As an Apple user I’m frustrated that SoapMaker is only for Windows. It would be helpful to me.
Prices
- Thread starter John Harris
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It's not 'greed' to charge market price for a 'want'. Greed is charging $300 for a need like insulin that only costs the company $20.
I second @Cat&Oak. Labor on my soap is calculated at minimum wage in my state which is $12.00/hour. This is what I would pay someone to cut, plane, bevel, box and label my soap (an actual soap maker would earn more), but in my non-soaping life I'm a Senior Staff Accountant for a CPA firm; needless to say my gross pay is a lot more than $12.00/hour. At $6.00 per bar, I would need to sell about 350 bars a week to replace my wages...that's a lot of freaking soap, which means that I would have to hire someone to help me. Hiring someone means less money for me...unless I raise the price of my soap to cover the additional expense.
And as noted by @The Efficacious Gentleman, there is more to running a business than direct costs and overhead. I started out with a couple of 10" Loaf molds and a knife, then I bought a cheese slicer, then came a single-bar soap cutter. I'm in the process of purchasing 6-5lb Loaf molds (waiting for the liners to come back in stock). I'm also going to be spending around $300 on a fancy beveler for my 'brand'. After that, I will need a multi-bar cutter and that's around $300. And going from 33oz of oils per batch to 63oz, I'm going to need bigger bowls to mix my soap. I got my scale and stick blender pretty cheap on Amazon two years ago, but I'm going to need to replace both next year...and that costs money. I'm also going to need to get a new printer...more money.
While I have a 'tried and true' recipe and I have a good dozen "stock" soaps, I'll also be rotating and having seasonal scents. Anything new...whether it's completely new scent or I have to change suppliers means making test batches and that cost money. And I eventually plan on making more than just soap...I want to add Lotion Bars, Whipped Body Butter, Salt and Sugar Scrubs, and Bath Salts. All of this costs money...developing the right recipe, additional ingredients, molds, tins, labels, jars, bands, bags and equipment. I've already spent several hundred dollars on my Lotion Bars and haven't made a dime yet.
Speaking of work...gotta go and make the donuts.
John Harris
Well-Known Member
I did some math and came out with 99 cents for a bar of soap. That is JUST for the oils and lye. (I THINK I did the math correctly! It is Price Per Gram = Total Price divided by Total Weight, I hope. Then you multiply that by the number of grams for each oil in your recipe.)
How do you factor in colorants? They are expensive, but you only use a couple of teaspoons per batch. (And take the Sodium Lactate, for example. I use 3-and-a-little tablespoons per batch. Kinda hard to calculate the "and-a-little" portion. ) Then there is the paper for your labels. The printer ink to print the labels. The stickers to affix the label. I'm sure there are other costs I am forgetting.
How do you factor in colorants? They are expensive, but you only use a couple of teaspoons per batch. (And take the Sodium Lactate, for example. I use 3-and-a-little tablespoons per batch. Kinda hard to calculate the "and-a-little" portion. ) Then there is the paper for your labels. The printer ink to print the labels. The stickers to affix the label. I'm sure there are other costs I am forgetting.
Did you include the fragrance cost? That is one of the biggest expenses per batch, at least for me.
John Harris
Well-Known Member
OH JEEZ... I forgot the fragrance!!!
And your time - set an hourly rate and factor that in, too
When calculating the cost of your ingredients are you including the cost of shipping? The easiest way of doing this is on a dollar per dollar basis. You take the cost of shipping and divide it by the sub-total of the items your are ordering ($17.53 / 67.89 = $0.2582118132272794). You then multiply that by the total cost of the item ($38.00 x 0.2582118132272794 = $9.812048902636618). Then you add that to the total cost of the item ($38.00 + 9.812048902636618 = $47.81204890263662). They you divide that by your unit of measurement ($47.81 / 200 = $0.24). So my actual cost per soap box isn't $0.19, it's $0.24.
