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What are the startup costs for a cosmetic business?

This is a joint article written by cosmetic chemists Valerie Patton & Perry Romanowski

This question was tweeted by @beautyscientist and followed up by @thelahobo. I thought it was pretty interesting so teamed up with @thelahobo to tackle the subject.

The original question was posted on a business forum and the questioner specifically wondered, how profitable would a natural cosmetic business (skin care line) that I started in my kitchen be? Many of you may be wondering the same, so here are some key things you need to know.

Cosmetic market

The cosmetic market is a pretty good one as nearly everyone on the planet uses some kind of personal care product. There is a ton of competition of course, but consumers are always looking to try something new and with the right dedication you can create a following of loyal consumers who will be the basis of your business for years to come.

Cosmetic start up costs

Starting your own skincare line from home *can* be profitable, but how quickly profitable is where it gets sticky. If you are a small shop starting out, it is unlikely that you are going to get your products into major retail stores or even mid sized local stores. Your best bet is to begin online where you can build some sales data which you can then take to your local markets to convince them to carry your product. If you take the online route, your key start-up costs will be in three primary areas including product development, marketing, and business expenses.

Of course, these costs can vary widely depending on the formulations you are making but here is a general ballpark for what you can expect.

Product development costs

When people think of starting their own cosmetic line, the product development costs are what they generally think about. Basically, these costs include anything related to creating your product such as raw material costs, packaging, and labeling. It also includes the cost of production activities such as mixing the materials together and filling them into the packaging. Cosmetic formulations can run anywhere from $0.10 per pound to $3 per pound but on average you can guess products will cost about $1 per pound. Packaging & labeling will cost another $1 per unit. Add in production and filling costs and your average per bottle cost will be about $2 – $3 per unit.

But you can’t just make a few bottles at a time as you’ll have to buy minimum quantities of the raw materials and bottles. To get the costs to $2 – $3 per unit you are going to have to make a minimum of 500 — 1000 units. If you make less your costs will go up significantly.

So, figure this part of product development will cost you around $3000.

Hidden product development costs

While $3000 doesn’t seem too bad, the product development costs are not done yet. If you are serious about running a cosmetic business you MUST test your products to ensure they are safe and effective. Preservative Efficacy Testing is a must. It can be a little pricey to start out if you have multiple products, but the one-time cost of this (~$350/product) is far less than payment on a lawsuit. Sensitivity testing should be done too, but can be optional, if your budget is super tight. However, if the product is going to be applied near the eyes or has ingredients like SPF, AHAs or BHAs, etc, you should really consider budgeting this in. These tests start at $800 and go to $1500 at some labs in the California area. If you’re selling an SPF product, don’t forget that SPF testing will probably cost you around $3000-$4000. Note these are ballpark figures.

So, the hidden costs of formula development have now pushed your cosmetic start-up costs to about $6000.

Cosmetic business costs

If you are going to sell cosmetics and you don’t want to lose everything, you should incorporate. In the US you could conduct your business under a Sole Proprietorship, but this makes you completely liable for anything bad that might happen as a result of your products. You would be risking your savings, your car, and your home. You do not want to do this. Incorporate to protect your personal assets from liability. This will cost you about $500.

Business Insurance

Now, you also need to further protect yourself. Whether you’re the formulator, manufacturer, or skincare company, get insurance. There are two basic types to be considered – Property Insurance and General Liability Insurance. Property insurance is just that – it protects your property, like rental insurance would. In the event of, let’s say, a fire, everything related to the retail aspect of your business (computers, your product inventory) are covered. The insurance company will write you a nice, big check for what you lost. This insurance is a great idea for a skincare or hair care company, in the event of misfortune, but if your budget is tight, it is probably not necessary. Formulators and manufacturers don’t necessarily have to have this one, but again, it’s a good idea.

Anyone serious about a cosmetic business should have is general liability insurance. And, unfortunately, this is the expensive one. This insurance is in the event that someone experiences an adverse reaction to your product, or slips and falls on your property. The cost of this insurance is typically based on how much sales your business has during the year. The limits are set so that the insurance company will pay a total of X amount of dollars (general aggregate limit), and will only pay a certain number of occurrences or claims. The higher your sales, limits, and occurrences, the higher the monthly premium. Formulators should have this insurance in case their formulation is the reason for the occurrence, and likewise for manufacturers – if something they did during the manufacturing process contaminates the product and causes the adverse reaction, they are responsible.

Sometimes, if you work with contract manufacturers and or contracted formulators they will “umbrella” the cosmetic company on their policy. This means that the manufacturer or formulator’s insurance company is including your products on the insurance. It does not mean that you are insured individually as a cosmetic company. That is why it is important for your company to have its own insurance. Formulators and manufacturers can be insured until kingdom come, but ultimately responsibility falls on the your company for the safety of the products. If the product doesn’t perform the advertised claim, or you do something to make the product unsafe, you are responsible. Selling homemade products is a huge risk – and any adverse reaction can potentially cost you thousands or millions. So, you just have to weigh the odds.

Finally, the last thing to consider about insurance. If your dream is to get your product into a large retailer – most major companies require proof of insurance before selling your product, as they will assume no liability.  Insurance costs will depend on lots of factors but a rough estimate is ~$100 per month per $1,000,000 of insurance.

There are lots of other business related costs such as fees for lawyers, accountants, employees and taxes but the details will be highly dependent on where you are located and how you run your business. You should just figure on some number for business costs like these.

Marketing & Sales Costs

The final area of start-up costs that we’ll cover is your marketing costs. This represents any money you put out to develop and sell your product. If you begin an online business (which is what we would suggest) the initial costs can be fairly low. Running a website can be done for less than $500 a year. Online promotion can be done for next to nothing and requires mostly an investment of your time. The amount of time you dedicate to online marketing will directly relate to how much product you sell. More time generally will mean greater sales. The activities that you do would be writing blog posts about your topic, participating in social networking sites, commenting on other people’s sites, and conducting online auctions.

Filling orders will be your next significant cost. You will need to have money available for boxes for shipping, people to actually fill the orders and shipping costs. When you are coming up with the price of your product don’t forget to including shipping as part of your costs. This can often be as much or more than the cost of the product. For example, if it costs you $3 to make your product, shipping costs will easily be $3 so you need to charge $6 per unit just to break even.

