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Pricing
I’m at the beginning phases of starting a skin care line. I want this brand to grow into a whole suite of skin care products, but the flagship product is what I’m currently working on. I’ve contacted a few chemist to discuss some formulation services to get some sample batches made to test out.
I’ve done a lot of research and I know what I want in my product, its the percentages of the active ingredients that I need to refine. I came up with the idea for my product after using a skin care product that I bought off ebay to treat some hyper-pigmentation that I had. The product not only treated and improved the hyper-pigmentation but also improved a completely unrelated skin problem that I had. Without giving away to many details, the product is easily available and I know whats in it; just not the percentage of the active ingredient. This is a generic product, and by that I mean its not branded. What I want to do is reverse engineer (hope that’s the correct term) the current formula to figure out what exactly is in it and what the percentages are, and modify it to suite my needs for it. I want to gear it towards treating the skin problem that I didn’t intend it for.Now that you all have most of the facts, my question is whats a fair price for the services that I’m requesting? Also, how do I protect the integrity of my idea? I’m afraid I’ll tell someone my idea and they being more capable than I, will produce it for themselves. Thanks in advance to anyone who takes the time to respond to my question, I really appreciate any and all help anyone is able to give. -
18 Replies
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A couple of points;
First you need to be careful in regards to what this “completely unrelated skin problem” is exactly. There isn’t enough information to say exactly BUT be careful that you aren’t using it to treat a disease or it is likely to become an OTC. That complicates and limits your options. Also, do your research and due diligence and ensure that the product will indeed treat the new condition. Use good references and avoid anecdotal evidence (“my mom used it and it cleared up X” or “I used the product and saw that my X got better). Claims substantiation is very important and should be based upon cognizant and qualified credentialed research, not opinion or a “mommy blogger” post.
Next, each Consultant’s prices and fee structure varies. It is hard to say exactly. Contact many providers initially and gauge pricing and fee structures you are comfortable with. Questions more germane are what do the fees cover? Do they cover ownership of the Formula? I know that sounds like a strange point but some Formulators will have a separate charge for this, especially if they are associated with a Contract Manufacturer.
As far as safeguarding the idea, you will execute an NDA at the start of the project. Some Chemists don’t routinely use NDA’s. Some will execute an NDA without payment. Since I am ethically obligated to comply with an NDA and (since despite what we think), there really aren’t very many really novel ideas in the Industry, were I to execute an NDA before being awarded the job, this could rule me out of similar projects. Without payment your idea could actually cost a Consultant money if he/she signs an NDA without remuneration.
Next, very many people are paranoid that there idea will be stolen. Remember, in general nobody else will be as excited regarding your project as you are. In the event that you captured a market share, someone else will knock off your product.
As Chemists we are routinely asked to “reverse engineer” products. You have an obligation to reveal the Ingredient list (not percentages). This is not optional but rather the FDA Labeling requirements. Your Ingredient declaration is the raw materials listed by INCI name in descending order by weight. Anything at or below 1% (you will hear Formulators refer to the “1% line”) can be listed in any order. My preference as I was trained is to list the preservatives, colors, fragrance components and ingredients such as Sodium Hydroxide (a common pH modifier) near the very end.
That said, a Formulator can identify the “1% line” first. In general anything below the 1% line will have either a readily identifiable function (say a preservative for example) or it is “pixie dust”, a term we like to use for an item simply added to make the ingredient declaration more impressive. Raw materials above the 1% line generally have a listed range of use. With some knowledge, experience with the raw materials and some lab time, almost any product can be knocked off.
How do you protect against this? Simply create a solid product that delivers the promised benefits through proper raw material selection. Once you have a product that performs as requested, it all become Marketing. Trying to overcome an established and effective marketing strategy will protect your market share far more than trying to treat the Formulation as “top secret.” In this Industry Marketing is very important. A common truism is a solid product with an effective market strategy will out sell the most over engineered product which is poorly marketed every time.
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Thank you so much for your response. I know exactly what the skin condition is, although it is a genetic condition, it is extremely common and benign. As for testing my product I have family and friends of varying skin tones and ethnicities who have volunteered to test the product when I settle on a formula I like. I would like to enlist the help of a dermatologist to help me document the condition of the skin before, during, and after treatment has completed. That way I have a medical report to show what exactly has occurred to the treated skin.
I have emailed several chemist and I’ve heard back from one so far and was a little taken aback by the quote. I will defiantly ask about ownership of the formula; that was great advice. As for the NDA I thought of that and I actually thinks its a good idea to have one even before formation begins. I honestly believe I have a really novel idea, you’ve probably heard it before, but I honestly believe l do. I’ve done a ton of research and there isn’t a product like it on the market.I have some ideas about how to market my product, and I’m leaning a lot towards a very big social media campaign. If I can get the product to do what I want it to do and in a reasonable amount of time, I think it will sell itself. I’ve also been researching companies to help me with branding and the packaging design, but I don’t want to get ahead of myself.Thanks again for all of your advice, I really appreciate your time and opinions. -
Get several quotes from Chemists. I don’t know how easily you are taken aback, but the fee will realistically be in the thousands, not the hundreds. This is fair based upon the time that goes into developing a stable Formulation. Do not under estimate this task.
