Need advice re: selling in a shop!

[Bubbly Buddha]

I have been making soap now for a year and a half and am just hopelessly addicted to it. I was thinking about doing some craft shows in the spring and my main goal would be to cover my costs so I could continue to make soap. After much experimenting (and some failures) I finally have a recipe I am happy with and I feel more confident that it is of a quality and consistency that I would be comfortable selling.
That said, I have a girl friend that contacted me this past spring about selling soap in her salon. I didn't feel I was "ready" at that point and told her so. She has now contacted me again and is still quite interested. My question would be "Now what?". How much do I sell it to her for? I know what the cost of my materials are per loaf, but am unsure how to calculate my labour, packaging, shipping, etc. And of course I'm assuming she also wishes to make a profit on her end. Does anyone have any experience in this area? What would some of my first steps be?

TIA!

 

[Midnight Rowan]

I don't sell myself, but have done quite a bit of reading up on the subject, just in case I ever decide to go there.

From what I've read, you'd add your overhead, packaging, and labor to your total loaf cost, then divide by how many slices you get per log.

For labor, you'd decide on an hourly wage for yourself, keep track of the hours you spend masterbatching, lining molds, making the soap, cutting, packaging bars, and on clean up, and divide your total hourly wage by the bar.

After you got your cost per bar, you would double that for your wholesale price. Your friend would then double what she paid you to get her retail price.

So, say your bar, everything considered, cost you 1.50 to make and package, you'd sell it to your friend for 3.00 wholesale, and she'd sell it in her salon for 6.00.

See what I mean? Hope that makes sense and helps :wink:

 

[radar-78]

This sounds fine in theory but I struggle to see how the soap maker puts in all that work mentioned and 'makes' 1.50 per bar of soap. The retailer, although they may do some sales pitch makes 3.00 on that bar for relatively little effort.

 

[Hazel]

This sounds fine in theory but I struggle to see how the soap maker puts in all that work mentioned and 'makes' 1.50 per bar of soap. The retailer, although they may do some sales pitch makes 3.00 on that bar for relatively little effort.

I disagree about "relatively little effort". Have you ever worked in retail? I worked in retail for years and was also manager for 7 years. It's not easy. You have to deal with the customers who can be extremely difficult, you have overhead - rental, taxes, insurance, utilities, payroll, advertising, etc. Plus it's not usually a 40 hour work week. Most of the time, I was working 60-70 hours a week. I once worked every day for 3 months before I got a day off.

Another problem for the small store owners is the fear of not making enough sales to meet all the bills. It costs a lot to keep a store open not to mention make enough to pay yourself a wage.

Personally I'd rather make soap and wholesale it than have to deal with retail. If someone offered me $3 per bar and was going to turn around and sell it for $6, I'd jump at the opportunity. I'd happily let the retailer have the $3 because it takes a lot of effort to work in retail.

eta: Also by selling wholesale, you only have to do a sales pitch to one person. The retailer has to do a sales pitch to hundreds of people in the hopes of making a few sales.

You can also set your own hours and work out of your home. You don't have to be concerned with dressing nicely everyday, being on your feet for 10-12 hours, not knowing when or if you'll get a break and smiling until your face aches.

2nd edit: I just realized this post sounded a little brusque. I didn't intend it to sound this way. I just wanted to explain why I think retailers should be receive extra money. They have the harder job in my opinion.

 

[Bubbly Buddha]

Thank you for all the replies!

As I said in my post, I'm happy enough to just cover my costs so I can feed this addiction ( :roll: ), so as long as I can do that, the rest is gravy.

 

[Sunny]

Hazel, I agree that it's difficult for a lot of small owners in the way that they have to worry about making their bills. But in this case, all the person is really doing is setting up a display in their salon and hoping that it sells.

So in this particular case, the amount of work this person (the retailer, owner of a salon) would be doing to sell this soap... it is minimal. Making the soap is much harder in my opinion and takes a lot longer.


To Bubbly: what Midnight said is right on. I just wanted to add... make sure you get liability insurance!

 

[Hazel]

How much do I sell it to her for?

I read it as the retailer was buying the soap and then would be setting it up and selling it herself. Then if it didn't sell, she would be left with the stock. Did I misunderstand?

Bubbly Buddha - Is this actually going to be a consignment deal?

Whichever it is, I've always heard wholesalers sell at double their cost and the retailers double their cost to determine the retail price. I also believe a good retailer is going to be actively "selling" a product which is hard work. I know because I had to do it. Also, most salons and spas are set up on a bonus (I don't think this is the correct term but I can't think of it now) system. When employees sell a product to a client, they receive a percentage of the item they sell. It's an incentive to them to help promote products and close the sale. It increases their income. It's hard to stay motivated and excited about a product for 8 hours on the floor especially when not every customer is full of sunshine and sugar. If this woman's salon operates on the same system, she won't get the full amount. A percentage of the retail price would be paid to the employee. It's been a long time but I think the percentage ran from 10% to 20%.

It benefits the wholesaler because the more the retailer and employees sell, the more soap the wholesaler will have to resupply. Everyone profits, it's a win-win situation.