Another option is to get a booth at a local market and sell your products directly. Booth costs vary but you can get some for between $50 and $125 a day. If you can sell more than that in a day then you’re making a profit. Once you’ve established your brand you may also attempt to get your product sold by some of the local shops in your area. For hair care brands, go see if your local salon will carry your brand. For skin products, perhaps a local spa or specialty gift shop would carry your products. You will have to give up a significant amount of your direct sell profit but you’ll ideally make it up with a high volume of sales.

Cosmetic Start up Costs

A cosmetic business can be profitable but it is much more complicated than making a lotion in your kitchen and selling the product to a demanding public. When you figure in the costs of product development, business, and marketing you realistically need about $10,000 – $15,000 to invest up front. Once you start making sales you can make that money back but understand that this is the minimum amount you are going to need to get started.

{ 164 comments… add one }

  • Judy 10/14/2014, 10:06 pm

    This is very helpful… I’m establishing a line of cosmetics through a cosmetic manufactures. Do I have to order and pay for the lab test? Or I can still be safe with the manufacturer’s lab certificate?

    • Perry Romanowski 10/15/2014, 7:57 am

      It depends on what tests you’re talking about. As the distributor, you are responsible for the safety testing. For the claims you make you are also responsible. But if you’ve had an agreement with the manufacturer maybe they will cover the cost of the testing.

  • Pawan 10/09/2014, 10:35 pm

    Hi Perry,
    I need to your help.
    I am a manufacturer of nail-polish in up(India). My business goes well. The difficulties come on point that is its cost of manufacturing goes up due to the purchasing of laquor as a raw material, from this profit goes down. I want to work on this part to develop it on my firm. So, I have expected from you that you will help of me to developed it.
    You contact me on-
    pawan.gupta581@gmail.com

  • Dianne 10/05/2014, 3:16 pm

    I am passionate about make-up, and I have been most of my adult life. I believe this is my true calling and I need to pursue this passion inside of me before I explode. I have been switching between brands just trying to find cosmetics/makeup that can meet my needs and problem areas. I know that I not alone in my search. I live in the Bahamas (tropical climate) and because of the hot temperature, I don’t like heavy make-up, but the coverage is important. I need to produce a product line of make-up that is suited for this climate. Can someone stare me in the right direction? Maybe also an investor to partner with a hard-worker.

  • Ime 09/22/2014, 3:33 am

    Thanks for the article. very useful for beginners like me. However, you were silent on equipment costs and basic equipments required to launch say, a personal care line. Also, I have been grappling with the issue of layout. my background is pharmaceutical and I am well familiar with the production flow there. For a small cosmetic line, what would be the ideal layout that would meet regulatory requirements where space is a major constraint? must there be a separate lab?

  • priscilla deker 09/11/2014, 1:23 am

    Hi I was wondering if it is possible to make skincare products at home. Do you need a proper lab at home, or can you just make some products at home ?

    • Perry Romanowski 09/11/2014, 3:59 pm

      You should have a proper lab. If you are going to sell the products then you definitely need a separate place to produce your cosmetics.

  • Juliet H 09/08/2014, 7:28 pm

    Thanks Perry for sharing this link. This is fantastic info for someone like me – it gives the basic info and more.
    Best,
    Juliet

  • nicol 07/16/2014, 3:18 pm

    If I’m using all natural produCts. Chemical free do I still have to do do preservative efficacy test?

    • Perry Romanowski 07/17/2014, 2:08 pm

      Yes.

  • chelsea 06/28/2014, 10:58 am

    Hello! I am 17 years old and my twin sister and I are interested in creating our own cosmetic line that is unlike any other on the market. We are so passionate about our dream but as a teens, start up costs are nearly impossible. Where can we find legitimate investors?

    • Perry Romanowski 06/29/2014, 3:50 pm

      You’d need to prove that the idea has potential. To do that you’d need to generate a list of people who say they will buy the product. Perhaps a Kickstarter project would be appropriate.

  • MK 06/15/2014, 11:50 am

    This was a very useful article. I am researching how much it may cost to start up a small line of skin care products, and just wanted a general idea of the total cost. This article perfectly addressed what I needed to know. Thank you.

  • Martins 05/12/2014, 2:11 pm

    This is eye opener and realistic assessment of dabbling into the business, it is going to help and aid in getting into the business without rushing in and rushing out without regretting at the end of the day.
    Thanks very much for the indept information.

  • claudia cesar 03/24/2014, 12:11 pm

    Hi thank you so much for such realistic and informative contant on your posts

  • Dee 03/23/2014, 7:21 pm

    This was very helpful information thank you!

  • Lilian 03/21/2014, 8:03 am

    A well informed write up. Absolutely answered my questions on start up cost. Thank you so much.

  • HEATHER 03/20/2014, 9:04 am

    As ever, fantastic insight and guidance. Thank you!

  • lyndell webb 03/19/2014, 10:28 pm

    the box on the right does not want to allow me to download the free report, it keeps telling me “you are already subscribed”?
    Thanks, Lyn

    • Perry Romanowski 03/21/2014, 7:48 am

      Hello Lyn – You must already have downloaded the report. You can try using a different email address if you like.

  • Ms Watkina 03/04/2014, 9:29 am

    This was a great article with real information and with great area coverage. Thank you

  • Ashlee 03/03/2014, 7:20 pm

    Hi Perry,

    What type of material would be the best to use when creating a two finger glove to use with a cleanser to clean your face? We are creating a skin care line and we were thinking of pairing a cleanser with a glove for your 2 fingers.

    • Perry Romanowski 03/07/2014, 11:53 am

      That’s a great question. I don’t really know as I’ve never worked on a project like that. But I imagine the same sort of material that is used in making gloves for washing dishes. Latex perhaps.

  • Illumination Consulting 02/18/2014, 8:51 pm

    Great article, thank you. I agree with you in regards to marketing skin care products. I would like to just add that it can get expansive if a brand does not do some of their own marketing internally. A skin care business tip that I would like to add is content marketing. For a skin care brand, content marketing is probably the most critical aspect of marketing skin care products online. Content can be a blog, articles published, press releases, videos, and infographics. Content marketing supports most other methods of online marketing such as Search Engine Optimization and Social Media Marketing.

