How do you calculate your cost per bar?

[HoneyLady]

Sorry, Kathie! I did not see your question to me until today. Glad I could help!

Cana answered your question, but I'll do it, too.

1.05 oz Castor x {$29.95 / 112} = 1.05 x 0.27 = $0.28

Where did the "0.27" number come from?? Did you divide the $29.95 into 112??? Did you multiply the 1.05 with some number??

The amount of Castor need for my recipe according to Soap Calc is 1.05 oz.

I can buy it from a supplier for $29.95 for 112 oz. So, the supplier charges me $ 0.27 per ounce for that product.

I need 1.05 oz @ $0.27 per ounce. That costs me $0.28.

I divided the numbers in the brackets first : {$29.95 / 112} The slash symbol means divide. (No, I don't think you're stupid. *I* did not understand that once upon a time. So just in case you had my math teacher, too . . .)

The answer to that (0.27) multiplied by my amount (1.05) gave me my final cost of castor oil for this recipe = $0.28.

Then I figured the cost per 2 pound batch, which I then cut into 6 bars. That gave me a cost per bar, from which I can decide how much to charge per bar wholesale or retail.

Yes, there are other ways to figure it. This is what I used for the example. Spreadsheets are great tools -- if you understand how they work. As Cana very correctly pointed out, you have to be able to recognize if the answers it gives you are reasonable or not. That particular point is a real problem for me -- my learning issues make it extremely difficult to recognize those patterns, and if something is wonky.

Good questions! Great answers! As math challenged as I am, I am amused and very happy that all my hard work to learn this stuff for myself can help me explain it to someone else.

And for the record:
I genuinely do not believe that we math phobic people are stupid. I really think we learn in different ways than others, and many teachers do not know how to teach it in ways we need, to understand it. Fortunately, this is getting better as time passes.

PLEASE ask if you have more questions! We are all here to learn from one another. I have sticky notes from a half dozen members of the forum in my binder. I expect that will increase!:razz:

~HoneyLady~

 

[kmarvel]

Thanks Honeylady. I am really trying to master the math here. I soooo suck at it! haha

I like to think of myself as "math challenged". haha
Kathie

 

[robosqu1d]

You are all making me feel very grateful that we use a decimal system for weights in Europe - grams and kilos are definitely easier than pounds and ounces.

 

[The Efficacious Gentleman]

Metric certainly does make it easier. But I think even with the imperial entanglements, people make it harder than it needs to be:

Take an ingredient. Any ingredient - this is not dependant on a specific recipe yet, but should be done for all ingredients used in soap that sells. Work out the cost per unit (should be the same unit that you make your soap in) by taking total cost divided by total units. That gives us cost per unit.

Do this for all ingredients. Put it in a spreadsheet or on paper or what ever feels best for you - spreadsheet is better as it does the math for you.

Then take one recipe and look at how much of each ingredient you used. Multiply your cost per unit by the number of units used. Do this for all ingredients in the recipe. Add this together and you have total ingredient cost per batch. Divide this by number of bars and you have cost per bar.

Of course, you need to factor in your time as an "ingredient" too - how much does your time cost per unit, how many units of time does it take per batch? Just the same as any other ingredient.

While I understand many people are math challanged, it is not a complicated system when you break it down in the smaller parts - work out cost per unit. Stop, period, have a cup of tea. THEN worry about batch cost and bar costs. Makes it much easier to swallow than thinking "I have 14.5 Oz of olive oil in this batch and a 60 oz tub of oil costs........................................." then you'll just get in a funk.

 

[kmarvel]

HoneyLady, I think I have it now. Can you check my work?? (Feel like a Math teacher yet?? lol)

My 3lb batch I use 1.7 oz of castor oil. 1.7 x {$5.95 / 16} = .37 1.7 x .37 = .39 I cut into 1" bars = 13 bars of soap.

So I use this calculation for all of my ingredients and then total up the numbers and that is the total cost of one batch of soap. If I cut 13 bars, would I divide the total number into 13??

Kathie

 

[The Efficacious Gentleman]

Kathie, please work out the cost per unit for the oil first - then put it in to the calculation for the batch. Doing both together is messier than it needs to be.

"My castor costs $0.37 per oz ($5.95 / 16).

I use 1.7 oz Castor per batch = 0.37 * 1.7 = 0.63 ($0.63). Each batch gives me 13 bars = 0.63 / 13 = 0.05 ($0.05) cost of castor per bar."