Some Chemists will take half, some will require the whole fee upfront. Some Chemists will take a deposit and ask for the remainder when you accept the project. These are ALL valid Business practices. Do not think you can get these costs down to any great extent. In my case if someone balks at my fees, it is a predictor that they will not be able to shoulder the larger costs of manufacturing.
Unless you have an extremely interested Dermatologist, you will find that he Dermatologists fees will dwarf the Formulator fees easily.
Lastly, remember Cosmetic can NOT be used to treat a disease. They can NOT be said to elicit a physiological response. Remember, the Federal Food, Drug & Cosmetic Act (FD&C Act) defines cosmetics
as “articles intended to be rubbed, poured, sprinkled, or sprayed on,
introduced into, or otherwise applied to the human body…for cleansing,
beautifying, promoting attractiveness, or altering the appearance.” If you target a disease it becomes an OTC drug at minimum and getting a new product approved OTC requires a “New Drug Application.” This process is expensive, in the millions, not the thousands. -
Thanks for your advice. My product will not target the disease, but will target the affects of the disease. I’m not sure how to better explain it.
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The first thing that most people starting out have a great deal of trouble comprehending is that there’s no such thing as a “secret” formula. None. Any, and I do mean any formula can be reverse engineered in at most a week, for about $5k.
The second thing that most people starting out have a great deal of trouble comprehending is that good, even great, ideas for cosmetic products aren’t even a dime a dozen - it’s more like a dime a hundred or two. Nobody is going to steal your idea, no matter how good you think it is, because a good idea by itself is essentially worthless. A good idea with a custom formula attached isn’t worth more than $100 or so.Almost all of the value in your idea (~98%) will come from sales and marketing. The other two percent is having a decent formulation - but those are really, really easy to come by.Be really careful about staying on the right side of the “structure and function line”, do all the safety testing, document your claims, and you’ll be fine. -
True Bobzchemist but basically all marketing is about how special the formulation is. No one will ever market a product as “this is a standard formula but with great marketing so buy it”
Therefore this reasoning ends up in a loop. -
Yeah, but 99% of the “how this special formula is amazing” stuff is pure nonsense. You can just sprinkle some fairy dust in a standard formula, and write pages and pages of advertising silliness.
Unfortunately, a lot of beginning entrepeneurs fall for the hype. -
I think one of the reasons you don’t see more scientists with their own product line is that they have a hard time propagating marketing BS.
Most entrepreneurs are “true believers” in the specialness of their product or idea even though there is no good scientific reason to believe. -
I don’t think there is a scientific way to prove that something is special, that is too subjective. I’m not saying my idea is special, I’m saying that there is a current gap in the market that my product can fill. In my humble opinion I think I have a very unique and potentially lucrative idea. The marketing plan for my product will simple be that it works, coupled with photographic and scientific evidence. Also, I don’t know if some of you realize how condescending your comments come off.
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@paranoiagent I don’t mean to sound rude myself, but I think you’re being overly sensitive. I didn’t read any of the comments as condescending. This forum is full of industry insiders and professionals, people who are offering time and expertise free of charge for everyone interested in cosmetic science — services which some consultants may charge for (even to answer some of the simple questions you asked). No one has implied your idea isn’t novel; it very well may be. No one has implied you won’t have a good marketing strategy for a product which is extremely unique. These individuals aren’t trying to discourage you at all, but rather are telling you to be cautious; they’ve seen it all, and they don’t want you to lose money, or waste time. How is that condescending?
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@gergetedder, thanks for your response. I agree that this forum is full of industry insiders and professionals with a wealth of knowledge, and I’v thanked people for their time and opinions. I feel most people who responded to my original post have been very polite and helpful, thats why I said “some” of the response in my opinion come off condescending. I didn’t mean to imply that anyone was rude, but that some of the response felt patronizing and flippant. Once again I thank anyone who took the time to respond to me, I appreciate everyones time. I got a lot of great advice and appreciate those of you who have shared your experience and expertise. If anyone one cares to know, I will try and keep this thread updated as I go forward.
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@paranoiagent - I also didn’t mean to sound condescending. I apologize if my comments came off that way.