  • Kathy KinKade 02/08/2014, 1:29 pm

    I have come up with and amazing almost instant as soon as applied anti-inflammatory product. My mother in law suffers with consistent leg and ankle swelling so I came up with a product that was able to take away the pain because of the reduced swelling almost instantly. At that time I thought well if it works so well for that how about using it on my face as I am older and have puffy eyes and wrinkles by my mouth, to my amazement it worked! Then I started having family and friends use it a few of them in the medical field, they too were amazed at how well it worked. Its one of those things that it is wow why didn’t I think of that products. My family and friends are now pushing me to get this product out there. So…how? is my question…I don’t have a lot of start up funding any suggestions?

    • Danelle lee 04/12/2014, 6:28 pm

      I would be in talking to You about your product a sí also suffer from swelling. I would be interestef in investing ( funding)/ marketing your product. I live on California and You are free to call me at 408-469-5009
      Or email me at danellelee2@yahoo.com

  • shena 02/03/2014, 6:40 pm

    Thank You so much, am looking to start my own like of eye shadow an eye primer, an this advice is wonderful. I want to deal with every aspect of my business, i want to b hands on, an also know about make-up an how it works. Do you recommend i take a cosmetology course? an also mayb a business course on starting your own business?
    Thank you

  • Ashlee 01/30/2014, 8:47 pm

    Perry,

    Do you recommend operating an online skin care product line as an LLC? We have 3 people who are equal partners but we do want to limit our liablity. What do you think is the best way? LLC or corporation?

    • Perry Romanowski 01/31/2014, 7:27 am

      Ashlee – yes, LLC is the way to go.

      • Ashlee 01/31/2014, 8:01 pm

        Thanks a bunch!!

  • George Kengott 01/14/2014, 11:19 am

    What is the approximate cost to get our Organic Hand Sanitizer lotion FDA approved?

    Also, what is the approx time involved?

    Thanks!

  • irene 12/28/2013, 2:07 am

    Hi, I want to start a lipstick line but my funds are low at the. I’m currently in the research stage. So my question to you is what type of ingredients foes into lipstick? And are the costs for testing cheaper than other makeup products?

    • Perry Romanowski 12/29/2013, 8:27 am

      See our post about lip stick formulations.

  • Analisa pazmino 12/12/2013, 5:05 pm

    I would love to start a lipGloss/stick cosmetic line. Is there a vendor in China that has a product that’s ready to sell In the US? Which means I would just have to handle the labeling, shipping etc? Right? Or would I have to go through the testing here in the US? Thanks :)

  • damie 12/09/2013, 3:02 pm

    Hi,I wud lyk u 2 link me up wv a professional/investor who can help me start my own brand of natural beauty products(body,hair etc)using strictly natural/organic ingredients,here in Nigeria. Pls any1 who wud lyk 2 help shud pls contact me via my e-mail… Tnx

  • Ana 11/22/2013, 3:51 pm

    Thanks a bunch! I had a project for class due on start up for a cosmetic line and with your help I actually impressed the teacher. Thank you sooooo much!!!

  • Sohail 11/19/2013, 9:59 pm

    Please suggest me best online selling point.
    Thanks alot for the post.

  • Sohail 11/19/2013, 9:57 pm

    Good.
    This is a womderful and nfomatory note. I am running my skin care facial range in Pakistan and want to launch the same brand in North America. I want some help and channel to take a start.
    If any one is interested please contact me.
    Sohailzaki@gmail.com

  • Kallia 11/05/2013, 5:43 am

    A million thank you for this post! There are other issues of course, but it is an excellent starting point

  • Grace 10/25/2013, 8:30 pm

    Hi. Thank you for this post. It is very useful to me. I want to start a makeup line and I need a lab that can produce the makeup for me. Do you know any good ones? Also, what country do you suggest is best to make cosmetics? I am presently in the UK but the products will be sold in Africa. I need your advice. Thank you.

    • Perry Romanowski 10/27/2013, 5:09 pm

      I don’t really know the UK or African markets so can’t give you any specific advice. However, maybe someone reading this post can help you. Also, if you post the question on our forum http://chemistscorner.com/cosmeticsciencetalk you might get a better answer there.

  • Lisa 10/25/2013, 1:03 pm

    Hi Perry,
    Do you, or anyone else out there – know of any Canadian labs that offer private label opportunities for natural liquid soaps, creams etc for hair and body? I am also looking for companies that sell emulsifiers (like BTMS) and preservatives and packaging. Preferable not on the West Coast. I am in Toronto.

    • Perry Romanowski 10/27/2013, 5:10 pm

      I don’t have any specific one to suggest but you should check with the Ontario SCC as many of their members are contract manufacturers.

      • Lisa 10/28/2013, 5:43 pm

        Thanks so much Perry. Great information here.

    • Bill 10/29/2013, 11:13 am

      The best small-medium sized private label skincare company is in Toronto – Aquatech. http://www.aquatechskincare.com. (416) 532-2004
      81 Keilfield Street, #5, Toronto ON M9W 5A3

  • Keyarlie 10/10/2013, 1:12 pm

    I want to start my own lipstick line. I have certain colors and things I want the lipstick to be like!! Who can I contact to have it made to my specifications at a reasonable price? Or who am I looking for to have them made?

  • Crystal 10/04/2013, 1:44 pm

    Hi I plan on working with a cosmetic consulting firm , do you know how much these types of firms charge?

    • Perry Romanowski 10/06/2013, 5:47 pm

      That really depends on what you do. But generally you can decide on an amount of money you charge per hour then guess how much time a project would take you to accomplish.

  • Avi 09/28/2013, 8:46 am

    Hi Perry!

    I am a makeup artist for more than 6 years and I have played with the idea of creating my own line of cosmetic products quite extensively. After years of applying makeup on Ladies and Gents with a diverse background, I am confident that my ideas will come to fruitation. The only reason I haven’t started is because I have been searching for an investor. Are there any trusted sources out there that can assist? Please advise.

    • Perry Romanowski 10/06/2013, 5:53 pm

      You might take a look at our free report (http://startacosmeticline.com)

    • Vinita 12/05/2013, 2:49 pm

      Hi Avi,

      How are you doing?
      I am a cosmetic chemist and am currently working on a skincare line. We would be interested in working with collaboration with you.

      my personal email id is misscosmeticchemist@gmail.com

      • Dee 03/25/2014, 6:27 pm

        Hello Vinita,
        I am working on different formulations for make up will it be ok we stay in contact and may be do some work together. Feel free to email me @ deenuflava1@yahoo.com

        Thank you

        Dee

    • Dee 03/25/2014, 6:24 pm

      Hello Avi,
      If you are interested in creating your own make up line I can offer you some helpful tips to help you get started. Feel free to email me deenuflava1@yahoo.com

      Thank you

      Dee

    • Teddy 10/08/2014, 4:48 pm

      Write your proposal, business plan, products etc and send to this email. If interesting we might want to work with you.

