not sell. I refuse to work that hard (and soap is hard to make well, plan, etc) for anything near minimum wage. A carpenter, a plumber, a cobbler, a blacksmith, a tailor, etc all charge high wages. A soapmaker is a trade, and too many are willing to discount their labor and/or not factor in all inputs. Does anyone in Louisina buy online from Lush? I am sure some do, and those bars are $7+ and use worse ingredients than ours. Our bars are better than theirs, so think what the price should be...


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## JustBeachy

cmzaha said:


> I can tell you Just Beachy that So Cal is not a great place to be selling soap at the moment. My price point at outdoor markets is $6.00 for 5.5-6 oz bars. Salt bars are higher as are my facial bars and neem bars. If they want the $10.00 pearl soap they do not question the price. If I do seasonal craft fairs my bars go up to $7.00 per bar and it usually works. My weekly market now has a vendor selling soap for $4.00 per bar and she only gets the stray customer that does not know I am at the other end of the market. I spent my time building my reputation. I buy all supplies in bulk, oils and lye I will call so I avoid the high shipping costs. Granted I am not trying to make a living at this, I would go back to work if that was the case. We are retired, cannot travel due to elderly parents, I love making soap and this pays my gas, groceries, supplies. Plus we enjoy going to the markets and meeting new people. So Cal is saturated with soapmakers and it is even hard to find new markets and if you do the markets are not doing well themselves.



And that just speaks volumes to what I'm saying about demographics and the markets dictating the price of the product. You will always sell soaps to the people you built a relationship with, and your margins should remain decent. 

But add in the saturation of the market and now it becomes even more of an issue. Back 15 years ago when I was selling soap, I was a novelty. The couple of little fairs I did, I was the only one selling homemade soap. People would call me and ask if I was "that guy that makes his own soaps" haha.  Now, the market is inundated with people selling soap. And the prices are therefore going to be effected.

New customers, not counting the reputation customers, aren't going to care if you had to spend 3 dollars to make that bar of soap. If your trying to sell yours for 12 bucks and there are 15 other sellers that are selling for 7, you're going to lose sales. Same situation as the ones who say I have to sell it for 7 dollars and it's worth it.  Sure it is, but the general public rarely spends money because they think something is worth it. They want something that fits their budget. 

Example is Vizio TV's. It's actually a decent tv, but certainly not as good as a Sony. Yet they have stolen a giant chunk of business out of the higher end TV markets, by offering a good product at a good deal less than the high end products. 

It's a totally different market than it was 20 years ago and the demographic economics really makes talking about the sales price of a bar of soap unrealistic and confusing. Margins would be somewhat more universal, yet with so many people buying their supplies from the same suppliers, the margins are going to vary as well across the US. I can't speak for that land across the sea's, because I haven't kept up with their economy. 

But here's something to think about. If we used the 4X's cost as a price marker, that would mean a bar that costs $2 to make should retail at $8. That's a profit margin that would make any business a fortune.  As an contrast, take the projected profit margin of a new home. We used to set our prices based upon achieving a 12% profit, and were happy when the final margin stayed above 9%. Can you imagine what a home would cost if they priced it at 4X cost, just because they thought it was worth it?  There would be a lot less houses sold.


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## JustBeachy

smeetree said:


> If that were true I'd just use them myself and not sell. I refuse to work that hard (and soap is hard to make well, plan, etc) for anything near minimum wage. A carpenter, a plumber, a cobbler, a blacksmith, a tailor, etc all charge high wages. A soapmaker is a trade, and too many are willing to discount their labor and/or not factor in all inputs. Does anyone in Louisina buy online from Lush? I am sure some do, and those bars are $7+ and use worse ingredients than ours. Our bars are better than theirs, so think what the price should be...



Your tying to put logic behind the ideals of market demographics and economics. That never works. :razz:  People will pay a plumber whatever it takes to get their toilet to stop overflowing into their bathroom. Unfortunately, the same cannot be said about their desire for a great bar of soap. 

Lush sells because of marketing. Pure and simple.


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## cmzaha

smeetree said:


> Considering how much time, work, and creativity goes into this I wouldn't take less than $7 (once I master this, I'm still learning). If you're making master level soaps $7 is reasonable no matter where the person lives. There is a TON of inflation in the world right now. It is mostly being seen in raw materials (and stock markets lol) rather than wages. The fact wages are stagnant is a problem when trying to sell high end soaps made of said raw materials, but I'd just hang on to it and use it yourself if you can't get the right price. Otherwise you're working for near minimum wage. Short of that you have to somehow reduce inputs, but I'm sure everyone is doing that to their best ability already. I don't see how you can sell soap for $5 and make good profit in this climate unless you can get huge volume. Then razor thin margins can be acceptable.


Do not know where in CA you are located but I can tell you in most farmer markets here $7 does not work well. I do a special of 4 for $20 and I sell a lot of soap that way. I still make money and my bars are not small. I would much rather sell four for twenty than one at seven. I recently figured out that I have made over 2k bars of soap this year and I am not overstocked at the moment, so I have sold a lot of soap even in this sucky market. My other trick is a punch card, buy x amount of bars get a free regular bar. Specialty and salt bars are excluded. You simply have to learn what will work in your particular market


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## JustBeachy

cmzaha said:


> Do not know where in CA you are located but I can tell you in most farmer markets here $7 does not work well. I do a special of 4 for $20 and I sell a lot of soap that way. I still make money and my bars are not small. I would much rather sell four for twenty than one at seven. I recently figured out that I have made over 2k bars of soap this year and I am not overstocked at the moment, so I have sold a lot of soap even in this sucky market. My other trick is a punch card, buy x amount of bars get a free regular bar. Specialty and salt bars are excluded. You simply have to learn what will work in your particular market



^^^^^  This is marketing!  Mixed in to a medium trace with experience.


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## smeetree

JustBeachy said:


> Unfortunately, the same cannot be said about their desire for a great bar of soap.



Then part of marketing should be having a sign or brochure showing the benefits of a good bar of soap. I think ignorance is a problem with potential soap consumers. They think "Why pay $6 when i can get zest for 50 cents?". Well if you have a sign up educating them, then they know and can make the informed decision. Most people will choose quality over money, unless they are extremely poor. My GF and I cook a lot. We could have gotten a chef knife from Walmart for $20. But instead we bought a Wusthoff for $100. Why? Because we want quality. Many people do. With soap it just requires the added step of informing them first.

There is no reason soap should sell for under $7 a bar in any market. This is why a company like Lush sells at one price (usually $7-10)  across _every _state and county. If your soap is selling for less than that you're doing something wrong, imo, and it's probably marketing or selling yourself short. High quality soap is a valuable commodity, and it's our job to make that known. Yes, you might make a profit at $5, but profit isn't everything. You want large margins. A soaper selling at $5 and saying, "I made a profit" might feel good, but they then have to bank on many variables like raw materials remaining the same, the groceries and other items they buy with the profit remaining the same price, etc. There is a lot of inflation in items we need. I just think it is unwise to sell even at 100% profit. You need a buffer of at least another 50% just to factor in all the other economic variables (gas costs, inflation, currency fluctuations, macro-econ, etc). 

I don't sell soaps because I'm not a master soap maker yet. But if I get to that point and sell, I will not charge under $7, but probably higher. If they don't sell, I'll keep them for myself. I'd also have a completely different marketing campaign than what I see from the average soap maker. The only time I can see selling soap for $5 is if you're not a very good soap maker and the product is so so. At that point take any profit you can.

