Getting into wholesale

[aab1]

I've just recently started a soap business and am getting ready to go into wholesale, but despite having run several businesses for over 10 years, this would be my first time selling wholesale so I have questions.

In general what should the price structure be regarding my cost VS wholesale price VS retail price? On my website I charge about 4 times my cost for the soaps, how would that breakdown into wholesale and retail prices?

Also, what's the best way to get stores like health food stores to get to sell my soaps? Should I directly talk to the manager, mail a letter/samples, or something else?

I also make soaps in a few different shapes, should I give them samples of my different shapes so they can decide which they prefer based on size/cost?

In general do the stores pay you for the soaps in advance or do you get paid as they sell?

What else should I know before approaching stores to get them to sell my soaps?

Thanks

 

[Lindy]

If you are wanting to sell wholesale there are a few things you need to do.

I created a catalogue to show my product line including photos of the different shapes and swirl methods. Your wholesale price is x 2 of your cost and retail is x 4. Set a minimum order, what you feel should be a wholesale order. I require 50% deposit upon order placement and the balance due prior to shipping. There are of course exceptions, but those are my general rules.

I always deal with the buyer whether that is the manager or a buying agent. And then follow-up on your calls and your samples.

 

[Serenity]

Hi all. I'm in the same situation at the moment with a local business wanting to buy my soaps to stock in their organic beauty shop, but wanting to cut my price way down & get me to do private label for them. I'm feeling really stressed about it now. If I'm not careful I'm going to be doing all the work and she's going to get all the money. As it is, if I sell them to her for $2.50 and my cost is $1.00, she'll sell them for $4.95 (she said) and make $2.45 while I make $1.50. I wonder if it's worth it.

I reformulated my soap recipe for this lady so that my ingredients cost per bar is $1.05 per bar. She reckons customers won't pay $6.50 per bar and she'll have better turnover if she prices them at $4.95. The business is in an exclusive suburb so I'm sure they could afford it.

Lindy, when you say cost, do you mean ingredients only or do you factor in other expenses (eg paper towels etc) and labour? If I made 50 bars in batch, I estimate my total time for making, cutting, washing up and wrapping to be 3 hours. At $40/hr that works out to $2.20 per bar, which is obviously too much. To get this figure down I could work faster or pay myself less.

I don't mean to hijack this post - I got carried away. I'm mainly interested about how to include my labour in the cost and how others do this. I hope it all adds to the discussion.

Thanks

 

[Ancel]

There has been several topics along these lines before, and the generally consensus was as Lindy said: 2x cost for wholesale, 4x cost for retail. Cost including everything from initial design to wrapping plus materials, so labour is included. I also remember several posts which discussed labour costs, and $40 is really very high. Soap making labour has different aspects: initial design, measuring, the actual mixing process, clean-up, cutting and packaging. Obviously some parts are more skilled, the design and mixing/pouring (depending on how fancy your soaps are), while the measuring, clean-up and packaging are lower skill labour.
Perhaps it's okay to charge $40 an hour for the more skilled aspects, but charging that much for the clean-up, cutting and packaging seems too high. It might price you out of the market, maybe if you paid yourself less for that part it would bring your cost down and make your wholesale price more attractive. As for the store owner making more money, that just seems the way it is, they have all their overheads to cover etc.,. I think with wholesale you just have to decide if you are happy with what you come away with and not think about what happens to the soap once it is in the store.


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[Lindy]

To be competitive I add 30 cents a bar for labour because the more I make, or should I say the larger the batch the less labour per bar add in labels and packaging into my cost as well.

 

[Serenity]

Thank you ladies. I so appreciate your comments.

AU$40 is a figure my husband suggested (US$37.87). For comparison, here in Perth I have to pay a domestic cleaner AU$25/hr (US$23.67). But I understand what you're saying and I'll rework my figures as you suggest using different rates for the different tasks.

I'm not just in it for the money as I will be so happy just to be able to make soap all day, but I must be careful I don't under-value myself because I've worked like a slave for employers in the past and got paid very little for it. I've put countless hours into learning this craft and developing my recipes and designs and I think that is worth something. But then, the market dictates and people aren't going to pay $7 for a bar of soap.

It's great to hear your perspective on things and I hope that in a few years I'll have that experience and will be able to help others too.

 

[Lindy]

I use basically minimum wage as my guideline and how many batches of soap I can make in an hour, as well as how many I can package in an hour to set that price.

 

[Delynnr]

In Australia, what does a fast food worker get paid? Honestly, most of the actual labor for making soap could be done by someone with very little skill or training. Obviously some tasks require skill or knowledge, but those tasks don't take up that much time from the total unless you are doing super fancy decorating! I would use that for the labor, and if you make more than that be happy!

 

[Relle]

In Australia, what does a fast food worker get paid? QUOTE]

At McDonalds here they pay around $17.95 hr.

 

[Lindy]

Minimum wage here is $10.50/hour

 

[green soap]

As of the first of January this year, the minimum wage in California is $8 USD an hour.

 

[Forsenuf]

I agree with Ancel- you set your wholesale price at whatever covers your cost (& hopefully is in line with what other soapers are charging in your area), and the store owner can sell it for whatever they think their customers will pay. I suggest a retail price to my vendors, but I also make it clear that they are free to set their own prices.

 

[SpiralTouch]

I charge $3/bar wholesale for 5 oz bars of soap made with local milk/organic oats. The shop I sell to sells them for $5/bar. I feel this price is very realistic and competitive.

I'm happy with it so far, materials only my bars cost a little over a $1.00 - not including packaging, etc.

 

[aab1]

Thanks for all the info.

I'm wondering if I should make sample bars to show stores or if just a product catalog is enough?

Also, will stores understand or mind that I need to let the soaps cure at least a month before they can get them or will they expect them to be already done?

Thanks

 

[Lindy]

Mine all understand that they need to cure and that their order is a custom order. I have samples I send along with the catalogue....

 

[aab1]

For selling in stores I was thinking of either large rectangular bar (which I don't yet have listed on my website) and/or the flower shaped soaps which I have on my website.

Should I give each store a sample of both the large bars and the flower shaped soaps so they can decide which they want to sell?

Thanks

 

[Ancel]

Both, if you're prepared to make both. What about range, are you thinking of supplying your wholesale clients with all your scents? It's exciting to get into wholesaling, just remember if you are offering many different scents in two molds then you could have complicated orders to fill. But maybe that's fine and you're a great organizer


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[Pawpaw]

If I may, possibly quite after the original post, give my opinion, not on costing but sales. I have been in sales for 13 years and my best sales were always face-to-face. If you can, go to places where you want to sell and speak to the owner or the buyer. Take samples with you of all you want to sell (don't give them the samples) so that the person has something to hold, see, smell. Don't mention prices until they ask, that's my first sign they are interested. If a place you want to sell to is out of town try and give the owner/ buyer a call introduce yourself and tell them you would like to show them your soaps can you send them an email. Then email then small photos or a link to website and give a little spiel to remind them of what you said on phone bit with more info (keep phone calls short and sweet). Also another thing I find helps is carry some stock with you, in car, and say you do hVe stock and can drop off for free now at no cost. Just some ideas good luck. The nice thing with wholesale is you can sell bigger orders.


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[Serenity]

Thanks Pawpaw. It's great to hear from experienced people. I just delivered my first wholesale order so this type of info will come in handy in the future.

Would you not leave a sample with them to try, if they seemed interested?