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final product price range
Greetings,
I was wondering for those who work in the industry, what is the price range for the final product (excluding packaging), generally talking.
Small industries will consider an excipient of lets say $30-$40/kg an expensive one if it is used in a large amount in the formula (ex. more than 30%). This is the same for cosmetics (semi-solids, liquids) and food supplements or pharma (solids)
have you experienced the same thing?Thank you
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2 Replies
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really depends on what price point you’re going to sell it at
If you are going to sell direct to the public, general business advice suggests that your finished cost of goods needs to be around half what you’re charging
If you’re selling to a retailer, they’ll want to make 100% markup on what you are selling it to them.Basically if you’re spending your time doing this you need to cover your costs and make a wage. Less than minimum wage, unless it’s a hobby you do for fun is not sustainable
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The first thing is proper accounting. You need to make a spreadsheet with all the costs of raw materials, packages, labelling, and labour. Then for each product you:
1. Multiply the raws cost/Kg by quantity used in product + 10% (‘heel’ or wastage) and add them.
2. Multiply the time taken per item by hourly labour cost.
3. Enter the package and label cost for each item.
Add 1-3 together. This is your input cost.
Multiply by 6. This is your retail price.
BEAR IN MIND that unless a product has a USP and you can show it to be “special” consumers will compare it with standard products on sale in the supermarket and think, “Why should I buy this em88 conditioner when I can buy a 400mL conditioner in the dollar store?”
As an example our coffee shampoo is now our best seller even though it is the most expensive of our shampoo line, I believe that’s because it is both a super nice shampoo but also has no competitor.
PLEASE note that even the above approach is simplistic because it doesn’t account for the cost of marketing / capital employed etc. but at least it allows you to automatically adjust prices when your input costs change.
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