 

[kmarvel]

Oh my gosh. I think I have it all figured out!!! For a 3 lb batch cut 13 bars. $0.74 per bar. $0.64 per bar cutting 15 bars!
I am selling retail.

HoneyLady, you are a Math uber awesome wizard!!!! :grin: Thank you sooo much!!!!

Kathie, please work out the cost per unit for the oil first - then put it in to the calculation for the batch. Doing both together is messier than it needs to be.

"My castor costs $0.37 per oz ($5.95 / 16).

I use 1.7 oz Castor per batch = 0.37 * 1.7 = 0.63 ($0.63). Each batch gives me 13 bars = 0.63 / 13 = 0.05 ($0.05) cost of castor per bar."

I will definitely break it down for each ingredient. thank you!!

 

[HoneyLady]

Kathie and kmarvel, I think you are on the right track. But I think you may have swooped over a step for a moment.

The EG did a good job of putting into words what I was actually trying to do with numbers the first time around. If those words don't work for you -- "cost per unit" -- keep playing with this until you find a system you can understand. If no one else understands it, that is fine. If it works for YOU, and you are more accurate with it, it's good.
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My 3lb batch I use 1.7 oz of castor oil. 1.7 x {$5.95 / 16} = .37 1.7 x .37 = .39 I cut into 1" bars = 13 bars of soap.

So I use this calculation for all of my ingredients and then total up the numbers and that is the total cost of one batch of soap. If I cut 13 bars, would I divide the total number into 13??
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1.7 ounces of Castor Oil needed for this 3 lb. (#) batch.
Supplier sells it in 16 oz bottles for $5.95.
Therefore, your COST of Castor Oil will be $5.95/16 because there are 16 ounces in a pound.
$5.95/16 = $0.0371875, or thirty-eight cents ( $0.38 ) per OUNCE.
But you need more than one ounce, you need 1.7 ounces. So, 1.7 (ounces) X (times, or *) $0.38 = $0.63 cents for castor oil in a 3 # batch.
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Yes, you use this method for costing (figuring the cost) of all your other supplies for the batch -- say, 5 ounces of CO, 4 ounces of OO, 1 ounce of lye, and 1ounce of FO.
For simplicity's sake, I'll pretend it's $1.00 per ounce for the CO; $1.00 po for the OO, $0.50 po for the lye, and $2.00 po for the FO. Those are arbitrary numbers I pulled out of the air.

So, for this three pound batch, it costs me to make/I pay :
5 ounces of CO = $5.00 (5 ounces at $1 per ounce)
4 ounces of OO =$4.00 (4 ounces at $1 per ounce)
1.7 ounces of Castor Oil = $0.62 (1.7 ounces at $0.38 per ounce)
1 ounce of lye = $0.50 (1 ounce at $0.50 per ounce)
1 ounce of FO = $2.00 (1 ounce at $2.00 per ounce)
Total cost of ingredients for this imaginary batch = $5 + $4 + $0.62 +$0.50 + $2. This adds up to : $12.12. Cost of ingredients per 3# batch.
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If you cut that batch into 13 bars, you divide the cost by the number of bars. That is, $12.12 divided by 13, or 12.12/13. That calculation gives us : 0.093230769 . . . OR, $0.93 cents per bar cost.
If you do it the way you phrased it, "divide the total number into thirteen", you get this : 13 divided by 12.12, OR 13/12.12. That = $1.07 cost per bar.
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EG is right, it is much easier to take this one step at a time. When I laid it out for Alice, I sort of combined it for brevity, but if it confuses you, by all means don't do it that way. Figure out your cost per ounce / gram / pound from the supplier, then figure your cost based on recipe. Total the cost of ingredients. If you can figure packaging costs, (a shrink wrap band @ $0.10 each, and a label @ $0.05 each, for instance) would add $0.15 cost to each bar. Any packaging you do costs you, and should be included in your cost/price calculations. But don't attempt it until you understand the process. If you can't, just work with ingredients for now.

You are right with your figures -- then, as a very broad and general rule of thumb, your bare minimum price is at least your cost, or you are losing money. From there, it's more or less 2 x Cost = Wholesale Price, 2 x Wholesale (same as 4 x Cost)= Retail.

I am very cautious about the spread sheets. You need a clear understanding of how to input your formula into the sheet, and how it's going to operate. This confuses me, so I do it with a ledger. I will move it to a spreadsheet eventually, I just haven't done it yet. It's arithmetic may be more accurate, but it's only as good as what I tell it to do. And if I tell it the wrong thing, it's of no use. Garbage in, garbage out!