It's actually a bit annoying to see people sell so low because it results in an undercutting that just drags down the market for all.


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## JustBeachy

smeetree said:


> Then part of marketing should be having a sign or brochure showing the benefits of a good bar of soap. I think ignorance is a problem with potential soap consumers. They think "Why pay $6 when i can get zest for 50 cents?". Well if you have a sign up educating them, then they know and can make the informed decision. Most people will choose quality over money, unless they are extremely poor. My GF and I cook a lot. We could have gotten a chef knife from Walmart for $20. But instead we bought a Wusthoff for $100. Why? Because we want quality. Many people do. With soap it just requires the added step of informing them first.
> 
> There is no reason soap should sell for under $7 a bar in any market. This is why a company like Lush sells at one price (usually $7-10)  across _every _state and county. If your soap is selling for less than that you're doing something wrong, imo, and it's probably marketing or selling yourself short. High quality soap is a valuable commodity, and it's our job to make that known. Yes, you might make a profit at $5, but profit isn't everything. You want large margins. A soaper selling at $5 and saying, "I made a profit" might feel good, but they then have to bank on many variables like raw materials remaining the same, the groceries and other items they buy with the profit remaining the same price, etc. There is a lot of inflation in items we need. I just think it is unwise to sell even at 100% profit. You need a buffer of at least another 50% just to factor in all the other economic variables (gas costs, inflation, currency fluctuations, macro-econ, etc).
> 
> I don't sell soaps because I'm not a master soap maker yet. But if I get to that point and sell, I will not charge under $7, but probably higher. If they don't sell, I'll keep them for myself. I'd also have a completely different marketing campaign than what I see from the average soap maker. The only time I can see selling soap for $5 is if you're not a very good soap maker and the product is so so. At that point take any profit you can.
> 
> It's actually a bit annoying to see people sell so low because it results in an undercutting that just drags down the market for all.



Unfortunately, everything sold in the US speaks against your thoughts. If most people would choose quality over money, we'd all be driving Mercedes and  Kia would be out of business. No one would be buying a sirloin, when they can certainly see the quality of that prime ribeye on the counter. 

If the desire for high margins would magically make it so, then no one in the US would be able to afford a place to live, food to eat or clothes to wear. Wal-Mart would be out of business tomorrow, instead of being one of the largest retailers in the US. And believe it or not, being "too poor" has little to do with it. Some of the richest people in the world are actually tight wads, that probably soap down with a good bar of Ivory. 

Lush sells at an overpriced rate, because they have marketed themselves into a position of being thought of as a status symbol.  Why do people buy a 140 dollar David Donahue dress shirt, when that 30 dollar shirt at Target serves the same purpose?  Because a portion of the public has been "marketed" into a thought pattern of , status means everything.  But they are far from the majority of the buying public. 

So you have two options. 
Find a way to market your product, your soap, to the public with the intention of making it a status statement. Hope you have some really deep pockets to afford the type of marketing budget this will require.  Build it into the name recognition of Lush. Then with a better product than theirs, you can give them a run for their money. 

 Or....Build a business with a profit margin that you can accept, while still be able to move your product on a consistent and profitable basis. And the easiest way to determine this margin, is through market research. What is the market willing to bear. 

I guess you have a third option as well. You could, as you stated, just decide not to sell your soap and keep it for your own use. That's certainly an option. 

Educating people is never a bad thing, but it won't over ride the general principles of economics. Sure you can educate them about the benefits of home made soap as opposed to zest, but you're not the only one selling that "better" soap. If they can buy homemade soap from 50 other vendors at 5 or 6 bucks a bar, then you're going to be hard pressed to get one of them over to your shop to grab a bar at 7 or 8 bucks. And your assumption that those bars are lesser quality is erroneous at best. I've already seen a couple of people on these forums that sell for less than you would project. From reading their posts, you can easily discern that they are very knowledgeable about their art. I'd bet money they produce very high quality bars. 

I can respect your enthusiasm and spirit, but I'll repeat a saying that a very knowledgeable and prolific marketing genius that  I had the pleasure of being around for a while once told me. "The market is a fickle *****, and she suffers for no one."

Can anyone tell I love (loved) marketing almost as much as I love making soap. LOL.


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## OliveOil2

There isn't any replacement for actually selling your soap at a farmers market, or craft fair, the actual experience of watching the customer's reactions, and how they react to the price point is a true education. Theory is great, and yet not always true when put into practice.
 It is great to value what you make, and use quality ingredients, but at the end of the day you can only sell at the price people are willing to pay.
 I think Carolyn has some great marketing ideas, and you do get to know what the people that are buying from you want.
 I agree with Maya, selling at a higher price is dependent on finding the right customers.However there is a great deal of competition for that particular group of customers, and where I live there are far fewer that can afford great soap of any kind.


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## JustBeachy

OliveOil2 said:


> There isn't any replacement for actually selling your soap at a farmers market, or craft fair, the actual experience of watching the customer's reactions, and how they react to the price point is a true education. Theory is great, and yet not always true when put into practice.
> It is great to value what you make, and use quality ingredients, but at the end of the day you can only sell at the price people are willing to pay.
> I think Carolyn has some great marketing ideas, and you do get to know what the people that are buying from you want.
> I agree with Maya, selling at a higher price is dependent on finding the right customers.However there is a great deal of competition for that particular group of customers, and where I live there are far fewer that can afford great soap of any kind.



Well put and speaks directly to the reality of this discussion. Marketing guys can sit around and devise clever ways to attract your attention. Smiling baby's, scantily clad ladies dancing around without a care in the world. In the end though, all the marketing in the world won't do you much good if your price point isn't in line with your competition. Or beyond your target markets financial comfort zone.


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## smeetree

JustBeachy said:


> Unfortunately, everything sold in the US speaks against your thoughts. If most people would choose quality over money, we'd all be driving Mercedes and  Kia would be out of business. No one would be buying a sirloin, when they can certainly see the quality of that prime ribeye on the counter.
> 
> If the desire for high margins would magically make it so, then no one in the US would be able to afford a place to live, food to eat or clothes to wear. Wal-Mart would be out of business tomorrow, instead of being one of the largest retailers in the US. And believe it or not, being "too poor" has little to do with it. Some of the richest people in the world are actually tight wads, that probably soap down with a good bar of Ivory.



I think many consumers are uniformed. They'll see a cheap item and buy it over the more expensive one, but then they fail to track how quickly the cheap one breaks and they have to replace it. Over time, the cheap item usually winds up costing them more. This is why I always go quality. People with low income can buy good cars, btw, if they purchase used. That is a better long term buy than a new Kia. 

Get this: I bought a new canopener from Wal Mart several years back. After maybe 6 months of use it was all rusted out and bolts came off. It was a disaster. They take it back and give me another. Same thing happens after an even shorter period of time. I get fed up, go on Ebay, and buy a new canopener from 1960. It was still in the box! I've had it 2.5 years with zero issues. It works like new still. Paid $28 for it. About $8 more than the WalMart one, but already 2x the use, and will get much much more, if not own this until I die. 

Anyway, back to soap. I think educating buyers on why zest or even Lush are poor products goes a long way in making a sale. Not in a fear mongering way, but just in a health conscious way. Everyone cares about health. Not everyone has fear.


