Cost of goods

[penelopejane]

You have to use different suppliers to get the best price.
You have to choose the cheap FOs and EOs.
You have to use sensibly priced speciality oils. Meadowfoam is phenomenally expensive here but OO not too bad so work out what is sensibly priced for you in your area.

 

[penelopejane]

You lucky thing we never get free freight and it can be a trap.
I do know what you mean though, I have one supplier I can drive to and I pay a little extra because it's cheaper than adding freight.
Is there another soaper in your area you can share supplies with?
Stick with shea and avocado if you want to keep costs down.

By far the greatest cost is FOs and EOs that takes research. Some are cheap but you use 3x as much as more expensive ones!

 

[Susie]

I don't know where you live, but if it is in the US, you may want to Google "restaurant food suppliers" for your area. It may be that you can get your cost down by buying OO, CO, Lard, etc from them. Then you can make other choices on everything else.

 

[SheLion]

Randy, this is not aimed personally at you but the quoted part of your post hit a personal nerve. I do not sell soap (not yet) but I do sell (occasionally, anyway) handmade jewelry. In the artisan world, people that do not account for their time in the cost of their products, which is usually hobbyists that want to fund their hobby, undercut all the other makers out there that make it their primary business. Because when people see handmade soap for $4, they'll think that all the other soapers charging $6, $8, or $10 a bar are overpricing their products. But in fact, the $4 bar is underpriced because you're not accounting for labor, which is a big cost. However, someone that makes and sells soap for a living must pay themselves (because bills have to be paid and soap is not legal tender) so they have to include labor.

Bottom line, once a hobbyist decides to start selling, it becomes a business and should be treated as such and they shouldn't work for free.

 

[Susie]

I am trying to find a fair price for my time. I may follow this example:

[ame]https://www.youtube.com/watch?v=FqVNU9eN9DU[/ame]

 

[mx5inpenn]

I am trying to find a fair price for my time. I may follow this example:

https://www.youtube.com/watch?v=FqVNU9eN9DU

Thanks for sharing! I've been worried about the material costs primarily, but knew the point was coming where this would have to be decided too. When I sold canned and baked goods, I wasn't as fair to myself as I maybe should have been. I was happy with what I made, but was told by a few major customers (regular orders in the $400-600 range) that I really should be charging more. I don't want to charge under or over a fair price.

 

[cmzaha]

Randy, this is not aimed personally at you but the quoted part of your post hit a personal nerve. I do not sell soap (not yet) but I do sell (occasionally, anyway) handmade jewelry. In the artisan world, people that do not account for their time in the cost of their products, which is usually hobbyists that want to fund their hobby, undercut all the other makers out there that make it their primary business. Because when people see handmade soap for $4, they'll think that all the other soapers charging $6, $8, or $10 a bar are overpricing their products. But in fact, the $4 bar is underpriced because you're not accounting for labor, which is a big cost. However, someone that makes and sells soap for a living must pay themselves (because bills have to be paid and soap is not legal tender) so they have to include labor.

Bottom line, once a hobbyist decides to start selling, it becomes a business and should be treated as such and they shouldn't work for free.

I am constantly selling against people that sell their soaps for $4-$5 and it just wants to make me scream....can't they do simple math. I have had potential ask me why my soaps are $7 with a few $10 soaps and I tell them, I need to make money and I make great soap that is formulated to give a soap that will give them approx a month use, larger bars etc, them I give them a sample and see what happens. People that undercut do a great dis-service to all of us selling. I do this for supplemental money not just for fun, even though I love it. Even my avocado soaps are going have to start going as a specialty soap. In the last three years my 5 gallons of Avocado Oil have gone up from $98 to $147. Pure Olive Oil has gone up to $104 5 gallons, fortunely I prefer Canola HO over Olive oil at a cost of $27.50 for 35#'s. Good soap is not cheap to make

 

[SheLion]

...People that undercut do a great dis-service to all of us selling....

Exactly! And in the end, it hurts everyone because there will always be someone that sells cheaper. There are customers that value quality and understand that quality costs money but they are few, and getting more scarce it seems.

