Wholesaling Question

[jenmarie82]

There's a lady that's interested in wholesaling with me for her bed and breakfast and said she wants a price list, sample and would buy about 50-100 at a time. How do i create a wholesale price list? Is there a website somewhere that can help me with this? Also, i know I asked before about the wholesale % and i kinda set it at 40-45% but this big of an order i think i should go with the 50%?

 

[beachgurl]

Jen,

I think that you did talk about consignment which is a little different from wholesale. When you run your soaps on consignment you approach someone and ask them to give up some of their shelf space for you to sell your product. In other words, the shop/person/establishment acts almost as a selling agent for your product. YOU retain ownership of the product until the sale is made. If I'd go down to the country general store and ask to sell my soaps in their shop and not ask for them to buy the products, that would be consignment.

Wholesale is different. When you wholesale to someone, you charge a flat price (cost x 2 is generally acceptable)and set a minimum order quantity. If it costs me 2 dollars to make a bar of soap, for wholesale price I would charge 4 dollars, my sale price would be 6 dollars and my retail price would be 8 dollars. While this price (wholesale price) is less than you would charge a normal customer, you still make money because the person buys in bulk; however, you have to calculate your break even point. In this case, the customer (after payment) owns the product.

 

[jenmarie82]

so if i'm charging 5.50 per bar then 3.50 wholesale? someone had mentioned 50% off for wholesale & if i charged 3.50 it wouldn't be 50%.
also how would i create a porice list for this lady?

 

[beachgurl]

How much does it cost you to make the bar?? You have to include your time (labor), supplies, labeling, insurance (which I started charging on a per bar basis), etc. That's how you start pricing. Then you take that number, your cost, and multiply it by 2 to get your wholesale price, by 3 to get your sale price and by 4 to get your retail price.

 

[jenmarie82]

I think I figured it cost me around 2-3$ to make a bar. So what i'm charging seems to be about right. I don't have insurance yet as I cannot afford it just starting out. I will get it as soon as i'm able.

 

[beachgurl]

You need to know exactly how much each bar costs you; no ifs and or buts. I pay myself 25 dollars per hour of labor. So if it takes me an hour to label an entire batch of soap, there's 25 bucks. Takes me another hour to cut and clean up bars, another 25 dollars. Materials .. you need to figure out how much your materials cost. I know how much each of my oils costs per ounce. In addition, I average shipping costs per ounce of oils and add that in. Cost of colorants, cost of additives. Cost of your molds has to be spread as well.

 

[The Queen]

How much does it cost you to make the bar?? You have to include your time (labor), supplies, labeling, insurance (which I started charging on a per bar basis), etc. That's how you start pricing. Then you take that number, your cost, and multiply it by 2 to get your wholesale price, by 3 to get your sale price and by 4 to get your retail price.

Ditto, this is the national standard & industry expectation.

 

[Deda]

I think I figured it cost me around 2-3$ to make a bar. So what i'm charging seems to be about right. I don't have insurance yet as I cannot afford it just starting out. I will get it as soon as i'm able.

You can't afford NOT to have insurance. Selling without it is financial suicide.

 

[jenmarie82]

Ok, would you all mind telling me how you got your start? There are a lot of people that can't just start out with top of the line products and insurance, business license, etc. You have to start somewhere. I realize that i'm taking a risk not having it, but i cannot afford it right now. I don't have the client base established yet and i don't make enough to go out and spend all this money on insurance, license, expensive ingredients.
I'm just wondering how someone small starts out. The average person starting a business isn't going to go get a license, register with the state, get insurance, etc. after selling one bar of soap? Right? Or am i totally off?

 

[Deda]

Personally, I started by learning. For years I leaned over every shoulder I could find. Saved all my pennies. Learned all I could about every aspect of the business. I took classes geared toward Naturopathy. Saved more pennies. Found a mentor in a related business and worked for her for a couple years. She never made soap, but did sell natural skincare products. For me, it was never a get rich quick thing. More like a slowly inch toward poorer! I know between classes, supplies, travel and equipment I have spent more than 10K. But it was worth every penny.


Edited to say that the average person does start out by getting a license, insurance and registering with the state. Simply put - it's IRRESPONSIBLE to dismiss these out of hand and probably illegal.

 

[jenmarie82]

I don't measure by a scale when i add things to my soap so how in the world am i going to figure out how much it costs to make one bar of soap? I usually add oils/additives by the teaspoon.