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## JustBeachy

smeetree said:


> I think many consumers are uniformed. They'll see a cheap item and buy it over the more expensive one, but then they fail to track how quickly the cheap one breaks and they have to replace it. Over time, the cheap item usually winds up costing them more. This is why I always go quality. People with low income can buy good cars, btw, if they purchase used. That is a better long term buy than a new Kia.
> 
> Get this: I bought a new canopener from Wal Mart several years back. After maybe 6 months of use it was all rusted out and bolts came off. It was a disaster. They take it back and give me another. Same thing happens after an even shorter period of time. I get fed up, go on Ebay, and buy a new canopener from 1960. It was still in the box! I've had it 2.5 years with zero issues. It works like new still. Paid $28 for it. About $8 more than the WalMart one, but already 2x the use, and will get much much more, if not own this until I die.
> 
> Anyway, back to soap. I think educating buyers on why zest or even Lush are poor products goes a long way in making a sale. Not in a fear mongering way, but just in a health conscious way. Everyone cares about health. Not everyone has fear.



Nothing wrong in any of those statements. But it doesn't address the problems of competing against the other home made soapers who are doing the same thing. Making the same soap that's better than store bought soap. And selling for less than you are.

Again, educating the public isn't a bad thing. But it's my opinion that you first look at being able to compete within your market. Develop marketing that makes you stand out against your peers. Staying with the car analogy, Mercedes doesn't direct it's marketing to the Kia demographics. They're wise enough to know that, even if they can educate those buyers about the quality issues of their product, their time and money is better spent marketing to their targeted demographics. And standing out among their main competition. Other quality car manufacturers.


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## smeetree

JustBeachy said:


> Nothing wrong in any of those statements. But it doesn't address the problems of competing against the other home made soapers who are doing the same thing. Making the same soap that's better than store bought soap. And selling for less than you are.
> 
> Again, educating the public isn't a bad thing. But it's my opinion that you first look at being able to compete within your market. Develop marketing that makes you stand out against your peers. Staying with the car analogy, Mercedes doesn't direct it's marketing to the Kia demographics. They're wise enough to know that, even if they can educate those buyers about the quality issues of their product, their time and money is better spent marketing to their targeted demographics. And standing out among their main competition. Other quality car manufacturers.



We should form a soapmakers' union or cartel, because anyone selling under $5 is selling too cheap and then the race to the bottom (undercutting) begins. At $5, it's benefiting the buyer more than the seller, after all the planning, artistic skills, labor, materials, marketing, etc etc are factored in. If people balk at $7 they can go use zest! That can be our slogan. To those soapmakers selling $5 razor thin margins: you're hurting yourselves long-term. Find emerging markets online like Singapore, China, etc that have growing middle classes with a lot of disposable income. Better off doing that than selling local at too low a price.


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## smeetree

If you follow commodity markets closely, you realize some industries do sell below cost (e.g. gold mines are notorious for this). The thinking is they'd rather have some cash flow, I guess? To me that makes no sense. If they all banded together to not sell at those prices (the DeBeers diamond cartel) rather than undercut one another in a race to the bottom, they could get not just fair market value, but many times even higher (by controlling supply. OPEC does this, too).

Here's a video on DeBeers if you're interested. It is fascinating. 

[ame]https://www.youtube.com/watch?v=s4c1p_DMkIw[/ame]


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## JustBeachy

Well you lost me on two points. I'm all against unions. With all your talk about the evil cartels and such, I would've assumed you would be too. 

And second, I use expensive EO's in most of my soaps. My cost is still under 2 bucks. Add in some shipping and handling and lets say were up to 2.25. Selling at 5 would be over a 100% markup. That's a margin most businesses would love to have. Not saying to sell at 5.00 but still.   

Sell at what the market will bear. It really doesn't get simpler than that.


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## houseofwool

I too use EO's I managed to get my pricing low. Most bars retail for $3.99 each for a4 ounce bar.  My costs on some are as low as $.75 each and as high as a $1.50 each. Overall I average about a dollar a bar cost.

At the last show that we did there were at least two other soap vendors there. One of them has prices in the $6-$8 range for the same size bars. People came to our booth, walked away, went to her booth, then came back to ours and spent a boatload of money.  The market here just can't handle having high-priced bars.

I'm still turning a decent profit. And have no intention of increasing my prices unless my raw material cost go up.


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## smeetree

JustBeachy said:


> Well you lost me on two points. I'm all against unions. With all your talk about the evil cartels and such, I would've assumed you would be too.
> 
> And second, I use expensive EO's in most of my soaps. My cost is still under 2 bucks. Add in some shipping and handling and lets say were up to 2.25. Selling at 5 would be over a 100% markup. That's a margin most businesses would love to have. Not saying to sell at 5.00 but still.
> 
> Sell at what the market will bear. It really doesn't get simpler than that.



I am against unions and cartels. That was half joke/half frustration speaking. 

Check out these sellers on ebay:

http://www.ebay.com/itm/HOME-MADE-G...592?pt=LH_DefaultDomain_0&hash=item1c124dd768

http://www.ebay.com/itm/Handmade-So...t=LH_DefaultDomain_0&var=&hash=item258be10664 


http://www.ebay.com/itm/LOT-OF-12-H...739?pt=LH_DefaultDomain_0&hash=item19bc0c300b


They're basically selling at cost, if not below. They are paying themselves $0 for labor. The only rational conclusion is that they're either (a) bad at business or (b) are using the amazon.com model of selling at a loss with the hope of gaining market share and loyal costumers (i.e. future profits). The problem with that model, is the second you raise your prices to where they need to be to make real profit, you lose your customers. 



Your cost is $2.25 per bar _including _your *labor *_and _*opportunity cost* (i.e. what you could have been using your labor on if not making soap)? I think many soapers miscalculate both of those and don't realize it because they do it as a hobby/part time and have other income coming in. 




> Sell at what the market will bear. It really doesn't get simpler than that.




Which market? Because the market in Singapore will bear much more than the market in Punxsutawney. Name me an industry that sells a commodity (and soap is a commodity) that only sells local. The entire commodity space is based around global markets because that is the only way to get market price. People bringing these to local craft fairs and selling for under $5 could get more in the global market. There are some advantages to selling local (word of mouth, buyer can test it, etc), but if we're talking a commodity fetching the best price, in general, you need to be outside your local market. 



The person who mentioned the homemade soap market is saturated was correct. The good news is the people above selling loafs for $25 on ebay will soon be out of business. The bad news is there are still many in that $4-5 range where you can technically eek out a paper profit (but at too much opportunity cost) who are undercutting. I think the big problem here is (a) people don't factor in all input costs, some not even paying themselves labor and (b) people selling local. These two things keep price artificially low.


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## smeetree

houseofwool said:


> I too use EO's I managed to get my pricing low. Most bars retail for $3.99 each for a4 ounce bar.  My costs on some are as low as $.75 each and as high as a $1.50 each. Overall I average about a dollar a bar cost.
> 
> At the last show that we did there were at least two other soap vendors there. One of them has prices in the $6-$8 range for the same size bars. People came to our booth, walked away, went to her booth, then came back to ours and spent a boatload of money.  The market here just can't handle having high-priced bars.
> 
> I'm still turning a decent profit. And have no intention of increasing my prices unless my raw material cost go up.



What do you pay yourself per hour to make the bar? And not just make it, but cut it, test it, check it day after day to make sure it's curing correctly, checking scent, etc. What about the gas money to get to the show. Did you factor that in?


