Hello SMF
Having seen a number of newbies selling at stupid pricing (when they shouldn't be selling at all!) and seeing some regulars who are thinking about starting to sell, I wanted to post about why pricing is very important, even for (or especially for!) a hobby soaper who sells.
People who make a living from making things have a pretty standard method of calculating price:
Running costs are things like rent, utilities, insurances and business fees.
That is a pretty standard way of calculating the price of something, in this case soap. Someone who is selling their soap as a sole income will need to work on this principle.
Why is it important for hobby soapers? Because if you come in and only want to cover the costs of your materials and not your time and other costs, your soap will be cheaper than the true cost of selling hand made soaps. As time is one of the most expensive costs, this can make your soap a lot cheaper. Why is this bad?
Because people will then expect that a bar of quality hand made soap costs 2€ or $ and so on. Commercially made soap can be cheaper because they buy ingredients in bulk and make massive amounts at once, so the costs are much much lower. For an artisan soaper, there is only so far one can go in making larger batches or getting cheaper ingredients.
Which means that if there are two stalls in a market, one being a artisan soaping full time, the other a hobby soaper looking to make the "hobby" cost less (I use " because when you monetise a hobby it is no longer a hobby!) and both are offering soaps of similar standard, if one stall is a good deal cheaper than the other then people will tend to go for "the better value" option. They will think that one is well priced and the other expensive.
Of course, if the quality differs then people can work that out, but for many of us here at SMF there isn't a massive difference in the quality of our soaps (in fact many people here thinking about selling make better soaps than many who do sell).
Soaping is one of those things where it is fairly easy to get in to it, and for some reason it seems to be something that a fair few people get in to just to sell, which makes it all the more important that the true costs are always reflected in the pricing.
This is not price fixing, by the way. This is not about putting a massive mark up on things to make a massive profit. This about a proper valuation of a product.
You could take many different business as examples where someone who does it only for fun can charge someone a lot less than the actually market value. If you enjoy fixing cars in your spare time, you might charge only the cost of the parts used plus a little extra, whereas a garage costs a lot more than that. Someone who enjoys photography might do a wedding for a lot less money than a professional could do it for. If people assume that these lower prices are actually what it should cost, they will only want to pay those prices.
So, if you are going to sell your soap, please please please PLEEEEEEASE do it properly. Do not sell cheaply "just to cover ingredients" to keep your other half happier about the amount of money that you are spending on your hobby. Do not think that as a new seller you should sell cheaper because you lack experience. Use the formula above - if you are a lot higher or a lot lower than your local compeition for the same sorts of things, have a look at why. Did you forget something like insurance? Are your ingredients too expensive? Is your hourly rate too high and/or do you need to up your batch size?
While some might see this as a rant, I hope that those sensible folks who are considering selling have found some points to think about a little bit more.
Having seen a number of newbies selling at stupid pricing (when they shouldn't be selling at all!) and seeing some regulars who are thinking about starting to sell, I wanted to post about why pricing is very important, even for (or especially for!) a hobby soaper who sells.
People who make a living from making things have a pretty standard method of calculating price:
Total cost of materials + (time * hourly rate)+ location and "running" costs = total costs
Total Costs * 2 = Wholesale price
Wholesale price * 2 = retail price
Total Costs * 2 = Wholesale price
Wholesale price * 2 = retail price
Running costs are things like rent, utilities, insurances and business fees.
That is a pretty standard way of calculating the price of something, in this case soap. Someone who is selling their soap as a sole income will need to work on this principle.
Why is it important for hobby soapers? Because if you come in and only want to cover the costs of your materials and not your time and other costs, your soap will be cheaper than the true cost of selling hand made soaps. As time is one of the most expensive costs, this can make your soap a lot cheaper. Why is this bad?
Because people will then expect that a bar of quality hand made soap costs 2€ or $ and so on. Commercially made soap can be cheaper because they buy ingredients in bulk and make massive amounts at once, so the costs are much much lower. For an artisan soaper, there is only so far one can go in making larger batches or getting cheaper ingredients.
Which means that if there are two stalls in a market, one being a artisan soaping full time, the other a hobby soaper looking to make the "hobby" cost less (I use " because when you monetise a hobby it is no longer a hobby!) and both are offering soaps of similar standard, if one stall is a good deal cheaper than the other then people will tend to go for "the better value" option. They will think that one is well priced and the other expensive.
Of course, if the quality differs then people can work that out, but for many of us here at SMF there isn't a massive difference in the quality of our soaps (in fact many people here thinking about selling make better soaps than many who do sell).
Soaping is one of those things where it is fairly easy to get in to it, and for some reason it seems to be something that a fair few people get in to just to sell, which makes it all the more important that the true costs are always reflected in the pricing.
This is not price fixing, by the way. This is not about putting a massive mark up on things to make a massive profit. This about a proper valuation of a product.
You could take many different business as examples where someone who does it only for fun can charge someone a lot less than the actually market value. If you enjoy fixing cars in your spare time, you might charge only the cost of the parts used plus a little extra, whereas a garage costs a lot more than that. Someone who enjoys photography might do a wedding for a lot less money than a professional could do it for. If people assume that these lower prices are actually what it should cost, they will only want to pay those prices.
So, if you are going to sell your soap, please please please PLEEEEEEASE do it properly. Do not sell cheaply "just to cover ingredients" to keep your other half happier about the amount of money that you are spending on your hobby. Do not think that as a new seller you should sell cheaper because you lack experience. Use the formula above - if you are a lot higher or a lot lower than your local compeition for the same sorts of things, have a look at why. Did you forget something like insurance? Are your ingredients too expensive? Is your hourly rate too high and/or do you need to up your batch size?
While some might see this as a rant, I hope that those sensible folks who are considering selling have found some points to think about a little bit more.
and as someone who has been shooting for decades I am honestly offended by this. And trying to figure out a new career... the soap just isn't selling except to a few friends. So I don't think that's gonna save me. I have bashed my head against a wall many times over the ridiculously priced hobbyist with a day job but ultimately there's no cure for that. They won't change. In fact if questioned they defend their pricing.