  • nancy ferguson 09/17/2013, 6:32 pm

    Can I buy a line of cosmetics already approved so I don’t have to pay for testing? But put my own brand name on them?

    Thanks Nancy

    • Perry Romanowski 09/17/2013, 6:35 pm

      You may be able to from a company like this. LiquidTek

  • Natalie Seikanyeng 09/15/2013, 3:25 pm

    hello,Ihave always bein passionate about make since when i was little,and now i want to make that dream come true by starting my own makeup line,i need help for how to start and all that is required to make the products,please help.

  • marianne 09/03/2013, 3:17 pm

    Hello,

    Approximately what is the price range to buy a medium sized manufacturing facility in China?

    • Perry Romanowski 09/13/2013, 3:16 pm

      I have no idea

  • Tiana 08/28/2013, 11:32 pm

    Hi! Like Christine I am super interested in starting/creating my own make up line! Ever since I was a little girl and now growing up I’ve been in love with everything make up. My everyday life, my passion and job (dancing hula) has made make up an everyday essential and good quality make up with great prices is in high demand! I obviously live in Hawaii and have written down notes to your blog and also Make Up Geeks blog! I guess my question is would it be more realistic to make the move to California/New York/anywhere in the states to actually have the process get moving?

    • Perry Romanowski 08/29/2013, 6:55 am

      With the easy distribution the Internet provides, you don’t really have to move to start your own cosmetic line.

  • Solmaz 08/22/2013, 11:01 am

    I need a cosmetic raw materials supplier from china. I manufacturer is in overseas …can you help me please since I am looking a trustable supplier not somebody from Alibaba ..

    • Perry Romanowski 08/22/2013, 12:27 pm

      I do not have any to recommend.

    • Matt 08/22/2013, 1:17 pm

      I suggest that you find reputable manufacturers in USA and Europe and then find out who their distributors are in China.

    • tiffany 09/06/2013, 9:16 am

      Hi Solmaz

      I am just starting out and I have been looking extensively, because I feel the same way about Alibaba. I came across a site called the privatelabelinsider.com created by a woman named Melody. The woman who runs it is remarkable , she provided a great list of manufacturers for private label companies from all facets(skin,nail polish, make up, and so on). Some of the companies are just bottlers though, but either way its worth checking out. When you go to the site you should see a book on the top right called “Want a list of my favorite vendor sources?”, put your information in and you should receive an email with a link. Trust me, you will never regret it. Please contact me at tiffanymilan2012@gmail.com if you have any problems because I can just send a copy to your email address.

      Good Luck
      Tiffany M.

      • Perry Romanowski 09/06/2013, 9:22 am

        We did a podcast interview with Melody. You can see it in our podcast archives.

    • Sue 09/09/2013, 4:13 am

      Hi,

      We’re Skin Care manufacturer from Singapore since 2002. Our products are certified with ISO22716 (Cosmetics GMP) and ISO 9001 (Quality Management System), clients are major from Asia.

      You can have your brand name with our products, email me if you are interested.

      sue.s (at) angelic (dot) com

      Regards,
      Sue

      • Stephanie Manna 09/17/2013, 1:24 pm

        Do you manufacture color cosmetics such as foundations, concealer and blush. What are your minimums?

        Thank you!

        • Sue 09/21/2013, 11:43 am

          Hi Stephanie,

          We are more on manufacture skin care product such as cleanser, serum, BB cream and gel base products. However, we do also provide make up remover and cleansing milk.
          Pls drop me an email at : sue.s@angelic.com
          to discuss further.

          Thanks,
          Sue

    • Abizer Raj 10/15/2013, 6:32 pm

      Solmaz,
      Please contact me from the contact us page on my website. We can further discuss your requirements and projects.

  • Christine 08/13/2013, 7:54 pm

    Hello! I am very passionate about makeup and starting my own line. Would it just be helpful to contact someone that already has a line started or seek an entrepreneur? I am a college student, but I feel like I can succeed in this industry, I may just need the step by step process.

    • Perry Romanowski 08/14/2013, 8:58 am

      See our free report for the step by step process. http://startacosmeticline.com

      • staypolished 08/28/2013, 9:25 am

        Our company provides private labeling of high quality cosmetics. Please let us know if we can be of any assistance. You can get started right away.

  • nagina 08/13/2013, 6:17 pm

    hi, I would like to start halal cosmetic products but im not sure how to start this. can someone please give me advice on this.

  • Natalya 07/24/2013, 1:28 am

    Hello, everyone.

    What is MOQ?

    Thank you.

    • Imo 09/01/2013, 7:28 am

      Minimum order quantity

  • Shana 07/22/2013, 10:05 pm

    Im planning on making an oil blend. How do I wash my droppers and measuring utensils? Do I need to use distilled water to clean them or can I use normal tap water? I will be making them from home until I can afford to get a large batch made by a contract manufacturer. Do I send one of my homemade units to be tested and then just carry on making them at home using the same recipe until I can afford to pay to get them made by a contract manufacturer? or do I need to get a large batch manufactured by a contract manufacturer and send one of these units off to be tested? Or will the contract manufacturer make a sample unit to be sent off for testing before placing a bulk order?

    • Perry Romanowski 07/23/2013, 2:56 pm

      You can use tap water for washing out your utensils (although you’ll need to use a detergent too).

      Yes, you have to send a sample of whatever batch you are going to sell to be tested. Ideally, you will have your batches made by a contract manufacturer. They can then send a sample out from a bulk batch for testing.

    • nimit 08/15/2013, 2:28 pm

      its great, could u tell me which all products u are making, i want to see them

      • Ben 08/16/2013, 3:51 pm

        Email herbaclean@gmail.
        Hello nimit,
        I am a formula/product developer in organic /natural cosmetics,skincare and cleaning-products. Mostly i work on contract. Just tell me what you would like to make or sell and i will prepare a sample and send it to you.