K, you pass Costing 101 with an A+ !!
Nah, I'm not a math wizard, you are! I've just had to learn how to break it down in itty bitty steps so *I* could understand it. Some of these really smart folks like EG, can see and understand the logic without effort. I need a road map from Point A to Point B. If my map helps, great!

~Honey Lady~

 

[HoneyLady]

Hey, DeeAnna and other Mods! (DeeAnna is actually the only one I've spoken with :razz: )

This thread is generating some interest. I guess I am not the only math challenged individual in the universe. How about a sticky? "HOW TO FIGURE COST" I would be willing to write it all out again, in a simpler version if needed to explain as I've done on this thread. I'd use even numbers, LOL.

If you would like me to do this, let me know. Somebody somewhere has my email addy . . . If not, okay. :razz:

~HoneyLady~

 

[kmarvel]

Thanks HoneyLady for the "A+". haha Some people are good with numbers and can see them clearly. I cannot. Thank goodness for this Forum and the patient people, like you and EG, Dorymae, Seawolfe, Hazel, etc.

Now......it is back to breaking up numbers some more.

Kathie (kmarvel)

 

[Hazel]

Hey, DeeAnna and other Mods! (DeeAnna is actually the only one I've spoken with :razz: )

DeeAnna isn't a mod.

 

[Jaccart789]

I just wanted to chime in and say to take into consideration that maybe you are selling too early. I am a registered nurse and I am studying to be a nurse practitioner specializing in aesthetics and dermatology, and I think soap making is often taken too lightly. I mentioned in an earlier thread that people who have allergies, immunocompromised, can have devastating effects from your mistakes. Lotions and other products laden with bacteria because of improper technique, soaps with ingredients that are not labeled correctly could be the cause of anaphylaxis, or severe dermatitis and or burns from again improper technique or ingredients. All these possibilities should be weighed heavily before selling to the public. I am not downing you as I fully embrace the idea of selling. I just hope you don't make a grave mistake. I have been soaping a year with close to 200 batches, soaping almost daily...my new husband offered to get me a store and to start selling, but I wouldn't dream of it. I have been mixing scents and creating bath products such as lotions since high school, as I worked for one of the oldest scent companies in Georgia, so I had some understanding. However, I decided to go a 3-5 year plan, toying with the idea of a very small craft show (which I decided to not do). I guess I want perfection and I give my stuff away to at least 40 different people on a routine basis who keep pushing me to sell, but I won't until I know everything there is about soap making. For me a year is definitely not enough time as I am still asking basic questions. When I am like Hazel, Seawolf, Seven, Dorymae, Cmzah (I think that is how you spell just to mention a few), and can offer advice and figure out what posters mistakes are in their recipes... the science behind it... then I am ready. Well good luck my friend and I hope you have a phenomenal business just remember the responsibility you have to the public.

 

[Hilge]

I have to say something, even if I shouldn't :smile: First, I have to say that Jaccart789 is absolutely right about responsibility and safety. But then, sometimes I feel like this whole things is too serious. Of course it is, but my idea of soap making is very traditional and simple. It's something that's been done for ages. Now we have millions of regulations, safety cautions and other tricky things. Soap makers should always be sure about their recipes and label everything correctly but I sure hope that people with allergies or other severe problems are very careful with any product and don't experiment just anything. People sell cupcakes, cocktails, poisonous chemicals (like cleaning products) and plastic toys for children but then old school basic soap is something to worry about? Sometimes when things seem really tricky, I think about those 2000 years old aleppo soaps, basic castile soaps, african black soap (looks like poop!) and try to figure out how this got so complicated. It's just soap (My goosh, did I just say that on this forum?!). And PS. I don't sell.

 

[Jaccart789]

Clearly good points Hilge. I am accused of being too serious all the time. This is my opinion and it could be because I have a license, and when you are a nurse, you are held to a higher standard according to the law, so probably I carry that over with everything I do and this includes soaping. I am also a perfectionist to a fault, so I can't understand the rush to sell. I wish everyone success at any and all business endeavors.

I don't want to hijack this post and change the subject more than it has... Good luck to OP and landing the new clients!

 

[DeeAnna]

Hey, Honey Lady, I'm not a mod. I regret if I've said anything that gave you that impression. I can't do anything about making this a "sticky", but I think you're doing a good job of 'splainin things -- keep up the good work!