It is very easy to get jaded as a formulator because we know most of what sells products is not the way that the formula performs but how the products are marketed. Certainly your product idea is worth pursuing and you shouldn’t let perceived negative comments here dissuade you from pursuing your dream.It is vitally important that you believe in your product if you want it to be successful. My comment was only explaining how hard it is for formulators to market cosmetics because we know the limits of what the products can actually do. On some level it is a negative thing for you to learn all the detailed science behind formulating & your product. It turns you highly skeptical of anything new and some people even get cynical. For an entrepreneur this is disastrous.You are doing the right thing. Have faith in your idea, find a chemist who can make it for you, and do your best to market it. Just avoid making any drug claims or doing anything else that can get you in trouble with the FDA, and you’ll have a great chance at being successful.In 1996, a cosmetic brand called Urban Decay was started by someone who was not in the cosmetic industry. A couple years ago it was sold to L’Oreal for over $150 million. No chemist in the cosmetic industry could have come up with this brand because it used exactly the same technology as everyone else. Technology does not matter nearly as much as marketing in this business.Again, I apologize if anything I said felt condescending. It wasn’t meant that way. -
Just wanted to say I enjoy the skeptical tone. Refreshing counterpoint needed to balance the “silliness” propagated elsewhere.
Entrepreneurs should believe there is value added in the products/services they provide but they also need a thick skin, willingness to face adversity and an appreciation for how difficult it will be to convert non-believers into potential clients in a grossly oversaturated market like this one.
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Actually, I agree with Bob. Giant Supermarkets including Grocery Stores and 99 Cent Stores are still selling (of course making profit) the Sulfated and synthetically preserved Personal Care Products. The Majority of the Public is still not educated enough about the quality of the formula. Most of them are looking at the price not LOI (List Of Ingredients). They trust the name of the Supermarket more than the name of the product. I still believe it’s mainly about Sales and Marketing.
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great answer @Perry.
@student54 : i do not see the problem of “synthetically preserved” personal care products. No real/critical scientific can see it.@paranoiagent : We hope you keep as informed
I hope you the most of luck! -
Perry it’s not just cosmetics. I am actually very established in an alternate industry. I have accomplished more and have published far more and have a far better understanding than most yet I do only alright because I know that the market BS is just that and I refuse to sell people things that I find fundamentally useless. However, I am fully aware of my short comings regarding that side of the business which is why I choose not to pursue it as a full blown career.
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Sorry for not responding sooner, I’ve been very busy at work lately. @Perry thank you so much for your clarification, I sincerely appreciate it. I completely agree that a lot of popular products sell mostly from gimmick and/or good marketing. Eos lip balm is one that comes immediately to mind. I’m not going to market my product as any kind of special formula with some special ingredient. I just want to say that my formula works and the products does what it claims to do. I went to art school not medical/chemist school, so maybe I have a little more imagination than most scientist lol. I whole heartedly believe in my idea and think it’s worth pursing. Even if nothing comes of it, at least I can say I tried.
Having read through the forum for a while before asking my own question, I was already anticipating some jaded responses. There seems to be one member in particular I feel goes out of their way to give dismissive responses. @EliseCortes I agree that some skepticism can be very constructive. I’m well aware that as an entrepreneur there will be hardships and rough waters ahead. I never thought for one minute that it would be smooth sailing the entire process. I want to improve a product that has already shown it can improve an unsightly skin condition; one that it is not even intended to treat. If I can tweak the current formula, get it to treat the condition even better than it already does, than I won’t need to shill customers into buying my product. I will sell it on merit, not a fancy or special formula. I hope I’v made that clear enough.I know the cosmetic industry is very over saturated. I feel my product however will fill a niche and not have to compete in an already very competitive market. I’m a very practical person and I don’t make a lot of money. If I didn’t feel like my idea was lucrative I wouldn’t be wasting my money or time. I didn’t set out to make this product or to start a skin care line. I just happened to use a product that inadvertently treated a separate condition. That was my inspiration. -
At least in the US, there is a fundamental conflict in selling skincare. According to the FDA, cosmetics are not allowed to affect the structure or function of the human body, or to treat any disease. What this means in the real world is that any cosmetic product stronger than a simple moisturizer is technically an unapproved new drug, and is illegal to sell unless a NDA is filed and approved.
Cosmetic companies know this, and must walk a fine line between selling products that might work and products that are illegal. In practice, what we as chemists know is that there’s really very little difference in how any similar product performs. This leads to a lot of cynicism, especially when marketing people want to claim that the addition of minuscule amounts of “active” ingredients and/or botanicals make a formula new/different/more effective.But…what @Perry said is also very true. If you want to sell a product, you absolutely MUST believe that your product is great. So, listening to cosmetic chemists can be really counter-productive.Please don’t think that we believe that you are trying to “shill customers into buying your product” But, if your product really does treat/improve a skin condition, you’re selling a drug, not a cosmetic. If you try to sell it as a cosmetic, you are taking a huge risk that you will be able to avoid FDA scrutiny.
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