Soap Making Business -- Know That Cost

A soap making business where the principal player does not know the cost of the product for sale is a soap business headed for the ditch. If you're serious about making money, determining the cost of what you sell is a must.

Only you can decide, but in my experience it is possible to make some money with a soap making business. That goes for a small scale soap maker making natural soaps as well as a publicly traded soap company.

Let's think through how profit is arrived at.

It's Sales less Cost to get Profit.

SALES

Generate some sales and you begin to have a chance with a soap business. That can be done any number of ways, but the more you get of those and the faster the better. Watch out though since the sales price matters. Sell too cheap and the profit picture may look dismal.

How do you determine sales price?

Rookies start talking or writing about how much it costs you to make soap when it comes time to price soap.

Wrong...

The price must be in line with what the competition is. Maybe a little higher will work, but not much. If your products have special features, organic soap for example, you can command a different price since you are now in a different market.

Otherwise... Your price must be roughly equal to other selling roughly the same thing.

What soap costs you has nothing to do with your cost in the short run.

So, what can you sell a 4 ounce bar of handmade soap for?

$4?

$5?

$6? Somewhere in there???

Now the more you sell the better and the more you sell the lower price you can afford to take within reason. That's because you will maximize your profit with some combination of sales price and quantity of sales.

That's why what you want is easy ways to sell large quantities in a short period of time.

That's not door to door and it's not home parties. It's not gift shops and it's not spas.

It might be festivals. It might be craft fairs. It might be wholesale even. It might even be on the Internet, but only in a certain way.

COST

First, what's it cost you to make a bar of soap? You must know.

It's different for different bars of soap, right?

Unscented costs you way less that sandalwood essential oil scented soap... Far less...

Can you even afford to make sandalwood essential oil scented soap? I don't think so!!!

Cost depends on buying at the right price and having a reasonable design as far as ingredients.

Simply, a bar of soap costs you what the total for the lye, base oils, super fat oils and scent oils cost. Get that figure in hand and you have a rough idea of what the profit is in a bar of soap.

There's far more to it of course. Labels cost you as does gas for travelling around. Books cost something as do entrance fees at shows.

But all that can only be paid out of the profit in a bar of soap.

So, what's a bar of soap cost you to make?

Is it $0.25? Higher???

How about $0.50?

Is it $1.00?

If you could sell a bar of premium soap at $5.00 and you had $1.00 in it, you get to apply that difference, $4.00, to all your other costs and to profit.

You must move many bars of soap with a $4.00 gross profit in a bar to make much money.

I have sold 500+ bars of soap in a weekend.

Then the fun begins, because many people will buy again from a website or as a result of a little mailing to your customers. That makes for easy selling and little marketing cost as well.

Bottom Line

There is potential for profit with a soap making business.

You must control cost and devise a way to move soap in substantial volume to make a soap making business go. Both are possible but not necessarily easy.

Getting the volume of sales depends on how well you market which we cover in our material about starting a soap making and selling business.