To calculate the cost of volume on items sold by weight, you have to weigh the volume. So how much does a tablespoon of Sodium Lactate weigh? How much does a teaspoon of Mica weigh? This is one of the things I love about SoapMaker3...it does these calculations for me.
So...when calculating your costs you start with your Base Oils, Lye/Water and your standard Additives (like Sodium Lactate or Kaolin Clay or Tussah Silk, etc). For me, (10-4.5oz bars) that's $0.87 a bar (it should be noted that my SM3 hasn't been updated in quite a while so I'm working off old costs and it includes waste and shrinkage). But I'm not making a plain bar of soap, I want add Lavender FO and Lavender Mica...my costs just went up to $1.48 bar. Of course, I can't just hand my customer a bar of soap...it's needs to be packaged and labeled. My costs just went to $1.76 a bar.
And then there is my labor...this can be difficult to calculate. How long does it take to make a batch of soap (from getting out your ingredients to cleaning up)? How long does it take to unmold, cut, plane, bevel, stamp, box and label? Add to this, I MasterBatch....and I usually do this when I'm making soap 'cuz I'm big on multi-tasking. Add to this, it takes me just as long to make a test batch (4 bars) as it does a small batch (10 bars) as it does a regular batch (18 bars), though there is a time difference once I start processing the unmolded soap. It also takes me less time to make a single color soap is it does to make a 2-color drop/chopstick swirl. Once you figure an average time for your batch size, then how much do you pay yourself? My soap would be cost prohibitive if I paid myself the same wage for soap making that I do for my regular job so I look to what I would pay someone...I just use minimum wage for my state...$12.00. So now the cost of my soap is $2.96 a bar.
Oh...and 'direct/indirect overhead'...can't forget about that. This is 'rent', electric, gas, water/sewer, internet, garbage, telephone, website, business cards, business license, insurance (property and product), general office supplies, printer ink, merchant/banking fees. Some of these, what I would call 'indirect' expenses (in red) can be calculated the same way the IRS does for 'Business Use of Your Home'. You calculate the percentage of your home used for business and then multiply it by the total of your indirect expense. Add that to your direct expense and then divide by the total number of bars you could reasonably produce if you worked 8 hours a day, 5 days a week.
Or you could just take your base ingredients times two.
John Harris
Well-Known Member
Plodding along...
For a 40 bar batch:
Oils and lye - 0.99 a bar
Fragrance - 0.50 a bar
Labor - 0.94 a bar (at $18.75 an hour x 2 hours)
Shipping - 0.60 a bar
Tax - 0.20 a bar
Total - $3.23 a bar
Still unaccounted for:
Colorants
Labels
Ink
Stickers
For a 40 bar batch:
Oils and lye - 0.99 a bar
Fragrance - 0.50 a bar
Labor - 0.94 a bar (at $18.75 an hour x 2 hours)
Shipping - 0.60 a bar
Tax - 0.20 a bar
Total - $3.23 a bar
Still unaccounted for:
Colorants
Labels
Ink
Stickers
John Harris
Well-Known Member
John Harris
Well-Known Member
Wow... I don't like this game anymore....When calculating the cost of your ingredients are you including the cost of shipping? The easiest way of doing this is on a dollar per dollar basis. You take the cost of shipping and divide it by the sub-total of the items your are ordering ($17.53 / 67.89 = $0.2582118132272794). You then multiply that by the total cost of the item ($38.00 x 0.2582118132272794 = $9.812048902636618). Then you add that to the total cost of the item ($38.00 + 9.812048902636618 = $47.81204890263662). They you divide that by your unit of measurement ($47.81 / 200 = $0.24). So my actual cost per soap box isn't $0.19, it's $0.24.
To calculate the cost of volume on items sold by weight, you have to weigh the volume. So how much does a tablespoon of Sodium Lactate weigh? How much does a teaspoon of Mica weigh? This is one of the things I love about SoapMaker3...it does these calculations for me.