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## smeetree

JustBeachy said:


> And second, I use expensive EO's in most of my soaps. My cost is still under 2 bucks. Add in some shipping and handling and lets say were up to 2.25. Selling at 5 would be over a 100% markup. That's a margin most businesses would love to have.



If our profit margins were 100%, we'd all be getting bought out by Lush or some other business. People selling at $2.25 on eBay are taking a massive loss. Probably a [negative] -100% margin. At $5 maybe break even. Lush is not overpriced. They are priced correctly, like most successful businesses. 

We haven't even discussed tax rates...I don't think many soapmakers are profitable, though many are convinced they are.


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## JustBeachy

smeetree said:


> I am against unions and cartels. That was half joke/half frustration speaking.
> 
> Check out these sellers on ebay:
> 
> http://www.ebay.com/itm/HOME-MADE-G...592?pt=LH_DefaultDomain_0&hash=item1c124dd768
> 
> http://www.ebay.com/itm/Handmade-So...t=LH_DefaultDomain_0&var=&hash=item258be10664
> 
> 
> http://www.ebay.com/itm/LOT-OF-12-H...739?pt=LH_DefaultDomain_0&hash=item19bc0c300b
> 
> 
> They're basically selling at cost, if not below. They are paying themselves $0 for labor. The only rational conclusion is that they're either (a) bad at business or (b) are using the amazon.com model of selling at a loss with the hope of gaining market share and loyal costumers (i.e. future profits). The problem with that model, is the second you raise your prices to where they need to be to make real profit, you lose your customers.
> 
> 
> 
> Your cost is $2.25 per bar _including _your *labor *_and _*opportunity cost* (i.e. what you could have been using your labor on if not making soap)? I think many soapers miscalculate both of those and don't realize it because they do it as a hobby/part time and have other income coming in.
> 
> 
> 
> 
> 
> Which market? Because the market in Singapore will bear much more than the market in Punxsutawney. Name me an industry that sells a commodity (and soap is a commodity) that only sells local. The entire commodity space is based around global markets because that is the only way to get market price. People bringing these to local craft fairs and selling for under $5 could get more in the global market. There are some advantages to selling local (word of mouth, buyer can test it, etc), but if we're talking a commodity fetching the best price, in general, you need to be outside your local market.
> 
> 
> 
> The person who mentioned the homemade soap market is saturated was correct. The good news is the people above selling loafs for $25 on ebay will soon be out of business. The bad news is there are still many in that $4-5 range where you can technically eek out a paper profit (but at too much opportunity cost) who are undercutting. I think the big problem here is (a) people don't factor in all input costs, some not even paying themselves labor and (b) people selling local. These two things keep price artificially low.



I don't claim to be an expert on anything, except maybe enjoying a nice day on the beach. I'm excellent at that. 

But I spent many years, selling and marketing. Many year's managing those types of corporations. I probably came away with a little bit of knowledge of the process. 

Opportunity cost is no where even in the discussion. If you like doing  something, it's worth making less money to do it, rather than just  making money and being miserable. If I just wanted a six figure income,  I'd take one of the job offers I occasionally still get and re join the  corporate nightmare. No thanks. 

No offense intended, but I've given you sound, market realistic information, that you seem dead set on ignoring and just continuing to swim against the current. By all means, do it your way. That's your right. I genuinely wish you success.


----------



## smeetree

JustBeachy said:


> Opportunity cost is no where even in the discussion..



It certainly does. If you are an attorney and can make $400 per hour, yet you made soap for free, then you took a $400 loss by making soap. This is a foundation of economics, and the reason we have specialization. 

I'm not ignoring you. How do you even come to that conclusion when I have responded to every point of yours? Disagreeing = ignoring?

 I'm asking soapmakers to explain how one makes profit at $5, no less at $2.50. I'd love to see a spreadsheet of costs, because I'm guessing many hidden costs are missing.



> If you like doing  something, it's worth making less money to do it, rather than just  making money and being miserable


Generally speaking, yes, but that's a price you can't quantify. Some would argue it's worth doing the thing you dislike, where you make more money, so you can use that money to find enjoyment in your free time.


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## smeetree

People make soap because they like doing it, and they are willing to accept hidden costs either willingly and knowingly, or they just don't recognize them.


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## smeetree

This is a sincere request: anyone who claims to make a profit selling soap, please PM me your balance sheets/spreadsheets.


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## JustBeachy

smeetree said:


> It certainly does. If you are an attorney and can make $400 per hour, yet you made soap for free, then you took a $400 loss by making soap. This is a foundation of economics, and the reason we have specialization.
> 
> I'm not ignoring you. How do you even come to that conclusion when I have responded to every point of yours?
> 
> I'm asking soapmakers to explain how one makes profit at $5, no less at $2.50. I'd love to see a spreadsheet of costs, because I'm guessing many hidden costs are missing.
> 
> Generally speaking, yes, but that's a price you can't quantify. Some would argue it's worth doing the thing you dislike, where you make more money, so you can use that money to find enjoyment in your free time.



Didn't say you were ignoring me, I said you were ignoring the information. Read it again.  

I spent many a year living your example of "make more money so you can use it to find enjoyment". Wasted a lot of years and time with that mindset. Missed lots of time that could have been spent with my kids. That's a loss that nothing can compensate for. Certainly not more money. 

Money is a great commodity, but it pales in comparison to the value of time spent doing things you love, with the ones that you love. Money can rent you some good times, but true happiness is something that money can't buy. I make enough money to do the things I enjoy, and it's way less than I use to make. I'm happier now than I've ever been in my life and I have enough time to realize that. 

So, if it works for you, knock yourself out. Good luck.


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## smeetree

JustBeachy said:


> Didn't say you were ignoring me, I said you were ignoring the information.



But I wasn't I addressed everything. Just because I disagree with much of it doesn't mean I ignored it. I gave rebutle. That's how conversation works. I notice on this forum if you don't accept what senior members say as dogma, you get labeled a troublemaker who just won't obey. Well yeah, sometimes people will have different opinions. Sometimes if something is wrong I can't pretend it's right just to appease someone. If you show me your balance sheet/spreadsheet with what you think are all your costs, we can then see if you're truly turning a 100% profit. I'm open to being wrong.



> So, if it works for you, knock yourself out. Good luck.


If what knocks me out? Again, this is some kind of weird jab. Is this implying I'm some rich guy who chooses being in a fancy profession over making soap? Or money over a family? I don't understand the comment since I haven't given any info about me.


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## JustBeachy

smeetree said:


> But I wasn't I addressed everything. Just because I disagree with much of it doesn't mean I ignored it. I gave rebutle. That's how conversation works. I notice on this forum if you don't accept what senior members say as dogma, you get labeled a troublemaker who just won't obey. Well yeah, sometimes people will have different opinions. Sometimes if something is wrong I can't pretend it's right just to appease someone. If you show me your balance sheet/spreadsheet with what you think are all your costs, we can then see if you're truly turning a 100% profit. I'm open to being wrong.
> 
> If what knocks me out? Again, this is some kind of weird jab. Is this implying I'm some rich guy who chooses being in a fancy profession over making soap? Or money over a family? I don't understand the comment since I haven't given any info about me.



Not a jab at all. Just a, as you put it, a rebuttal to your ideas. Again, I genuinely with you success with your endeavor. Again, in my experience, the process I described works. It's worked in every industry and will continue to work. What you describe as conversation, I described as "swimming against the current". 

I'm not a senior member, but I've had discussions with some knowledgeable people on this forum where I questioned the information. I've never felt like anyone has asked me to obey or felt like a troublemaker. 

