If you ever thought of making and selling your soaps, You must read this article. We'll talk about how to correctly price your soaps.

This is very important, as you need to know exactly how much a bar of soap costs you to make.

Pricing is extremely important for any business to maximize profit. Why?

Simple.

If you price your soaps too low - you end up loosing money you should be making.

If you price your soaps too high - you loose customers and sales you should have made (because they buy from your competitor, where it's cheaper).

Do you see why correct pricing is so important? ;-)

So, let's begin.

All the numbers below are merely examples. Your numbers will be different:

1. FIXED COSTS:

All the costs you have before making one bar of soap, per month:

Rent: $150 (one room of your house is used for soap making)

Phone: $70

Water: $10

Electricity: $20

Insurance: $20

Equipment (pots, spoons, thermometers, moulds etc.): $30

(let's assume I spend $360 per year in equipment)

So, the total for fixed costs is : $300 per month.

If you make 1,000 soap bars per month, your fixed cost per bar would be:

$300 / 1,000 = $0.3 per bar

2. RAW MATERIALS

Let's take a simple soap recipe to make things easier here:

Olive oil: $11 for 128 oz.

Coconut Oil: $14.01 for 128 ounces

Palm oil: price $14.01 for 128 ounces

Lye: $4.50 for 16 ounces

Distilled water: $.99 for 128 ounce

So, the total raw material costs for making

a batch of 96 bars is $44.51, or $0.46 per bar.

3. LABOR, LABELING & WRAPPING

Let's tally the labor, labeling and wrapping:

Labor: 1/2 per batch of 96 bars

(if you're skilled). At a cost of $15 per hour,

this comes to $7.5 per batch, or $0.07 per bar.

Labeling: (cost of paper, printer and ink - for small batches you can use your home computer and printer) - comes to about $0.07 per bar

Wrapping - If you are skilled, you can wrap and label every soap bar in 1 minute of labor. This comes to $0.25 wrapping cost per bar.

4. LET'S SUM IT ALL UP:

Fixed costs per bar: $0.3

Raw materials per bar: $0.46

Labor per bar: $0.07

Labeling per bar: $0.07

Wrapping per bar: $0.25

TOTAL COST: $1.15 PER BAR

So if you sell every bar for $2-4, you make a nice profit.

Of course, if you want to use more expensive oils in your soaps, you will have bigger costs, but you can also sell your soaps for larger profits.

Another thing to consider is that you can reduce your costs dramatically by ordering materials in larger amounts, and making bigger batches. This can reduce your costs at %30 per bar! So please consider that after you make your first batches.