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Formula Costs
Hello! I find this platform extremely helpful. Thanking you in advance for guidance/insights.
I’m cross checking a skincare formula’s cost per kilo. Protecting confidentialities, I cannot expose the IL
In today’s world of skincare formulation, what type of formula would cost $1100 KG on a very small run - a run under 1,000 pieces. It’s a no water formula, aesthetic is fluid, serum like/milky texture.
No high-performance ingredients or technologies are included in the formula - no retinol, vitamin C, no AHA’s, no encapsulation, no time-release.
Also, isn’t a stability test an automatic test that should be included in every finalized formula? Meaning, stability testing shouldn’t be an “extra ask” or an “extra cost” in the development process with any formulator agreement, yes/no?
thank you!
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11 Replies
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I think that costs sounds high, but the run/fill size is likely a big factor in why they are placing cost at that level, especially if they had to order unique ingredients for the run at high MOQ. Anhydrous formulas are more expensive in general, water as the main solvent is cheap in comparison.
Is this cost for formulation alone? Are you asking for any claim validation or specific testing, or help with fulfillment (especially if going international where regulations differ)? Are you asking for quick timeline? There are plenty of factors that can increase cost that have less to do with the formula itself and more with the holistic manufacturing process.
To me as a lab monkey, stability testing is part of the development process, though we often had it itemized separately (you’d have to ask a salesperson why). They may also place an additional charge if you require stability testing outside their normal conditions.
Short answer is CM will charge whatever price they can, the smaller you are the less leverage you have in negotiating price.
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Thank you.
This is bulk cost only. (does not include fill, etc.)
No claims testing, nothing “extra” with testing except micro testing is included.
No ground breaking innovative technology unless one might consider a raw material at a high and low molecular weight or niacinamide ground breaking.
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If it is The production cost not the development cost. then I can say it is a price that is rather high but can be Coursed because of the high cost for Getting the machinery ready. 1000 Pices is a very low quantity let’s say the preparation of the Filling line takes 4 Hours and 2 persons make 8 hours technical persons to pay for + 1 person from the filling team maybe to make adjustments etc. If you say a Technician Costs 150€ an hour. that makes already 1200€ only for the Preparation of the Mashinerey to fill your 1000 Pieces.
If you know to calculate that the filling line will maybe fill 15 Pices per min (with that small scale you will not be faster) that means your filling process will take 1h 6 min let’s say they calculate 2 h because the machine that puts on the label will maybe not work directly very good and so on. for the filling process you need 2 Persons on the filling line 1 Put on the new Bottels 1 to Put the BOttels into the Folding boxes they cost 80 € per hour makes additionally 320 € for the personal of the filling it self.
Energy etc on top let’s say another 80€
makes under the line 1600€ just for the filling cost.
The same goes for the Production of the Bulk let’s say you have 50 ml bottles make 50 kg production. you have 1 or 2 hours for Weighing the Materials (depending on how many ingredients are inside) 2- 6 H For production if you have a heating and cooling process. In that time you have a Production person standing next to the machine lets say 100€ per h making worst case 800 € on top.
So now you have 1600+800= 2400 € if you split that on the 50 kg bulk 48€ per kg
Additional Cost will be Organization in the background (ordering Raw materials; Analytics; Putting your Formulation into the System; Etc) let’s say makes another 200€ per kg. just for time and Personal.
Let’s say they want to make moony with that they will have to Charge 25 % on top makes already 312.5€.
Now it depends if the Price is ok or not.
Did you Pay them for the Development of the product or is it your Formulation? if so then it is too high. If they Developed the Formulation without payment the payment will just be included in the estimated production Values. Product development will cost around 5000 to 10000 € depending on the complexity and the Person that is doing the development. if you Calculate that into your 100 Pices Price the cost will explode of course.
For the Stability Study, it depends some companies like to separate all possible activities so the customer can decide if they want for example use an external laboratory for Stability studies. In general, I would say yes, stability will be part of development but the costs will then just be integrated into development costs and then depending if you paid development separately or not included in the Kg price.
hope that helps
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Thank you. There is a separate fill price of $500 It’s not a globally developed formula.
Agreement is co-ownership of formula, so no, the client does not own the formula outright.
Overall, my feeling is that this formula is way overpriced.
thank you!
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and….this is “second” order cost. This is the pricing to do a second run, so formula is already in place.
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As others have pointed out, the manufacturer is likely passing on MOQ’s costs to you. They can’t order only what you need.
This will sound challenging, but this reinforces the need for the growth of your line. These costs are based on volume and if you are going to be successful in the market, you need to quickly grow to meet these larger run sizes. In my experience, this is even more crucial post-COVID as I am seeing minimum run sizes increasing.
Grow or die in the market. Or plateau quickly.
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To add to what others have said, it does seem high. Reading between the lines what it really means is that they don’t really want your business. A small run is not worth it to a contract manufacturer when they know more than 90% of brands will never do a second run. Now they have all this packaging and ingredients that they may (or may not) use again. From their standpoint, it makes business sense to charge a very high amount to customers who want only small runs.
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The price would equate to roughly $30 per 30 ml bottle for ingredients which is just crazy. Even $3.00 per 30 ml bottle would be on the high side. But, without any specifics on your list of ingredients, it is impossible to give you any better advice.
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Exactly! You’re right on target with the numbers, and that’s why I’m baffled at this price! I posted the question here to gain more insight to what I may have missed in the calculations.
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What country are you based in? Are prices USD? The price seems quite high to me. I’m only a home formulator and if I use expensive packaging my overall costs are much higher than if I use more basic packaging. Have you costed the cost of the product what it would be if you made the product yourself? I know for me the cost of the formulated product can be less than the packaging - so I would ask for a breakdown of all the costs that the manufacturer is charging you because it doesn’t seem worth it to me. I would then look around for other manufacturers and get a few quotes. For instance I can make a very nice face cream in a very nice expensive looking glass pot 50 ml with labels I do myself for around $5 (AUD) total and the face cream itself costs me less than $2. (and I dont even buy ingredients or packaging in bulk).
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I agree that they don’t really want your business. I would ask for more information regarding the pricing perhaps they have just made a mistake and that is the price for the entire batch.
Are you using any extremely expensive essential oils at high percentage?
Do they stock the raw materials? Or does this include the price of them ordering in every raw material that you will need? Most raw materials you will need to buy a 200LT drum as MOQ and for some raw materials it could be a pallet as MOQ or higher. For example if they need to order in a 200LT drum of a raw material at $10/kg ($2000 per drum) then they might be just charging you for the whole drum even if they only need to use 1 kg of the raw material in your formula.
I would ask more questions as this does seem excessive.
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