On the rest of it. I think you're just taking it all too personally, and looking for a reason to feel slighted. As far as spreadsheets. You're right I don't know you, so there's no way in hell I'd let you anywhere near my financials. haha. But it really doesn't take a degree in accounting to figure out the margins of anyone here. 

Respectively, I'm done with this conversation Smee. I really don't see it going anywhere. I'm off to bed. Again, good luck.


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## smeetree

JustBeachy said:


> But it really doesn't take a degree in accounting to figure out the margins of anyone here.



Okay, goodnight.

I do want to address this last comment. It doesn't take a degree in accounting, correct. It does take factoring _every _expense (some examples: gas money, test batches, failed batches, oils that go rancid, dropped oils, wasting lye due to soap calculators inexactitudes, buying distilled water or distilling water instead of using tap, etc. There are so many more nobody thinks about), and then there is also opportunity cost. 

Personally, I can't get those figures to work at $5 per bar, so I will never sell soap. I don't understand how some people claim the math works, and I'd like to see balance sheets that factor in all costs, most importantly labor. A trade should pay well, not near a minimum wage.

Goodnight, buddy.


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## Lindy

Smee you don't sell so you don't know of what you speak.  Theory is amazing but reality is totally different.  Each market is different and if you look at any business model then  you will find that wages come out of profits unless you are selling labour as in Graphic design, lawyers etc.  So now take a look at your costs and speak to it from there.  The 4 x cost, real cost not including labour or shipping (expenses come out of profit as well and are not something you make profit from).

 The other thing, and I said this in another post, your market is what determines what you can sell for.  In your are in a lower income area then you are not going to get premium prices.  It is also totally uncool to put down another product to boost your sales.  That is the #1 error sales people can make and they quickly learn that they are going to lose business over the long haul because people see you as so unprofessional that they are not going to want to deal with you.

 There are good ways to help people understand the differences between commercial and hand-made.  One of those is to use the brochures supplied by both the US & Canadian Guilds that get into the differences and what makes our products premium.  Take the high road and you will get to where you want to be a lot quicker than playing the dirty politics game.  I never, ever put down another person's or company's product because there are room for them all.


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## smeetree

Lindy said:


> wages come out of profits.



I'm not sure I understand this. What if you make a loaf yet sell no bars from it. You don't consider the labor you put in?



> unless you are selling labour  as in Graphic design, lawyers etc.



Again, I am not sure what this means. Graphic design and law are mostly intellectual labor or a service. Are you saying these people pay themselves a salary, yet someone doing physical labor does not? 

Can you show a breakdown of all your costs?


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## The Efficacious Gentleman

I think that we need to make a distinction between selling soap and running a soaping business. 

'Frank' has retired. He has an income that supports his family. He sells soap for fun and for new materials. If he doesn't sell anything for 3 months then he just makes a couple of batches rather than many until things pick up again. He doesn't need to worry about having a robust business. 

'John' runs a soaping business. It is his only source of income. When he doesn't sell anything for 3 months, it's game over. Unless he prices his products so that he has a robust business, able to survive the leaner times. 

This x4 figure is not just cash in the pocket. Frank can go and get an Orange Moch Frappachino after the market because he sold some bars and has profits enough for his beverage. John can't - that money goes in to his business. 

While a market cannot take smee's idea on set prices (or price fixing cartels) as we see with the car example and the supermarket example, there is a point on the other side - a Kia costs less to produce than a Mercedes. Both make profits, though, based on different business models. 

If your area can only take $5 a bar then the quality must drop - extra pure Shea making up 50% of your bar (yuck, anyway) won't work here. Think Kia not Mercedes. You have access to a top end spa? Throw in the goodies and charge accordingly.

The product should also reflect the market, it's not just the price that needs to change.


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## houseofwool

smeetree said:


> What do you pay yourself per hour to make the bar? And not just make it, but cut it, test it, check it day after day to make sure it's curing correctly, checking scent, etc. What about the gas money to get to the show. Did you factor that in?




It isn't in the costs listed above, but, yes, I still take a healthy draw every month during the fall, when we do most of our sales. The draw the rest of the year is the same percent of gross, but since sales are smaller, the dollar amount is lower too. 

I am quite anal about not spending personal money on business expenses. 

The competitor I mentioned?  She sells at wildly inflated prices, particularly now that I can figure out her material costs.  She is selling for 1200% over material costs. Not including labor or overhead for her storefront. But since we don't have a storefront, we can easily sell at a lower price and still have a healthy profit.

And I'm not sure why there is this idea that you have to have such a dramatic profit margin. Most industries I've worked in if profits were 10 to 12%, everyone was thrilled. I definitely don't want to work at such a small profit margin on a business that I can't contract any work out, but I don't need to be making 1000% either.


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## JustBeachy

The Efficacious Gentleman said:


> I think that we need to make a distinction between selling soap and running a soaping business.
> 
> 'Frank' has retired. He has an income that supports his family. He sells soap for fun and for new materials. If he doesn't sell anything for 3 months then he just makes a couple of batches rather than many until things pick up again. He doesn't need to worry about having a robust business.
> 
> 'John' runs a soaping business. It is his only source of income. When he doesn't sell anything for 3 months, it's game over. Unless he prices his products so that he has a robust business, able to survive the leaner times.
> 
> This x4 figure is not just cash in the pocket. Frank can go and get an Orange Moch Frappachino after the market because he sold some bars and has profits enough for his beverage. John can't - that money goes in to his business.
> 
> While a market cannot take smee's idea on set prices (or price fixing cartels) as we see with the car example and the supermarket example, there is a point on the other side - a Kia costs less to produce than a Mercedes. Both make profits, though, based on different business models.
> 
> If your area can only take $5 a bar then the quality must drop - extra pure Shea making up 50% of your bar (yuck, anyway) won't work here. Think Kia not Mercedes. You have access to a top end spa? Throw in the goodies and charge accordingly.
> 
> The product should also reflect the market, it's not just the price that needs to change.



You make some really good points Craig, but I would differ with you on the quality having to drop. The car analogy I used was just an extreme example, used because for some it's easier to grasp if the example is wildly obvious.  

Granted if you did use 50% shea in a recipe, it would drive the cost up, but in my recipe at 8% it's adding 7 cents to each bar. The most expensive EO Blend I use, to contrast, adds 70 cents to each bar. 

I could use a cheaper FO blend and bring that cost down without sacrificing the quality of the actual soap. 

That aside, there are some quality bars out there that are still inexpensive to make and if you buy in bulk you could easily get your ingredient cost down to the 1.25 range without sacrificing quality. Then using the 4X cost idea the bar would be sold at 5.00

My point is that, again, while all this may look good on paper, you should always follow your market when developing a price point. Marketing is there to help you sell more product, to help your product stand out amongst the horde. But you can't fight the financial demographic. If everyone at the craft fair you're selling at is selling for 6 bucks a bar, and you're selling for 8, your bar better cure cancer or it's not going to move well. 

Your point on the differing business models of the guy supplementing a retirement income and the full time soaping business is spot on. No way to compare what margins the two will be willing to accept.


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## JustBeachy

Lindy, I love your comment on not putting down another product to boost yours. That goes for everything in life, in my opinion, but certainly in marketing your product. Never pull someone else down, just to pull yourself up. Negative advertising usually has a nasty habit of coming back and biting you.