So...when calculating your costs you start with your Base Oils, Lye/Water and your standard Additives (like Sodium Lactate or Kaolin Clay or Tussah Silk, etc). For me, (10-4.5oz bars) that's $0.87 a bar (it should be noted that my SM3 hasn't been updated in quite a while so I'm working off old costs and it includes waste and shrinkage). But I'm not making a plain bar of soap, I want add Lavender FO and Lavender Mica...my costs just went up to $1.48 bar. Of course, I can't just hand my customer a bar of soap...it's needs to be packaged and labeled. My costs just went to $1.76 a bar.
And then there is my labor...this can be difficult to calculate. How long does it take to make a batch of soap (from getting out your ingredients to cleaning up)? How long does it take to unmold, cut, plane, bevel, stamp, box and label? Add to this, I MasterBatch....and I usually do this when I'm making soap 'cuz I'm big on multi-tasking. Add to this, it takes me just as long to make a test batch (4 bars) as it does a small batch (10 bars) as it does a regular batch (18 bars), though there is a time difference once I start processing the unmolded soap. It also takes me less time to make a single color soap is it does to make a 2-color drop/chopstick swirl. Once you figure an average time for your batch size, then how much do you pay yourself? My soap would be cost prohibitive if I paid myself the same wage for soap making that I do for my regular job so I look to what I would pay someone...I just use minimum wage for my state...$12.00. So now the cost of my soap is $2.96 a bar.
Oh...and 'direct/indirect overhead'...can't forget about that. This is 'rent', electric, gas, water/sewer, internet, garbage, telephone, website, business cards, business license, insurance (property and product), general office supplies, printer ink, merchant/banking fees. Some of these, what I would call 'indirect' expenses (in red) can be calculated the same way the IRS does for 'Business Use of Your Home'. You calculate the percentage of your home used for business and then multiply it by the total of your indirect expense. Add that to your direct expense and then divide by the total number of bars you could reasonably produce if you worked 8 hours a day, 5 days a week.
Or you could just take your base ingredients times two.
(BTW. Thanks for this long, informative post, Geck!)
For me...Base ingredients would be Base Oils/Butters, Lye and Fragrance since those are my biggest costs. Distilled Water, Sodium Lactate, Kaolin Clay, colorants...add fifty cents. I know some folks really get into the Additives...Coconut Cream, Tussah Silk, various powders.
Wow... I don't like this game anymore....
Which is why I use SoapMaker3 Pro...it does [most] all the calculating for me.
Definitely long. LOL A lot of it comes from watching a few soap makers 'rant' about all the things folks never told them about getting in the soap making business. Ya know...make some soap, sell it for a lot of money, get rich quick, sit on the beach sipping drinks with umbrellas in them. The reality is...it's a lot of freaking hard work...and it's expensive. I have easily spent over $3500 the last 2 1/2 years and I haven't even officially started selling soap. And I'll probably spend another $500 to $750 before I do.
John Harris
Well-Known Member
Is there much of a learning curve to it?
John Harris
Well-Known Member
CreativeWeirdo
Assume humorous intentions.
Here is the question: if you were to sell your soaps at "market price", wouldn't you have to get a business license and incorporate? You don't want to make this a serious business, at least not this second, right? You just have people who are interested in supporting you, but you don't want them to take advantage of you, right?
John Harris
Well-Known Member
@CreativeWeirdo That's all pretty accurate, Creative.
CreativeWeirdo
Assume humorous intentions.
I feel like this thread might be getting away from that.
I wouldn't sell anything (out of my many, MANY hobbies) I made anywhere near "market value" as I won't have the same expenses and/or fines/fees. The overhead is different. But at the same time, I wouldn't drastically undercut myself; nor would would I "advertise" my lower price to anyone within earshot.
You're a smart, capable human being. I think you can figure out for yourself how muchyour you're comfortable charging people you know. Just keep in mind that they are doing this because they want to support you in something you're good at. Anyone who would push you into making an uncomfortable decision, be it with prices or deadlines, isn't worth your energy to accommodate them. This is your hobby, not your business. It's meant to be fun and make you happy. Find boundaries that work for you, and stick to them. You're worth treating yourself with kindness.