 

[Deda]

I don't measure by a scale when i add things to my soap so how in the world am i going to figure out how much it costs to make one bar of soap? I usually add oils/additives by the teaspoon.

weigh out your teaspoon. figure the cost per ounce. divide by the number of bars in that batch.

 

[beachgurl]

Weigh it as you put it in. As for insurance, I have to agree .. I finally broke down and got some. I figured 535 dollars now or on the flip side someone sues me and takes my house, my car, my kids future, my IRA, etc.

As far as here .. to start a sole proprietorship you need a tax ID number and that's it. Requirements vary by state. Some good places to start are the state department of revenue, chamber of commerce, and a good lawyer (I'm lucky I have one in the family).

As far as not being able to pin down an exact cost .. you'll never be sucessful if your financial skills and accounting abilities aren't precise. Especially in a small business .. every single dime counts. You'll just keep eating cost after cost. Your price seems a little high (though I'm not familiar with M & P), my CP bars cost much less than that. You need to start trying to buy wholesale if you're truly serious about making a go of it.

As for the whole insurance thing; I don't think you realize that they could take everything and anything you've ever worked for. If you don't have the money for it, you probably need to rethink starting a business at this time in your life (I'm not trying to be mean or ignorant) because I'll tell you what, starting a business requires a significant financial and personal investment. I could have thought of much better ways to spend 500 bucks, but I've worked hard to get where I'm at and I'd feel foolish if I put it all on the line to sell an uninsured bar of soap. If you're serious about your business you need to realize that in order to get started you're going to have to raise capital, outlay cash (for things like insurance, molds, cutters, supplies, etc).

 

[chrisinflorida]

The average person starting a business isn't going to go get a license, register with the state, get insurance, etc. after selling one bar of soap? Right? Or am i totally off?

If they want to start their business off on the right foot they will do ALL these things before they sell a SINGLE bar of soap, tube of lip balm, etc. If you cannot afford to get a license, register with your state, and obtain insurance you are probably not ready to start a business.

I, too, would like to start a business, but at the moment I cannot afford all of the fees involved upfront so it will take me a little bit longer before I can officially get started. But I will feel much better once I am legal and fully insured. All it takes is for one whacko to say your soap burned them and then to sue. What would you do then? IMHO, insurance is not something to skip on for any length of time.

Chris

 

[jenmarie82]

Ok well i guess i should just shut down my website then. I can't get insurance right now so i guess i shouldn't do this right now. Oh well..

 

[jenmarie82]

I figured it up last night and as it is now, I'm spending about $2 to make a bar of soap. That's expensive but as funny as it sounds, i can't afford to buy in bulk right now...what should I do?

 

[Deda]

I figured it up last night and as it is now, I'm spending about $2 to make a bar of soap. That's expensive but as funny as it sounds, i can't afford to buy in bulk right now...what should I do?

Start saving until you can buy in bulk. Look for a co-op for MP. You have options, you are only limited by your ingenuity.

 

[jenmarie82]

how much does it cost all of you to make one bar?

 

[beachgurl]

Have you thought about maybe putting it on a credit card and paying it off gradually? Like taking 25% of your profits each month and throwing it at the insurance bill? Perhaps taking out a small short-term loans, or borrowing from relatives (with a written contract establishing the principle, rate of interest, and monthly payment amounts)? I think for me it worked out to $44 a month for the coverage offered by the Guild.

 

[Deda]

how much does it cost all of you to make one bar?

My materials only costs are .67 for a 5oz bar.

That doesn't include paying myself, molds, utilities, website costs, packaging, travel.

It does include Olive, Ricebran, Coconut, Palm oils and Shea butter, essential oils, natural colors - like herbal powders, iron oxides and um, of course, lye, milks and aloe vera.

I buy my oils in bulk, test scent and colors with el Cheapo storebrand shortening. (Kwhalne knows what I mean! :wink: )

If you are buying your MP base in the craft store you are paying about $10 for 2 lbs/$5.00 lb. Through WSP you can get a 24 lb block for $38. thats $1.58 lb. More than a 68% difference. You can save huge amounts buying your FOs and EOs online. Even without buying 'big' bottles. I saw that my local health food store sells Aura Cacia Rosemary EO for $10/.5 oz! That would be over $300/16oz! I nearly snorted my diet coke right out of my nose. You can get it at WSP for a hair of $20 and if you order at least $50 shipping is free.

You can do this, but you have to drop the negativity.
Decide that you can make this happen and remember that anything worth having is worth working for.

So - put on your big girl panties and start brainstorming.