        Best regards

        • lindsay 09/15/2013, 8:55 pm

          What was your email address? I am interested in formulating an organic foundation

    • Dee 03/25/2014, 6:34 pm

      Hello Shana,
      I use rubbing alcohol or you can use 70% alcohol to clean all your utensils

  • Joanne 06/17/2013, 1:32 am

    Hi Perry,
    I just finished reading your informative document, How to Launch Your Own Beauty Products. Thank you for sharing your knowledge. I am in the process of creating a few products and am preparing to meet with my investor . Could you please give me a ball park figure of how much the unit price would be to produce a body oil that would be made of a base of almond and sesame oil with a mix of a few essential oils. I would also like to know the same for a shampoo and conditioner that would include the essential oils for fragrance. I would like to present to my investor a general idea of how much I would basically need to start things up. Also approximately how much do you think it would cost per unit to make a custom glass bottle for the oil?
    Please help!

    • Perry Romanowski 06/17/2013, 1:01 pm

      In the article above we talk about start-up costs for doing a business. Use that as a guide. The exact cost is going to depend on lots of factors such as who you work with, what type of packing you have, how much testing you do, how many units you produce, raw material costs, etc. A good guess would be go to the store and see what someone is selling a similar product as you want to sell for. Then maybe cut the price in half.

    • Joanne 06/17/2013, 2:33 pm

      Thank you Perry! You are a wonderful resource.

  • Natalya 05/26/2013, 12:14 am

    Thank you, Perry. Very useful.

  • NadiaZ 05/24/2013, 10:54 am

    Dear Perry,

    As much as I would like it to be true, I don’t think the 15 000USD is realistic if one wants to do serious and safe business including trials and errors (for example a supplier that doesn’t deliver, a parcel that gets lost, testing different suppliers for quality, a product that needs to be reprocessed to improve stability). That is without counting the cost of trademarking (not even dreaming of patents), graphic design for your logo, website, business cards, buying pictures for your website, getting your containers right, your accountancy system (that of course you cannot pirat), your batch managment program and if you want to test yourself, add some more for equipment. So at less than 40 000 USD, unless you don’t do import export, buy cheap local material (which is the case if you want a 2-3USD item price, mine are 10x higher as only natural), not sure one can make it. Again I do a high quality product, some other products more mainstream may need less investment. But at the end, do expect 3x more expenses than you have planned for. Good luck to all.

  • rita amen agbonghae 05/17/2013, 11:15 pm

    am really grateful for these imfomations.

  • onen ebokpo 05/03/2013, 11:27 pm

    Hi,
    I am in africa, Nigeria to be precise and I want to start a cosmetic line(brown powder to be precise) for light skinned african women, I am not a chemist by profession so I am wondering if for a start I would have to go to a lab to get the formulation and before I produce a few set for testing before the main bulk production, am really confused as we do not have good cosmetic labs in Nigeria, please what can I do?
    Thank you.

    • Imogen 05/24/2013, 5:32 pm

      He y i Aldo santiago to start a line …. For african skin and i world not mind to parthner up Smith someten . If it is of interest email me ! Lets talk ….. Imogensjaz@hotmail.co.uk . Bless

    • Carla De Roy 05/28/2013, 3:31 pm

      Hi, I see from your post that you are seeking an ethnic line for Africa.

      Please take some time and check out http://www.sheriffcosmetics.com
      They may be able to assist you with your powders.

      Large shade assortments – for all ethnicities.

  • Veronica 04/17/2013, 11:42 am

    I am not a chemist. Can you tell me where I need to begin for starting up my own cosmetic line? I would like to have my own private label. Would I need to meet with a lab or best to meet with a chemist? Thank you

  • karen 04/17/2013, 2:09 am

    Hallo Perry
    I really like your article! I am really looking to hire individual like you, who has experienced financial advisor in the cosmetic industry that will create a budget and cost for our company. please let me know. will prefer if you can contact me directly to my email.
    thank you
    Karen

    • Ben Lakatos 07/26/2013, 9:20 pm

      If you starting up a new cosmetic business i am the “some one”
      you need. I am in this business for 50 years .

      IF YOU INTERESTED JUST DROP ME AN EMAIL
      herbaclean@gmail.com

  • Kristine 04/13/2013, 2:27 am

    The cosmetic industry is a fast growing industry. Having a cosmetic business is truly promising. You just need to do your homework before starting one.

    Kristine
    Permanent Makeup NYC

  • Andrew 03/12/2013, 4:30 pm

    Hi,

    Great article. In terms of testing. If you go to a manufacturer who already makes the beauty products such as the cream, serum, etc, so technically they are just putting your label on it, does that need to be tested? Surely that would already be tested?

    • Perry Romanowski 03/19/2013, 7:16 am

      Ultimately, you are responsible for whether the tests are done or not. They should have the tests done and provide you with test data. If they do this, then you wouldn’t need to run additional testing (except micro testing on each batch). But if the company you work with hasn’t done things like safety testing, stability testing, and preservative challenge testing, you’ll have to do that.

  • Tyree 03/06/2013, 9:57 am

    Another question – if you are still answering!;)

    SPF. I am going into markets this summer and have noticed other natural bodycare companies selling “all- natural” SPF lotions and lipbalms. Now, it’s my understanding that any product that wants to have SPF has to go through testing because it is seen as a drug(FDA) I want to make a lipbalm containing zinc. Is it possible just to label it “mineral balm’ or something else? I know a slew of companies just make it anyways, i want to “do things by the book’ lol. Again, just a start-up, but i can’t find any company that will answer these questions.
    Thanks!!!

    • Perry Romanowski 03/06/2013, 10:07 am

      If you are going to make any SPF or sun protection claims then you have to do the proper testing. If you want to call something “mineral balm” then you won’t have to do SPF testing.

      • alex hammer 08/18/2013, 12:22 pm

        If you put a mineral in your lip balm you cannot make any SPF claims or any reference to sun protection on your label or you will be accused of misbranding.

        • Perry Romanowski 08/19/2013, 7:32 am

          Unless you do the appropriate testing.

    • Matt 03/06/2013, 11:57 am

      Having the ability to make an SPF claim elevates the value and marketability of your product. I would not personally bother to make a product that had sun protection functionality and then not take the necessary steps to be able to market it as such. Depending on the level of SPF you are expecting to test and the other related claims you want to make such as water resistance, these tests can cost between $2500-$5000 for a sunscreen. Not sure about the costs for a lip product but I would imagine they would be similar. In the grand scheme of things this isn’t a huge amount and should easily be recoverable in a short period of sales.

