-
Average cost of manufactured bulk?
For a typical decent quality dry skin lotion/cream (assuming no expensive proprietary ingredients), what are some rough ideas on price per ounce for the manufactured bulk (figure a 100 gallon batch size for example).
-
10 Replies
-
100 gallons isn’t really a production size - it’s closer to a large pilot batch. The answer to this will be distorted by the need to make such a small batch.
-
What is typically the smallest production batch size?
-
300 gallons is probably the smallest “production”. 1000 or 2000 gallons is common.
The answer depends on the company and types of price deals they can get on raw materials. But a small manufacturer should be able to make the formula for $1 - $2 for 8 ounces. Big companies can make it for a lot less.
-
By deduction, using the rule of 6, then if a dollar store can sell a skin cream of 240mL for a dollar, then its production cost, including packaging, was around 17 cents.
-
@Belassi would you please explain the rule of 6?
-
The low cost shampoo brand that I worked on had formulas that cost 8 cents a pound for raw materials.
-
Rule of 6: Pretty much everything you can see for sale in the supermarket actually cost 1/6 of the retail price to produce.
EG If there are three levels (MFR-WHOLESALE-RETAIL) then level 1 sells to level 2 at 75% markup (43% margin) and this then is sold on at another 43% and then again. This gives a 5.4 multiple. Since I have not included transport or storage costs you can see where the x6 comes from. -
@Belassi thank you very much
-
We use the rule of seven to include advertising combined with the three levels as outlined above including freight/shipping gives a fairly accurate picture of the markup multiples.
-
depends on the company’s capabilities; for us, 100 gallons (454 litres) would fill our smallest vessel nearly to the top, and the smallest batch of hot-mix product we can make is around 200 kg
with cold mixes we can go smaller still, and with some very simple, low-viscosity products (e.g. body oils) we can even mix them in a barrel if push comes to shove
Log in to reply.