Then part of marketing should be having a sign or brochure showing the benefits of a good bar of soap. I think ignorance is a problem with potential soap consumers. They think "Why pay $6 when i can get zest for 50 cents?". Well if you have a sign up educating them, then they know and can make the informed decision. Most people will choose quality over money, unless they are extremely poor. My GF and I cook a lot. We could have gotten a chef knife from Walmart for $20. But instead we bought a Wusthoff for $100. Why? Because we want quality. Many people do. With soap it just requires the added step of informing them first.
There is no reason soap should sell for under $7 a bar in any market. This is why a company like Lush sells at one price (usually $7-10) across every state and county. If your soap is selling for less than that you're doing something wrong, imo, and it's probably marketing or selling yourself short. High quality soap is a valuable commodity, and it's our job to make that known. Yes, you might make a profit at $5, but profit isn't everything. You want large margins. A soaper selling at $5 and saying, "I made a profit" might feel good, but they then have to bank on many variables like raw materials remaining the same, the groceries and other items they buy with the profit remaining the same price, etc. There is a lot of inflation in items we need. I just think it is unwise to sell even at 100% profit. You need a buffer of at least another 50% just to factor in all the other economic variables (gas costs, inflation, currency fluctuations, macro-econ, etc).
I don't sell soaps because I'm not a master soap maker yet. But if I get to that point and sell, I will not charge under $7, but probably higher. If they don't sell, I'll keep them for myself. I'd also have a completely different marketing campaign than what I see from the average soap maker. The only time I can see selling soap for $5 is if you're not a very good soap maker and the product is so so. At that point take any profit you can.
It's actually a bit annoying to see people sell so low because it results in an undercutting that just drags down the market for all.
Unfortunately, everything sold in the US speaks against your thoughts. If most people would choose quality over money, we'd all be driving Mercedes and Kia would be out of business. No one would be buying a sirloin, when they can certainly see the quality of that prime ribeye on the counter.
If the desire for high margins would magically make it so, then no one in the US would be able to afford a place to live, food to eat or clothes to wear. Wal-Mart would be out of business tomorrow, instead of being one of the largest retailers in the US. And believe it or not, being "too poor" has little to do with it. Some of the richest people in the world are actually tight wads, that probably soap down with a good bar of Ivory.
Lush sells at an overpriced rate, because they have marketed themselves into a position of being thought of as a status symbol. Why do people buy a 140 dollar David Donahue dress shirt, when that 30 dollar shirt at Target serves the same purpose? Because a portion of the public has been "marketed" into a thought pattern of , status means everything. But they are far from the majority of the buying public.
So you have two options.
Find a way to market your product, your soap, to the public with the intention of making it a status statement. Hope you have some really deep pockets to afford the type of marketing budget this will require. Build it into the name recognition of Lush. Then with a better product than theirs, you can give them a run for their money.
Or....Build a business with a profit margin that you can accept, while still be able to move your product on a consistent and profitable basis. And the easiest way to determine this margin, is through market research. What is the market willing to bear.
I guess you have a third option as well. You could, as you stated, just decide not to sell your soap and keep it for your own use. That's certainly an option.
Educating people is never a bad thing, but it won't over ride the general principles of economics. Sure you can educate them about the benefits of home made soap as opposed to zest, but you're not the only one selling that "better" soap. If they can buy homemade soap from 50 other vendors at 5 or 6 bucks a bar, then you're going to be hard pressed to get one of them over to your shop to grab a bar at 7 or 8 bucks. And your assumption that those bars are lesser quality is erroneous at best. I've already seen a couple of people on these forums that sell for less than you would project. From reading their posts, you can easily discern that they are very knowledgeable about their art. I'd bet money they produce very high quality bars.
I can respect your enthusiasm and spirit, but I'll repeat a saying that a very knowledgeable and prolific marketing genius that I had the pleasure of being around for a while once told me. "The market is a fickle *****, and she suffers for no one."
Can anyone tell I love (loved) marketing almost as much as I love making soap. LOL.
As an contrast, take the projected profit margin of a new home. We used to set our prices based upon achieving a 12% profit, and were happy when the final margin stayed above 9%. Can you imagine what a home would cost if they priced it at 4X cost, just because they thought it was worth it? There would be a lot less houses sold.