      • Tyree 04/01/2013, 7:47 pm

        Thanks so much for the reply, Agree with what you had to say. I will wait until I can afford the testing:)

  • Cat 03/03/2013, 1:04 pm

    What would you recommend for a schooling background?

  • laura 02/12/2013, 9:30 am

    Hi
    I have made my own face cream which includes only four ingredients which are all natural. Argan oil, beeswax, water and esstenial oil. So i emailed a few companies to see what the costing of getting this started would be. They gave me all the things that you said to be tested. Now i can understand i need to get it tested but I have no bad chemicals such as preservatives etc and its all natural so why am i having to pay out a good £2000 – £3000 for something so simple. This is correct as I do not want to have to fork out any more than I need to do. It is a oil based face cream by the way. I have enjoyed doing this and from the feedback that i have had is amazing from me giving samples away. Please help me!

    • Perry 02/13/2013, 9:48 am

      Hello Laura,
      You ask an excellent question. The reason you have to get it tested is because the fact that something is natural does not mean it is automatically safe. Bacteria, Fungi, Mold, and other disease-causing microbes do not care if a product is natural or synthetic. They will grow on any substrate that is suitable for them. Since you have water in your formula (and no preservatives) microbes will invariably grow. A lot of food is all natural but it also will grow microbes.

      Products that do not contain preservatives are dangerous because microbes will grow and can spread diseases. You need to have things properly tested or you could injure someone and set yourself up for lawsuits.

      Hope that clears things up.

      • Andrea 11/26/2013, 12:32 pm

        Growing microbes in the cream, this is true and not fully true as she said she uses essential oils; There are Essential oils which are fighting a wide spectrum of bacteria.

  • Durrelle 01/30/2013, 12:06 pm

    How do you go about getting products into jars and tubes please. I am looking into a line of cosmetics

    • gretchen 02/11/2013, 2:51 pm

      Hi Durelle-

      There are many steps to take before you get the products in a jar/tubes. It all depends on the formulation. I work with start up skin care brands and I can help you with any questions that you may have. Email me. I would love to help!

      Gretchen
      gretchen@uberangst.com

  • Thu pham khac 01/28/2013, 4:13 am

    My company is in the Vietnam,product’s company are natural cosmetics as white bath and body lotion,bath lotion,skin smoothing bath,facial bath…entirely of natural herbs.
    we want to sell products to the United States and elsewhere.
    Can you help me !To find the maketing, Thank very much!

    • Perry 01/28/2013, 7:15 am

      You might see if you can find help on Elance.com

  • Kelly 01/22/2013, 2:04 pm

    What clinical trials and/or FDA review/approvals are required for a new line of beauty/skincare products? lotion, serum, cleanser, exfoliant, lip balm, etc.? Thank you!

    • Matt 01/23/2013, 11:42 am

      Kelly,

      So long as you are not selling products that fall in to the OTC Drug category there are no clinical trials or FDA reviews or approvals. This is because you are only supposed to make claims of a temporary and cosmetic nature. Nothing can be said about affecting any cellular structures or curing specific conditions. Such claims move the product into the unapproved new drug category. Most companies skirt these rules and every now and then the FDA has crackdown on claims and makes them remove them from packaging or websites.

      Some cleansers fall into the OTC category such as Anti Acne washes that have salicylic acid or benzoyl peroxide in them and make acne claims. In these cases there are not trials needed but you must use approved actives at the approved concentrations and these are listed in the FDA OTC Monograph for the specific application. These products must also be manufactured in FDA registered facilities that follow specific guidelines.

      Sunscreens need to be tested IN VIVO on a minimum number of subjects in order to make any claims of a specific SPF number. These trials cost between $3000 and $10,000 per formulation depending on whether you want a standard test, water resistant rating and or global certification.

      The only other thing you have to make sure of is that none of the ingredients you select are on the FDA hotlist of banned or limited use chemicals.

      Beyond that there are now consumer class action suits against companies making false claims of product performance. And the Federal Trade Commission can get involved if print or television adds make claims that can’t be proven or that are misleading.

      Hope this helps.

      • Kelly 01/23/2013, 1:16 pm

        Thank you! Very helpful.

  • Terra 01/06/2013, 11:34 pm

    Hi. I’m interested in starting a lip gloss line. I have the idea that it will be marketed to women in their 20`s but anyone can buy it. My question is just for lip gloss, where do you start?

  • Jeannie 01/06/2013, 9:40 pm

    How do I give my skin care a name? Ive been selling some on ebay but I dont have labels or a product line name. I am planning on building a gift shop here on my property this spring and already registered business name with my county and sales tax with my state, however I want to name my skin care legally. Thanks

    • Perry 01/06/2013, 9:42 pm

      You can just name it whatever you like (as long as you don’t infringe on someone else’s trademark). Search through the US trade a patent office to see if a name you want is already registered. Then just print up some labels and go. Good luck!

  • Rob 01/06/2013, 10:47 am

    Bankground:

    I want to create a new premium brand on hand lotion/cream. I only want to start with this one product (rather than creating a line of products) and would use a private label company. The private label company already has the hand lotion formulas / testing. I would use a unique form of packaging though and my brand would be my own.

    Question:

    Is it possible to sell my hand cream to independent shops and on the Internet to start without an entire line of other products? Can I grow a following with one product and add more later?

  • John 01/02/2013, 9:50 am

    Guys,
    Make cosmetics require some basic processing equipment and manufacturing structure.
    1) 4000 sqft warehouse (a least)
    2) Kettle, conveyor, water treatment unit, Inline filling machine, building permits, GMP environment, QC lab (required by lab).

    I say, 350K to start and breakeven in 3 years.
    Contact me if you need help.

    • Ayman salem 11/02/2013, 9:31 pm

      how to contact you, you forgot to write your email so please contact me on my email : ceo@utopiamp.com

  • sassy 12/27/2012, 8:43 pm

    what about priavte label to started off first?

    • Perry 12/28/2012, 4:14 am

      Yes, this is a good option for most people.

