Formula for Pricing Different Sizes of One Product

[boogieluv]

Hi everyone,

I have read a lot of articles about different methods to determine wholesale and retail prices. What I have not found information on is, how do you price a product according to size? For example, how would you go about determining retail prices for 8oz, 12oz, and 16oz of shower gel? You can't just use a standard price per oz --we all know that larger sizes are generally priced to be more economical so simply doubling the price of the 8oz to determine the price of the 16oz will not work. I would love to hear about strategies and/or formulas that address this issue.

Thank you so much for your consideration and input.

 

[shunt2011]

I can't speak to lotions but my scrubs and butters I do price two different sizes. I have a 4 and 8 oz scrub. 4 oz is 5.50 and my 8 oz is 8.00 my butters I have 2 and 4 oz and they are 6.50 and 10.00.

 

[Paintguru]

I would think you need to calculate your cost for each of the sizes. As you said, packaging costs are likely the same for each, so there should be some savings between a 4 oz vs 8 oz. However, there is no hard and fast rule that you CAN'T charge based purely on quantity.

 

[DeeAnna]

The cost of your soap ingredients, for example, would be directly proportional to size. 4 ounces of soap contain 2 times more ingredients than 2 ounces of soap. So that part is pretty straightforward, thankfully.

Packaging materials (paper, labels, adhesives, shrink wrap, etc.) for a larger product is not directly proportional to size. For example, you don't use 2 times the labels for a big bar vs a small one. So there can be some cost savings there.

The cost of your labor is also not proportional to size. It takes only a bit more time to make and pour a recipe for a 5 pound log of soap as it does to make and pour a recipe for a 2.5 pound log. And it takes me about the same amount of time to bevel, clean up, and package a large bar as it a smaller one.

I cost out each variation of a product I might want to sell -- looking at labor, material costs, overhead, etc. for each size and style. Sometimes I can see a pattern after a few trials -- maybe I learn that making a double-size product costs me 1.25 times more than the regular-size item. Then I do have a rule of thumb to make future product costing easier.

I have not yet heard of any "rule of thumb" for costing different sizes of soap, since product costing varies so much from person to person and product to product. But maybe someone has come up with one -- and I'll be as eager as you to learn about it.

PS: The "hassle factor" is also something to consider. Sometimes just time and costs are not the only thing to figure into pricing. Maybe packaging those tiny little 2 ounce soaps is a royal pain and it's tolerable to package the 4 ouncers. In that case, I might price the little soaps a bit higher per ounce to make it worth my while to do that tedious kind of work.

 

[AtraGarden]

Hi everyone,

I have read a lot of articles about different methods to determine wholesale and retail prices. What I have not found information on is, how do you price a product according to size? For example, how would you go about determining retail prices for 8oz, 12oz, and 16oz of shower gel? You can't just use a standard price per oz --we all know that larger sizes are generally priced to be more economical so simply doubling the price of the 8oz to determine the price of the 16oz will not work. I would love to hear about strategies and/or formulas that address this issue.

Thank you so much for your consideration and input.

Here is mine; I'd check the market for 8 oz, 12oz and 16oz for same and similar products and compare. I am sure you spend more time, labor and wasted product etc. on 8oz so that one needs to have an extra attention so extra extra profit. I'd go with % pricing.

For instance
8oz : 15% profit
12oz: 13% profit
16oz: 11% profit

or

You will have numbers that are deserved to be there on each if you distribute your expenses on each product on percentage basis.

 

[cmzaha]

PS: The "hassle factor" is also something to consider. Sometimes just time and costs are not the only thing to figure into pricing. Maybe packaging those tiny little 2 ounce soaps is a royal pain and it's tolerable to package the 4 ouncers. In that case, I might price the little soaps a bit higher per ounce to make it worth my while to do that tedious kind of work.[/QUOTE]

My sample soaps which I sell are very pesky to wrap and label. I charge 2.00 ea or 3 or 5.00. These little soapies sell like crazy and are only .6 oz flower shape soapies that I pour in a silicone mold. With the labels, ink, & labor I have to charge more. Unfortunetly when it comes to jars and bottles it is a considerable cost difference when increasing the jar size, unless you can purchase by the case. Then there is another cost factor, having the stock sit until it is used.

 

[Lindy]

Here is mine; I'd check the market for 8 oz, 12oz and 16oz for same and similar products and compare. I am sure you spend more time, labor and wasted product etc. on 8oz so that one needs to have an extra attention so extra extra profit. I'd go with % pricing.

For instance
8oz : 15% profit
12oz: 13% profit
16oz: 11% profit

or

You will have numbers that are deserved to be there on each if you distribute your expenses on each product on percentage basis.

I am totally unclear about how you are determining your profit? Are you going from dead cost?

From dead cost my retail products are 150% profit not including the cost of selling i.e. table rent, internet website costs or regular costs of doing business. It's why I can sell wholesale with a mark-up of double my dead cost which equal 100% mark-up.

The forumla which you will see throughout the forum is cost x 2 = wholesale and cost x 4 = retail.

 

[shunt2011]

I aree with Lindy. Mine is about 150-200%. 15% wouldn't be worth the time or effort involved.

 

[AtraGarden]

Determining the profit depends on the item you are selling actually. Common products go by the market, special ones go on what it deserves. You could have a common bar of soap for 2 dollars but you could also make a soap selling for a 50 dollars a piece.

You have to specify the wholesale amount that you are selling. That would be an amount thats gonna save you the effort given to many retail customers. Wholesale go by the market as well so studying what and how people sell is the key unless you have an extraordinary product.

I suggest you get help from SCORE. I have had that when I used to live in US. It helps a lot and is free.

 

[boogieluv]

Thanks, everyone. I appreciate all the input. The "hassle factor" is definitely what I had questions about. Living and working in Hawaii definitely has its challenges - I typically pay anywhere between 33% to 100%+ shipping of goods alone so using keystone for wholesale and doubling that for retail doesn't always make sense. I'd be pricing myself way out of the market. We got our first Bath and Body Works store in recent years which definitely affects everything from branding to sales strategy. I checked out SCORE - what a great resource!

Thanks again!

 

[Kleine Teufel]

Definitely calculate in "hassle factor." I like that term, by the way. I go by the size, time, packaging, etc, then if it's an extra bear to the point that I HATE making them for what return I get, I might take on a bit more. My "mini" bath bombs, for instance. They are 21g per bomb and go 3 per pack. My time + packaging + everything tangible = not enough profit to make it "worth it" to me. Yep, my time is already calculated into it, but I wouldn't work a job doing just that for $8/hr (which I calculate for myself) for more than a day before quitting. Seriously, they're that friggin miserable to make. Now, I'm working on big bombs that are more for the fun of it (just baking soda, salt, citric acid and some fun additives for aesthetics). Since it will be bigger bombs, the labor will be decreased (I bought actual bomb molds instead of those painfully exhausting mini heart silicone molds) and they shouldn't be as much of a pain, they will be dramatically cheaper than the smaller ones (especially discounting the expensive ingredients in the minis).