Pricing handmade goods is an art as well as a science. It causes consternation pretty much universally, no matter the product. But a person that correctly figures in costs such as labor and overhead (rent, utilities, insurance, etc.) will never be able to sell as cheaply as a person that just figures (or guesstimates) their material cost and multiplies by x for wholesale and y for retail.

And what amazes me is that the people that don't include labor in their pricing would never work for free at their 'day' job. Go figure.

 

[SheLion]

Susie, that is a good example. I only take issue with her not including the overhead costs (rent, utilities, etc.) because those are still real costs that come out of your pocket. It's the difference between gross profit and net profit, which anyone that goes into business should understand. Personally, that cost is included in my jewelry pricing, though I just use a flat percentage and call it a day.

Ideally, pricing should be a mix of the three, with the cost based being the lowest you sell for. But if the market bears more, sell for more because there is a very real subconscious idea that lower price equals lower quality in people's brains. I have a silversmith friend that wasn't selling much of her jewelry, despite it being-to her-fairly priced. At her next show, she marked her prices UP and made more sales because low priced jewelry=cheap junk to a lot of people.

 

[cmzaha]

I do spend day making larger batches than hobby size and I Do Not skimp on ingredients. Granted I have to charge more and the ones that do not like it they move on. I will not lower my standards

 

[The Efficacious Gentleman]

Randy, if you sell to the public even as a side business, why is the time less valuable? Granted, you would be making soap anyway, but there is no material difference in the soap and the value of your time if you make a batch as a side business or full time.

Think of it from a customer perspective - one day they buy soap from you for $x and the next day it costs $y - the difference? You suddenly decide that you will include all of the costs of time correctly as you want to go full time at it. There is no difference in the product itself, so many customers will go elsewhere.

Not to mention, if everyone who soaps as a hobby price only to cover costs, full timers will have to stop being full timers! "So what?" someone might ask. Well, many of the trailblazers ARE full timers. They make, they sell and we all benefit from their experiences. And then we cut the rug out from under them because we, for some inexplicable reason, want to under price our soaps. Then they can't soap full time and blaze less of a trail because of it.

Then all soap is priced as materials + a little bit of time because no one can soap full time. Someone comes along who has a much cheaper source than you for materials and suddenly you are struggling to justify your prices - then it's you who isn't even covering the cost of the market from the daily takings (let alone from the actual profits of the day!) and unless you can lower your costs, you can't even sell as a side deal.

Under pricing leads to no good thing - not for the businesses nor the customer. A downward spiral to the lowest cost does not engender development and innovation, rather cost cutting and a cheapening of the product.

 

[PuddinAndPeanuts]

Exactly! And in the end, it hurts everyone because there will always be someone that sells cheaper. There are customers that value quality and understand that quality costs money but they are few, and getting more scarce it seems.

Pricing handmade goods is an art as well as a science. It causes consternation pretty much universally, no matter the product. But a person that correctly figures in costs such as labor and overhead (rent, utilities, insurance, etc.) will never be able to sell as cheaply as a person that just figures (or guesstimates) their material cost and multiplies by x for wholesale and y for retail.

And what amazes me is that the people that don't include labor in their pricing would never work for free at their 'day' job. Go figure.

I hear what you're saying about hobbyists undercutting prices, but I at least partially disagree with you. For sure- hobbyists in many circumstances are doing themselves a disservice by undercutting prices; that's true for all the reasons you both have listed and more. BUT- there's a fair percentage that don't need to make top dollar, and will never ever be selling for the purpose of earning a living. They are there to: help pay for supplies, use up product to create a reason to make more, get an ego boost when people ooh and aah over their stuff, and as a social outlet. For sure- them undercutting market value hurts my business; I don't like it. But that's not their problem- nor should it be. At the end of the day, we are in a market driven society. I chose to make a business doing things I love, and I made that decision knowing well that a portion of my competition will not be profit driven. It sucks, yes- but it's what I signed up for with open eyes.

In the end- MOST hobbyists make us look damn good in comparison. And those that kick butt? I don't know- I guess all I can do is wish them luck and envy them the financial position they're in where they don't have to make it as profitable as possible.