  • sarsil 12/09/2012, 6:44 pm

    This is a very interesting topic. While I was reading all the different opinions on this thread, I thought how difficult it is to start when you are ‘a little one’ in a world of multinational companies where it is so hard to compete. However, we all notice that some famous brands such as Claire’s, H&M, Zara, etc… also offer cosmetics with their names on the products. I was wondering if these companies do actually create their cosmetics collection as explained before, or if they just purchase huge amounts of skus in Asian markets (same product for different firms) which are later labelled with their brand name. I find very similar products in these kinds of businesses, the only difference for me is the label. Is it possible to create a line of products this way? Isn’t it unfair? Sorry for my English…

  • Guuky 11/25/2012, 2:18 pm

    Excellent Article. Best advice I can give is to be aggressive on online side as you can reach much broader audience with same effort. Know your social media and get that catalog out to everyone.

    • Perry 11/26/2012, 8:22 am

      Great advice.

  • Arnold 11/23/2012, 2:38 pm

    Hello. I just came across your web site and this thread. Very informative. We own a well-known beauty salon and have somewhat of a nationally recognized brand. Having been in business for nearly 20 years, the one thing we have not done is launch an eponymous product line. We are now in the process of doing research to start a line of color cosmetics. From what I gather reading this post and comments, is that if we start with 50 SKUs of CUSTOM formulations and packaging with MOQs of 1000 per SKU, our start-up costs for JUST the product manufacturing should go approximately as follows:

    Cost per unit: $3 x 1000 x 50 = $150,000 (Are our MOQ estimates too low for custom products? These are based on having numerous SKUs for each package, but different colors within each product category.)

    Testing: $1500 x 50 = $75,000 (Is testing done on each SKU or just on each category? For example, if you have 10 lipstick colors, do you have to test every color or just do one test for all lipsticks?)

    Based on these estimates, along with other start-up costs, we project that we will need about $300,000 to get started and get the first order through the door. Does this seem accurate? The packaging we would create will most likely be at the high-end of the price range, as well as the formulations.

    Additionally, we are looking for a great formulation and packaging company to work with, who have experience with development of custom high-end color cosmetics. If anyone has recommendations, it would be appreciated.

    Thanks in advance for your response(s).

    • Matt 11/26/2012, 2:01 pm

      Arnold,

      This is just my opinion based on my experience so far, but 50 SKU’s is quite a bit to start and and MOQ of only 1000 sounds low for a small container size, high labor product like a lipstick or lip gloss, or for that matter any color cosmetic. At 1000 units, the labor portion of the per unit cost for a custom hot process lipstick is going to be very high. It is sometimes hard to find an off the shelf product with such a low MOQ. I am thinking that your cost for an initial order is going to be much higher than you are calculating especially if I understand you correctly and you plan on also having your own custom packaging. For color cosmetics, having your own custom formulations is probably not necessary. You would be better off finding a company that has high end off the shelf products with an existing color range that you can then just creatively market as your own. Some of my clients have found what they need at http://www.cosmeticalabs.com in Toronto Canada. The one thing they don’t make is nail polish, if you were thinking of having one. That is a fairly specialized industry and you won’t be getting a custom formulation in a nail polish.

      You will need to have a base for each product and then have a sample of each color made up in each product. I don’t see this costing $75,000 or anything even close to this much. Assuming from your example that you will have 5 products with 10 colors each I would probably count on a low end of $2000 per product to a high of $5000 per product to formulate the base and as well as each of the 10 colors. This will depend on the complexity of the formulations and whether they can be post tinted after a neutral base is bulk manufactured. Or whether a new sample batch has to be made up from scratch for each color (much more time consuming).

      What you save on testing will easily be consumed + more added at the production level. If you have custom packaging made, the cost of having new molds can be quite high even in China.

      • Arnold 11/26/2012, 3:50 pm

        Matt,
        Thanks for your insight. Can you please clarify a couple of things:

        With regard to MOQ, is it per color or per product category? For example, if you have 10 lipstick colors, do you have to order MOQ x 10 or MOQ x 1?

        Is there typically a separate cost for customer packaging or does the MOQ just go up?

        Thanks again.

        P.S. we’re not doing nail polish

        • Matt 11/26/2012, 4:09 pm

          Arnold,

          MOQ will be per color per product. So say it’s an MOQ of 5000 units per color (which is not high for color cosmetics) then you would be looking at 50,000 units for 10 colors. The only time I have ever seen MOQ’s of 500-1000 units in color cosmetics is for off the shelf formulations that are pre-packaged and only need to be labelled. Setting automated filling machines up for your packaging is time intensive and would not be worthwhile in small production runs and manual filling is not much better. Also finding small quantities of readily available high end packaging is not easy in North America. When they are available they usually cost 2x to 3x what they would cost if purchased at the point of origin in China. With so many colors you would easily be able to meet the packaging MOQ from a Chinese manufacturer.

          • Arnold 11/27/2012, 9:03 am

            Thanks Matt, very helpful

  • Damian D. "Skipper" Pitts 11/22/2012, 7:46 am

    Perry, I wish I knew what was outlined in your OUTSTANDING article back in 2010 when I was starting my skin care business. What a learning curve it has been over the last few years. You are right to mention the 1600 word count. TRUST ME when I say, you are dead on with the things mentioned, and another 3600+++ words not mentioned. Keep up the great work pal. you are very well informed and people need to know before they enter into the game just how BRUTAL it actually is; btw, we’ve spent more than $150k just to play ball and in 2-yeras, we’ve NOT scratched the surface…but, we are working on it!

    Great job!

    • Tyree 11/27/2012, 9:46 pm

      I am now into a business plan to apply for a grant. I can’t believe just how involved it is!!! Sure makes you feel inadequate when you are a start-up!!
      Launched my natural bodycare company in august of this year and am selling out of product at all the shows I am doing. I have been asked to sell in stores and to expand my line already. Now, because of past student loans, i am not wanting to go into huge debt with a business loan, hence the draw to the grant. Now looking how detailed this business plan is, i am a little hesitant. I defiantly want to grow and get out of my house and into a space but am feeling a little lost.
      I have spent over three years now formulating, writing articles and testing, but now feel pressure to step up and play with the big boys, so to speak. yikes!!!

  • Mpumi.MS 10/10/2012, 8:25 am

    Thank you so much for the info, I am in SOUTH AFRICA and wanted to know if do you think costs will be different to the costs you have given now? if yes could advise me on how to go about finding out more about the costs. Do the costs depend on the country you situated in?