I wouldn't sell anything (out of my many, MANY hobbies) I made anywhere near "market value" as I won't have the same expenses and/or fines/fees. The overhead is different. But at the same time, I wouldn't drastically undercut myself; nor would would I "advertise" my lower price to anyone within earshot.
You're a smart, capable human being. I think you can figure out for yourself how much
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John Harris
Well-Known Member
Thank you for your words of wisdom, Creative!
A bit, but I could help you. And I think it is worth it.
You’re taking about a few different things here. First of all, you don’t have to sell at “market price” to be required to be licensed by your city (or county or state). If you are exchanging goods or services at a price…for cash or even barter, regardless of the amount, you’re running a business. Neither my city, country or state requires me to have a business license, nor am I prohibited by local ordinances from running a business from my home as I don’t have a store front. Every place is different and it’s the responsibility of the person to know what the laws are in their neck of the woods.
Second, you also don’t have to incorporate…you can be a sole proprietorship using your own name or getting an Assumed Business Name or Trade Name. You can report your income as a ‘hobby business’ on your 1040, or you can include your expenses on Schedule C. Right now I’m a SP w/ABN. I will be getting a TIN/EIN so that I can establish a bank account in the business name.
Define “serious business”? Being a ‘hobby’ business is no less serious than running a Fortune 500 business and they are folks who run big business like it’s game. And isn’t up to the individual to decide whether or not they are being taken “advantage” of? My BIL made the boxes for my molds…I paid for the materials plus one pie per mold for his labor. Am I taking advantage of him? He gets pie…he loves pie. He also loves my soap…I make it by the loaf for him…$20.00…it about covers the cost. Is he taking advantage of me…not all, he’d pay full-price. I give soap to my co-workers all the time…I don’t ask for money. Are they taking advantage of me, it’s my choice not to ask for money.
And @CreativeWeirdo I'm not sure what profession you're in, but imagine that someone started massively undercutting your prices because they were just doing what you do but just for the enjoyment in their spare time and wanted to cover the cost involved.......or how companies like Uber run at massive losses for a while to get rid of competition!
A lot of the people who have put so much in to helping people with the hobby make their money from selling soap, and those same people who were freely given the help now start digging into the livelihood of those soapmakers who freely gave it. It's a race to the bottom, and a lot of the very knowledgeable and helpful soapers will drift away, and soaping in general will be the worse for it. We see that here on the forum - a lot of the members who were very active when I first joined rarely (if ever) post anymore and their input is missed in a lot of the threads. And I can see why - people being encouraged to undercut market price / price incorrectly because it's just a hobby (and by the way, if it's in the business forum, we have to talk about it as a business, not a hobby), or in other threads where someone who cooked soap on a stove in a glass jug and left it in there meaning to get it out with a knife later is actually encouraged to sell soap! When many members think that's A-OK, I understand why many members visit less.
Full disclosure - I get given wholesale price from some people who I know, and even family members if they want to give the soap away rather than use it (I don't take money for soap that they want to use) but then I'm not at a market or selling online.
A lot of the people who have put so much in to helping people with the hobby make their money from selling soap, and those same people who were freely given the help now start digging into the livelihood of those soapmakers who freely gave it. It's a race to the bottom, and a lot of the very knowledgeable and helpful soapers will drift away, and soaping in general will be the worse for it. We see that here on the forum - a lot of the members who were very active when I first joined rarely (if ever) post anymore and their input is missed in a lot of the threads. And I can see why - people being encouraged to undercut market price / price incorrectly because it's just a hobby (and by the way, if it's in the business forum, we have to talk about it as a business, not a hobby), or in other threads where someone who cooked soap on a stove in a glass jug and left it in there meaning to get it out with a knife later is actually encouraged to sell soap! When many members think that's A-OK, I understand why many members visit less.
Full disclosure - I get given wholesale price from some people who I know, and even family members if they want to give the soap away rather than use it (I don't take money for soap that they want to use) but then I'm not at a market or selling online.