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## JustBeachy

Since I think we've beaten the "how much should you charge" horse to death, and then some, I was thinking maybe we could redirect this conversation in a more productive manner. How to market your soap, in order to increase sales. 

Marketing at it's base form isn't about setting a price. It's about expressing the value of your product and/or company to the general public, in order to get them to buy your product. I don't think, we'll ever get a consensus of the price point of soap, but a discussion on different marketing ideas/schemes could help people that visit this forum, in my opinion. Not only the people with aspirations of becoming a seller, but for those that have been selling for years. There's always more to learn, or an idea that seems simple, yet we never even thought of it. 

Sorry to post this and run, but I've got to get to work. I'll throw some stuff out there when I get home this aft.


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## cmzaha

smeetree said:


> This is a sincere request: anyone who claims to make a profit selling soap, please PM me your balance sheets/spreadsheets.


Are you kidding... who in their right mind would share their cash business p&l. I have outlasted many new sellers in my markets and I do make money. Sometimes not sometimes yes, but in the long haul the $6.00 bar makes profit and I do not skimp on quality. I purchase supplies with great discretion. We sold/sued our corporate partner to get out from under the business that was making us a nice high income, but was destroying our relationship and health. We retired and feel much better, maybe cannot own the sportfisher anymore but that is okay, we are having fun and making extra money.
Never ever put down another seller with implied signage or verbally. That is very poor business. In my salon I would have a customer come in to have their hair fixed that another beautician had botched. I never said how bad the work was just fixed it the best I could. It the customer pursed commenting about the former I would just say we can all have a bad day and unfortunetly we are human and make mistakes. Most businesses are a small circle and word spreads very quickly


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## smeetree

The Efficacious Gentleman said:


> I think that we need to make a distinction between selling soap and running a soaping business.
> 
> 'Frank' has retired. He has an income that supports his family. He sells soap for fun and for new materials. If he doesn't sell anything for 3 months then he just makes a couple of batches rather than many until things pick up again. He doesn't need to worry about having a robust business.
> 
> 'John' runs a soaping business. It is his only source of income. When he doesn't sell anything for 3 months, it's game over. Unless he prices his products so that he has a robust business, able to survive the leaner times.
> 
> This x4 figure is not just cash in the pocket. Frank can go and get an Orange Moch Frappachino after the market because he sold some bars and has profits enough for his beverage. John can't - that money goes in to his business.
> 
> While a market cannot take smee's idea on set prices (or price fixing cartels) as we see with the car example and the supermarket example, there is a point on the other side - a Kia costs less to produce than a Mercedes. Both make profits, though, based on different business models.
> 
> If your area can only take $5 a bar then the quality must drop - extra pure Shea making up 50% of your bar (yuck, anyway) won't work here. Think Kia not Mercedes. You have access to a top end spa? Throw in the goodies and charge accordingly.
> 
> The product should also reflect the market, it's not just the price that needs to change.



The only problem with that is that John can open an online shop and sell to up and coming middle classes, such as China, Singapore, Malaysia, etc. If he's selling soap in a small farm town, then yes, he has to sell cheap. But that town is not his market. His market is the entire world thanks to technology. 

The car example is not really analogous to soaping since John could buy a used BMW, Volvo, or Mercedes rather than a new KIA, and have a much better piece of machinery that will likely outlast the new KIA. We cannot buy or sell used soap. :razz: Now that is a fast way to go out of business. 

I do agree with you that we have the hobby seller and the person trying to make this into a business. I think the hobbiest is in a strong position. They likely will just use their soap on themselves if they can't sell it for all the input costs + profit. The store owner might have to sell it for small profit. I just think they are in a losing business if they do that, because the very likely do not calculate all the actual costs. If someone can show me a business they run with a spreadsheet (to the point above, just show me the inputs not the prices) maybe I change my mind. But does that spreadsheet have _every _cost I listed in above posts, and those were just the tip of the iceberg? Probably not. What I think the most common problem is is people skimping on their labor. There is a tendency to work for free since we loving doing it, and that gives artificial profit figures.


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## The Efficacious Gentleman

Smee, please drop it - there are many people successfully running soaping business properly with great and NONE of them have any need to show you any of their calculations.


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## smeetree

The Efficacious Gentleman said:


> Smee, please drop it - there are many people successfully running soaping business properly with great and NONE of them have any need to show you any of their calculations.



Okay, man. The forum that continues to squash conversation or intellectual curiosity. How long before I get _banned _for asking questions or just trying to stimulate good conversation? It's an embarrassment that I can't openly discuss this.

I've now been told to drop EVO olive oil conversation because DeeAnna was right, and there was no room for any discussion or God forbid, dissent. Then I proved that Kirkland EVO is a scam, and got flack rather than appreciation for that. And now I have been told to drop this conversation, despite nobody showing that they actually calculate _all _input costs or making valid, logical arguments to counter sound economics. If there were many soap stores turning profit as you say, a bigger soap company would buy them out. That is how M&A works and the fastest way for big boys to gain market share. Finally, I posted a video that showed Aleppo soap being made with Army Green/black olive oil, and nobody had the intellectual curiosity to ask or explain what was going on? 

Yet, I get accused of ignoring what you guys tell me. No, I question it, and that gets confused with ignoring because you don't like it. Then people get passive aggressive with me, don't answer questions, and just try to use their forum status or some vague argument like "I was in marketing so I know" to prove a point. As if I have no knowledge. What a terrible assumption. If I ever boasted about my background or education you'd all eat crow. But I don't want to use credentials to sway argument; I want to see facts, and nobody can provide them. 

I don't doubt there are a very small few, probably a handful, who run successful soap businesses. But the majority of people selling soap do it at a loss. It's a saturated market with undercutting, and that formula is always a race to the bottom (lowest margin). The ones who succeed very likely (a) sell globally (b) market completely differently than most (c) factor in all inputs and charge accordingly. Etc. 

Feel free to ban me for an opinion that differs than yours and is backed up by economics and examples (the ones on ebay selling at $2.25 per bar. Laughable. Especially after ebay fees and shipping/handling). But that just says more about you than me. If anyone is willing to engage in a real discussion and show _facts, _such as your inputs, please do. We do not need to see your prices..just delete those, but "I don't know you I'd never show you my costs!" is just a strawman to avoid showing the inputs, which is what I want to see, not the costs. 

Instead of all these arguments based around logical fallacy, can you please just show me all these soapmakers running successful stores? Can you please show me your inputs? Some facts rather than jabs based off some bitterness or killing of the dream that you'll one day open a soap shop? That's what I am getting now, all because I want to challenge and ask real, hard questions about this industry and process, and it is stepping on the toes of the old guard.


----------



## The Efficacious Gentleman

No no, Smee - I wanted you to drop it because no-one in changing opinions on this.  My belief in your credibility on this matter has been reduced a great deal by your insistence that you MUST charge $7 or you can't make it work.  News flash - make double the batch size and your manufacturing labour time, including clean up, just dropped by a large factor.  Triple your batch size and suddenly you're getting to much reduced costs.

You admit that some people must be doing it correctly, so what is the beef?  Do you think that on this forum you alone have the knowledge of all of the costs involved?  For the record, another reason why the bar cost x 4 model is important because some of that x4 goes in to R&D and so on.  So if I don't have that in my costs, would I fail your business stability test?

I agree that many MANY people are selling at what I would consider to be a loss - mainly due to their costs being too high.  But I have always maintained that profit is their problem - going at the market rate for a product is a good rule of thumb, cutting your costs to make your profit is just common sense.  

