Oct 29, 2018
Knowing how to price your skincare products is one of the most important factors in getting a viable beauty business off the ground. You're passionate about natural skincare formulation, but are you guilty of shirking the numbers? It's all too easy to get our heads in the pot enjoying making skincare but forget the nuts and bolts of running and growing a business, such as profit, retail and wholesale margins.
Spreadsheets not just formulae sheets should be your number one priority once you've decided to make a serious business out of your skincare products.
To help talk you through the numbers and how to factor enough wiggle room into your margins, we welcome a familiar face in the skincare business world, Melinda Coss. A several times entrepreneur and pioneer in the natural beauty industry, and experienced skincare business mentor, Melinda walks us through the most important things to think about in pricing skincare products. She takes us from working out the unit cost of products to the percentages retailers and distributors might expect and which you have to factor in.
We don't speak accounting jargon but we do recommend hitting replay so you can take down notes as Melinda packs in a lot of advice for new skincare entrepreneurs. This episode is a goldmine if you're currently doing back of the envelope or worse, finger in the wind accounting in working out how to price your skincare products.
So get your notebook open, and dust off your ability to do percentages. However, don't worry as you're in good company; Melinda has run and sold several successful businesses and says that with some help, savvy and willingness to learn, the number crunching can become second nature.
In this episode, you'll learn:
- Why working out your reasons for wanting to run a skincare business are key to understanding what profits you wish to make, or, simply put, why your mindset makes your market;
- How your branding and your brand's positioning in the market are critical to determining how to price your products at a level that meets consumer expectations;
- Why natural and organic skincare is rarely cheap;
- How a 'time and motion' analysis of every cost aspects of your activities in producing products will give you the insights on which to base pricing; and
- Find out how and when it makes sense to run discounts and other incentives like 'buy one, get on free', or to offer free shipping.
Melinda doesn't talk in abstract terms. She runs through some ballpark percentages that you should be aiming for when working out how to price skincare products and gives examples of other key facts and figures you need to know to run a business.
Key takeouts about how to price your skincare products include:
- Take time to work out what you wish or need to earn from your business in its first year. On that basis, you can make the financial and production forecasts required;
- Work out in minute detail your unit costs, not forgetting to factor in your hourly rate and everything relating to packaging down to the sellotape!
- Then, add on 70% and you'll arrive at your base trade costs. After that, add on 7% for contingencies so you ensure you have some leeway for costs you've not envisaged up front; and
- Remember that your figures are your most important tool. Business is about making money whatever the passion that lies behind it.
More on Melinda Coss
Find out more about Melinda Coss's Ultimate Skincare Business Masterclass, a six-month programme which starts in January 2019. It covers not only the financial aspects of your skincare business, but also takes you through an intensive training programme to get your business dream from paper to reality. Use the Formula Botanica affiliate link entering the code Hello Success to claim £500 off the Skincare Group Masterclass if you book before the 6th of November, subject to availability of places.
Melinda Coss
website.
Melinda Coss Skincare
Mastermind on Facebook.
Melinda Coss on Twitter.
Listen, Download and Subscribe to Green Beauty Conversations
Thank you for joining us for this episode of the Formula Botanica: Green Beauty Conversations podcast. If you enjoyed this episode, please share, subscribe and review on iTunes or Stitcher so that more people can enjoy the show. Don’t forget to follow and connect with us on Facebook, Twitter and Instagram.