    • Perry 10/16/2012, 7:24 am

      Hello – you will have the same types of start up costs but I’m not sure if there will be a significant difference. You’ll just have to ask a cosmetic formulator that works there. You can find them by contacting the local SCC chapter. This is their website.

      Coschem

  • siya 08/29/2012, 8:08 am

    Very in informating and educating.in what country or place will they produce d products.I want to have my makeup,hair and skin products

  • Brenda 08/18/2012, 6:51 am

    Excellent article to start, very informative and eye opener. Thanks.

  • moyosore 08/15/2012, 7:08 am

    what do you think about starting a makeup line using a private label company?

  • Ken 04/29/2012, 4:49 am

    Excellent article and comments.

    As an entrepreneur with more than 3 decades and numerous start ups under my belt (some successful, some not) I have a rule of thumb I would like to offer when calculating your capital requirements and cash flows:

    Do your homework, include all of the aforementioned costs, then double your capital requirements and multiply by 2.

    Then do the opposite for revenues. Come up with your best estimate of revenues, cut it in half, and then divide by two.

    I know this sounds trite, and maybe a little pessimistic, but it works. And it will keep you out of trouble.

  • George 04/25/2012, 12:53 am

    A good article to get a general idea. Matt covered me completely on what I wanted to add to the article. Minimum order quantities are a major problem for someone who is starting out small.

  • lucio 04/24/2012, 6:01 pm

    At first I think about U $ 10,000 to more, you should think that the first three months will only walk in red, who can pay your extra expenses? Research and flow of people also need to open your business. also good to have your business online.

  • Eliza 04/24/2012, 12:53 pm

    Great bit, thank you Valerie & Perry!

    I was just reading this article on marketing:
    http://www.gcimagazine.com/business/management/innovation/146168195.html

    My 2 cents is that the costs and time involved in marketing are often underestimated (I know I did!).

    Also the kind of money you would need to get it right, it’s mostly what makes it hard for cosmetic chemists to release their own brand of products. In this economy without power numbers it’s almost impossible to get a loan of that magnitude! I’ve been at this for almost an year now (working on getting it right) and I must say that I now understand more and more why so many people just begin with selling soap made in their own kitchen :(

    You need to begin somewhere to generate data in order to convince the bank, investors and potential whole sale accounts that your product is worth investing in.
    No matter how wonderful your plan is, in the end it’s all about making fast profit :(

  • Matt 04/24/2012, 8:10 am

    I just remembered another one. In order to sell to any retailer that uses barcodes and most do, you will need to register with GS1 and get a unique company identifier as well as the package that provides the most appropriate number of UPC digits for the products you will be selling. This costs at least $1000 to start as well as an annual fee. Large retailers require that you provide a valid GS1 certificate in order to even consider selling your products and fulfillment houses need barcodes in order to properly pick your customers orders for online sales.

  • Thembi 04/24/2012, 3:52 am

    Very good introduction to a novice like me struggling to start. And I am taking note of the additional info provided by other commenters.

    Thanks Perry

    • Maggie Ghanem 04/25/2012, 11:26 am

      This is a very interesting article….Thanks Perry
      I worked for Active Concepts for a little over 10 years. Throughout the years I noticed a lot of customers couldn’t meet the MOQ because they were starting up and/or noice to the industry. Since then, We created a new division of our companies for Formulators and start up. We don’t have any MOQ’s and offer products at a reasonable price.
      Please feel free to visit our website and/or e-mail me for additional information.

      • Ladyfire 06/22/2012, 1:51 am

        Hello, I was reading your response and currently thats my problem that im having. Meeting the MOQ. Can we chat about this and would love to check out your products. Email me :-)

  • Mark 04/23/2012, 6:33 pm

    I think your article is great but a little short.
    How about labels that deal with natural products. Customers constantly chasing what’s new on the bad cosmetic ingredient list. Then they want their labels changed again and again and again. This can turn into a cost nightmare.
    Don’t forget refunds and the freight associated with them.

    • Perry 04/24/2012, 7:19 am

      Ah yes, there is certainly more than listed here but it was already >1600 words! These factors are why we ultimately said you need about double what we estimated. So if the formula costs about $5000 to develop you really need $10,000 or more to launch your business.

  • Matt 04/23/2012, 2:38 pm

    This is a good start but the startup costs related to raw materials and packaging are far more complex than explained. Raw materials are often only available in MOQ (minimum order quantity) sizes that are much bigger than needed in order to produce the desired quantities of product needed for launch. Often MOQ is a 55Gal drum which can equate to thousands of units. The more complex a formulation is, or the more formulations you are producing, the more this issue becomes pronounced and costly leaving huge excesses of raw materials to payed for and stored until needed again.

    Packaging presents a similar problem as it is very hard to find stylish affordable packaging in small quantities (500-1000). Most acrylic or glass jars and airless serum pumps are made in china and most are not stocked in North America, meaning they are custom order and have MOQs in the 2000 to 10,000 unit range. These units may cost less than $1 each in quantity, but shipping from China causes delays and is costly once you factor in all the LCL, brokerage and freight forwarder fees.

    • Perry 04/23/2012, 2:40 pm

      Excellent points. Thanks for adding.

      • divya 11/05/2013, 7:01 am

        hi!i just want to know after all expanses what % of profit we should keep to run a good business.
        thanks

        • Perry Romanowski 11/05/2013, 7:14 am

          I guess it depends on how much you want to make. But figure 10X profit. So, if it costs you $1 to make a product you should sell it for $11 to make $10 in profit.

          • ME 06/17/2014, 5:36 pm

            Hi Perry.
            Awesome Information.
            I’m a Skincare Formulator and have a consulting lab. I focus in working with Startups. Anyone interested in creating a skincare private brand, I’m the one to help them. We offer complete turn key – Custom Formulation, Custom Packaging, Art Work, Manufacture and Fill. Minimums starting at 300 units. We formulate professional clinical skin care products, batch & body, hair care etc. We definitely help them save money. If you know anyone who needs our services, please let them know. Our temporary website is http://lcelabs.weebly.com/.
            Regards.

        • AlanM 06/18/2014, 9:45 pm

          The website you linked looks pretty scammy. http://lcelabs.weebly.com/.

          It is not believable that a credible company “operating since 1994″ would have such a site, even temporarily.

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