Out of interest, seeing as we have to provide information for our statements, can you quantify and qualify the numbers in this statement - 
_
I don't doubt there are a very small few, probably a handful, who run successful soap businesses. But the majority of people selling soap do it at a loss. It's a saturated market with undercutting, and that formula is always a race to the bottom (lowest margin). The ones who succeed very likely (a) sell globally (b) market completely differently than most (c) factor in all inputs and charge accordingly. Etc._


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## smeetree

The Efficacious Gentleman said:


> No no, Smee - I wanted you to drop it because no-one in changing opinions on this.  My belief in your credibility on this matter has been reduced a great deal by your insistence that you MUST charge $7 or you can't make it work.  News flash - make double the batch size and your manufacturing labour time, including clean up, just dropped by a large factor.  Triple your batch size and suddenly you're getting to much reduced costs.



If you make double the batch you do reduce some labor, but you also run more risks if anything goes wrong with the batch (i.e. bigger loses). To avoid that you likely have to do a lot of small test batches, which is time and such. Maybe once you absolutely perfect a recipe and it is flawless every time, you can reduce some labor. But what does this mean? It means you either spend more time building a large mold, or purchased a large, more expensive mold, have more bars to lug to the market each week and back home, etc. It's not a vacuum. But yes, in theory if you produce more you will reduce the per unit cost of labor over time with enough widgets sold. Our apartments, homes, and equipment are a limiting factor so that reduction would be a figure unique to each person. 



> Do you think that on this forum you alone have the knowledge of all of the costs involved?


I don't know, but based on some of the comments I wonder. I think someone talked about driving their soap to craft fairs and selling it for $4. Unless that fair is very close or they biked (which still requires food inputs), gas becomes a major factor. If they didn't sell all bars, they have to transport those bars each week until they do. Again, I don't know if everyone has knowledge of this, five people do, or only me, because nobody is willing to open up and discuss reality. There is this idea if a bar costs $2 and I sell for $4 I made 100% profit. That is blatantly false on the surface and depends a lot on what they factored into that initial $2. I don't see how it can be everything. Maybe they are writing off a lot of losses? Again, I'd like to see to know.



> Out of interest, seeing as we have to provide information for our statements, can you quantify and qualify the numbers in this statement -
> _
> I don't doubt there are a very small few, probably a handful, who run successful soap businesses. But the majority of people selling soap do it at a loss. It's a saturated market with undercutting, and that formula is always a race to the bottom (lowest margin). The ones who succeed very likely (a) sell globally (b) market completely differently than most (c) factor in all inputs and charge accordingly. Etc._


I posted links to people on ebay selling at an obvious loss. Just search there for homemade soap and see the prices. They do not add up unless the seller has free inputs (like he knows a butcher who gives him free fats) or his dad owns a lye factor. Sure then you can pull that off. My other statement about a small few running successful businesses was off the cuff just to agree with your point that there likely are. I'm just guessing that out of the thousands making soap a small % make a product so good, market it, etc etc that they do succeed on a level to quit day job and make it a living. Maybe there are 0 who can do that, I really don't know, but I am willing to agree with you there are likely a few (someone has to be reaping the fruit of the majority's lost labor). Which brings up an interesting point. Adam Smith wrote that doctors, lawyers, cobblers etc high fees were all justified because they made up for all the failed doctors, so the new was a zero sum game for society. This is the same with soaping, I'd think, and a few are getting the real cost of their soap at the subsidy/expense of the majority who don't make it.


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## Earthen_Step

JustBeachy said:


> Lindy, I love your comment on not putting down another product to boost yours. That goes for everything in life, in my opinion, but certainly in marketing your product. Never pull someone else down, just to pull yourself up. Negative advertising usually has a nasty habit of coming back and biting you.



Agreed!  I started off being slightly negative towards the other products.  I thought about it and it seemed very petty and unnecessary.  I have since been very careful not to fall into pulling someone else down in order to prop myself up.  There are so many positives that can be said instead!  It makes me feel much better, and I have since made friends with some of my competitors.

Some really good points being brought up in this thread.  Anyone thinking about selling should read through this.  There are so many layers to marketing it's to complex to just lump everything into one little box.  I think one key thing is being open to change and evolve.  Some people will find a niche and fill it well.  Earthen Step has not quite filled one yet, we have many plans ahead of us.  But we have already changed drastically from day one.  Being able to adapt and adjust to what comes your way will go a long way.  

I really don't think anyone is wrong on this.  I love the conversation going on and thank you all for your comments.  It's opinions for the most part and not fact.  I think everyone is bringing up great points and many things can work.


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## smeetree

E. Gentleman, I also have an opinion that things that are visible (such as dollars, oils, the final bar) are obvious to calculate, and then the hidden costs are much less. We see proof of this in the mass psychology surrounding the dollar itself. For example, a dollar in 2000 purchased much more than a dollar in 2014. People do not see the invisible inflation tax in that situation and rarely factor it in until they do (such as a rise in material costs, their rent, etc) Until it hits them squarely. I don't know if you follow econ at all, but there is massive inflation in the world right now. Inflation does not necessarily mean prices increasing massively, but what it does mean is an increase in money supply, and that money will go into something (it can vary and be unpredictable). After the 2008 housing crash, our central bank printed 5 trillion dollars. Those go into things. Raw materials, for example. Or right now the stock market.

So how this factors into soap. I actually would put it as an input cost. Say my soap sits for a year before I sell it. In that year 1trillion more dollars enter into circulation. Well, my past dollars used to make that old bar had more purchasing power than the new dollars I get when I sell them.

I honestly don't think people factor in things like that. But when making a product like soap, I wrote earlier it's important (to me) to leave a 50% buffer margin in times of high inflation, and this is precisely why. It may sit a while before I sell it, and all that time the dollars tied up in it lose purchasing power. Thought of another way: if I made soap in 2000 and had a $4 price tag on it and it was still sitting on my shelf in 2014 with the same $4 tag, I'd take a huge loss just via inflation (purchasing power) when it finally sold.


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## smeetree

Earthen_Step said:


> Agreed!  I started off being slightly negative towards the other products.  I thought about it and it seemed very petty and unnecessary.



I think this looks bad, too. Think about political ads. When you see candidates bashing one another. It makes you feel bad about both options. Negative advertising is lame. It's best to just inform people. When people are informed accurately (it is equally bad to fear monger them and say they definitely will get skin cancer if they use chemical soap and things like that), they tend to make good decisions. The problem with soap is the masses are simply ignorant on the subject. And rightfully so: who has time to research soap or even consider it in their busy days? This is why I think an honest info sheet showing the pros and cons of Zest vs Homemade soap could be powerful. Zest would have the pros as "price, easy to find, yada yada", and the homemade would have a list of all its benefits and cons (and there are some, such as not being able to replicate easily, price, etc).


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## Lindy

Smee let's try this from another direction.  The x4 and x2 model does allow for labour.  In most businesses you have an overhead and this comes out of your gross sales.  It is not included in the cost of your product but rather it is an expense that takes you to net sales which allows for your expenses.  If you are not doing a good job of marketing your product you will lose money covering lights, staff an other expenses.  Most business are happy with a 15% net profit.  When we start talking about businesses that are selling labour they are going to mark up that labour as it is the only profit centre they have.  When I was running my architectural sign company I was selling my time and expertise so I marked up that labour costs for design and overseeing of installation.  Same as a contractor they are looking for 15% management fees and from there they must take their expenses out.    I have worked in sales for most of my life and know how to figure out what the profit margins must be to get where they I need to be to be profitable.  I am another one whose business has been around for almost 6 years.  This past year I have been able to work off my wholesale accounts.  Next year I am going to pick up my retail again because I miss my retail clients and the face to face sales.


