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Pricing issues - packaging
Some packaging is quite costly. For example, a 250mL “jabonera” (soap dispenser) complete with pump, costs me $11 in 100-off. (Prices in Mexican pesos, 1 dollar was 12 pesos at the time I bought them)
So let’s say the contents cost $3 and the label costs $1. Total $15.My normal multiplier for creams and shampoos and conditioners is x6. This allows me to be competitive and also have some margin, typically 30 to 40%, for resellers.However, if I use the same pricing for my liquid soap in pump bottle, I would have to charge $90. Consumers won’t buy it at that price because big companies retail them at $50.Once upon a time I used to assemble computers from components imported from the Far East and I would typically make 40% margin doing that. It occurs to me that I could regard the soap system as two components: packaging, made by someone else, and contents, formulated by me. So is it a sensible idea to say, “for the package, we’ll multiply by two, not six, giving a price of $24, and for the contents, multiply by 6, giving a price of $18, total sale price then equals $42.Or perhaps I shouldn’t be in this particular line; but that would be annoying because as a personal care company I want to offer a full range. Opinions? -
6 Replies
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Argh what has happened to the edit function!
I wanted to add: Foaming bottles cost even more than pumps! -
Well, I am happy that you saw the product as having to components. The first is made by a third party or parties, as the sticker label is even of great important and the second component is made by you. One thing I believe is that the first component - the packaging - helps you sell the customer first. Then when the buyers finally use your formulation, you sell them. This last “sale” will determine whether they will become repeat and loyal buyers.
But as you may realize, there would be no repeat sales without the first sale. The first sale sets you up for the repeat. What am I saying? Don’t cut corners with that first sale, it is the door-opener.Earlier today, I had a one-on-one discussion with an experienced graphic designer and he agreed with my opinion about packaging.Secondly, this particular line may not make a huge profit, but should the consumer love it so much, you can be sure she would seek out the rest of the range. So, if you have to “multiply by two, not six,” it would be worth it with future sales in the others in the range. I am sure you would be happy for each customer of yours to be using all of your products.
I hope this makes sense. -
something funny is happening to the edit button, it has moved to the top right of your post; when you mouse over it, it shows up like a gear icon. When you click it, the edit link appears. However, mine - I use Chrome most times - seem to have a layer covering it, which I think is a javascript bug, but it works.
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@Braveheart, thanks for that. Your argument makes a lot of sense.
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Belassi, a couple of points on packaging since it’s one of the main hurdles for small manufacturers. 1) When you want to use a third party packaging company is because in my experience you are gonna be required MOQs of probably 10k maybe 5k per product is this the case?
2) If you are gonna have those kind of volumes then will it make sense for you to have a third party manufacturing, filling and packaging your formulation? -
No, we’re not at the point where we need a third party to fill. The annoying thing is that I know that large companies source their packaging at a fraction of what I pay.
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