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## samirish

I charge $7/bar and the other soaper at my market charges $3.50/bar.  True story.  My booth is always filled and her booth remains empty most of the time. This is in a blue collar suburb in the midwest.  I think sometimes low prices speak of low quality and desperation...and I am neither one of those.


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## smeetree

samirish said:


> I charge $7/bar and the other soaper at my market charges $3.50/bar.  True story.  My booth is always filled and her booth remains empty most of the time. This is in a blue collar suburb in the midwest.  I think sometimes low prices speak of low quality and desperation...and I am neither one of those.



My kind of gal/guy!


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## smeetree

Lindy said:


> Smee let's try this from another direction.  The x4 and x2 model does allow for labour.  In most businesses you have an overhead and this comes out of your gross sales.  It is not included in the cost of your product but rather it is an expense that takes you to net sales which allows for your expenses.  If you are not doing a good job of marketing your product you will lose money covering lights, staff an other expenses.  Most business are happy with a 15% net profit.  When we start talking about businesses that are selling labour they are going to mark up that labour as it is the only profit centre they have.  When I was running my architectural sign company I was selling my time and expertise so I marked up that labour costs for design and overseeing of installation.  Same as a contractor they are looking for 15% management fees and from there they must take their expenses out.    I have worked in sales for most of my life and know how to figure out what the profit margins must be to get where they I need to be to be profitable.  I am another one whose business has been around for almost 6 years.  This past year I have been able to work off my wholesale accounts.  Next year I am going to pick up my retail again because I miss my retail clients and the face to face sales.



Okay, since you are doing it I respect that. 15% would not be enough for me, personally. And that is not because I am greedy. Again, it's the opportunity cost. Can I get 15% somewhere else doing less work? Yes, investments, for example, and capital gain taxes are significantly lower on investment than self-employment. Then I can simply make soap as a hobby (what I do now) to benefit my skin and hair. Maybe I could get behind a 5x model. But I wouldn't be happy with 15% net given the difficulty of planning, making, and selling soap.

Speaking of Forex, I think soapers would be wise to educate themselves on currency fluctuation and the concept of purchasing power. Open a Forex account and put your currency/"profit" into a currency (like the Yuan) that is going up. The Dollar is stable of late, but got hammered the past five years. The Euro is about to get hammered. The Yen has been getting crushed. I personally buy silver with any profits (from non soaping endeavors) b/c all currency right now is in trouble, but at the very least protect your profits in something appreciating and/or tangible.


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## JustBeachy

You know I was going to just drop this, but I think it just needs to be said. So here goes.



smeetree said:


> The car example is not really analogous to soaping since John could buy a used BMW, Volvo, or Mercedes rather than a new KIA, and have a much better piece of machinery that will likely outlast the new KIA. We cannot buy or sell used soap. :razz: Now that is a fast way to go out of business.



Sales and marketing is a universal game. The basic principles stay the same no matter what you're selling. Like most of the points I make, you just would rather try to argue the point. 



smeetree said:


> Okay, man. The forum that continues to squash conversation or intellectual curiosity. How long before I get _banned _for asking questions or just trying to stimulate good conversation? It's an embarrassment that I can't openly discuss this.
> 
> I've now been told to drop EVO olive oil conversation because DeeAnna was right, and there was no room for any discussion or God forbid, dissent. Then I proved that Kirkland EVO is a scam, and got flack rather than appreciation for that. And now I have been told to drop this conversation, despite nobody showing that they actually calculate _all _input costs or making valid, logical arguments to counter sound economics.
> 
> Yet, I get accused of ignoring what you guys tell me. No, I question it, and that gets confused with ignoring because you don't like it. Then people get passive aggressive with me, don't answer questions, and just try to use their forum status or some vague argument like "I was in marketing so I know" to prove a point. As if I have no knowledge. What a terrible assumption. If I ever boasted about my background or education you'd all eat crow. But I don't want to use credentials to sway argument; I want to see facts, and nobody can provide them.
> 
> Instead of all these arguments based around logical fallacy, can you please just show me all these soapmakers running successful stores? Can you please show me your inputs? Some facts rather than jabs based off some bitterness or killing of the dream that you'll one day open a soap shop? That's what I am getting now, all because I want to challenge and ask real, hard questions about this industry and process, and it is stepping on the toes of the old guard.






smeetree said:


> I don't know, but based on some of the comments I wonder. I think someone talked about driving their soap to craft fairs and selling it for $4. Unless that fair is very close or they biked (which still requires food inputs), gas becomes a major factor. If they didn't sell all bars, they have to transport those bars each week until they do. Again, I don't know if everyone has knowledge of this, five people do, or only me, because nobody is willing
> 
> 
> 
> 
> 
> smeetree said:
> 
> 
> 
> .
> 
> 
> 
> 
> [s the masses are simply ignorant on the subject. And rightfully so: who has time to research soap or even consider it in their busy days? This is why I think an honest info sheet showing the pros and cons of Zest vs Homemade soap could be powerful. Zest would have the pros as "price, easy to find, yada yada", and the homemade would have a list of all its benefits and cons (and there are some, such as not being able to replicate easily, price, etc).
Click to expand...


I was going to line item these, but decided it really wasn't worth the time. You'd just come up with some off the wall argument. Smee, you don't discuss or converse, you argue. You hate it when others disagree with you, yet you disagree with **** near everything that's posted. If you'd rather not take the opinions from people that have spent years selling, marketing, making soap,etc than respectfully, that makes you a fool.

 No one I've seen on this forum, and I've spent a lot of time looking through old posts, squashes any idea's that are discussed in a constructive way. To be honest, you're the only person I've seen be antagonistic, well until now, I would say I'm being antagonistic. But I don't really see any options in getting through to you.

If you know so much more than I do about marketing and sales, why on earth aren't you out there making high 6 figures in the corporate world?  I still get job offers that would blow your mind. You're wasting your talents. 

If you know so much more about the profit margins on running a soaping business, than the people who have done it for years, quit your job and go make some money. No one needs to share financials with you to satisfy your desire to try and prove yourself right. I like quite a few people on here and would help them in pretty much any way I could. That doesn't mean I'm going to open up my financial portfolios to them. That's just silly. 

Sorry, I'm usually pretty laid back, but shy has never been a word used to describe me, and I tire of this "I'm being persecuted" attitude.  I'll end with, if you don't like the environment here, feel that your opinions are being squashed and no one knows what they're talking about, why are you still here? Why would you ask advice from any of us idiots?   If I felt that way, I wouldn't be sitting around waiting to get banned, I'd leave and never look back. 

Don't bother with another convoluted rebuttal, I truly am done. 

Sorry to the moderators/forum members, but I felt it needed to be said.


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## smeetree

JustBeachy said:


> I'll end with, if you don't like the environment here, feel that your opinions are being squashed and no one knows what they're talking about, why are you still here? Why would you ask advice from any of us idiots?   If I felt that way, I wouldn't be sitting around waiting to get banned, I'd leave and never look back.



You're rude.

But to your question, I didn't ask for advice on profits. I only asked for advice about soap. I have received pm with people thanking me for my posts in this forum, and it's making them rethink things.


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