Pricing DIY Skin Care Products (for Profit and Wholesale)

Pricing DIY skin care products correctly is essential if you want to turn your hobby into a business.  If you have only made products at home for your family thus far, the pricing details and formula below will surprise you.

Yes, you’ve been told on Pinterest that ‘you can make a lip balm for twenty cents’ a pop…so you’re probably thinking that lip balms sold for $5.00 per tube are CRAZY high.

If you are looking to actually make money (or evening a living!) with your handmade skin care line, you have to factor in much more than just material costs.

Pricing DIY Skin Care for Retail and Wholesale

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Base Formula for Pricing DIY Skin Care Products

The formula below for pricing DIY skin care is my own version of several (upon several) examples that I have seen online.

There is no ONE perfect way, and others sellers may say that ‘abc’ should be added or ‘xyz’ eliminated.

I have found this formula to work incredibly well for my shop, but by all means use this as a starting point and then tweak it to your situation:

Base Price = [(Ingredients) + (Packaging) + (Listing Fees)] x Transaction Fees

If you will be walking through this pricing exercise with me, make sure you have on hand your invoices for:

⭐️  Ingredients (including shipping fees)

⭐️  Packaging (including shipping fees)

⭐️  Ecommerce site listing fees, transaction fees, shipping fees

Let’s walk through this formula step-by-step!

To demonstrate exactly how to calculate for profit, I’ll be using my organic lip balm recipe.

Pricing for DIY Organic Lip Balm

    Breakdown of Ingredient Costs

    *actual product prices subject to change

    Organic Beeswax: $11.95/16 oz = .75 per oz. Recipe has 3 Tbsp, so .75 x 1.5 = $1.12

    Organic Shea Butter: $12.95/16 oz = .80 per oz. Recipe has 1 Tbsp, so .80/2 = $0.41

    Organic Coconut Oil: $7.99/14 oz. = .57 per oz. Recipe has 3.5 Tbsp, so .57 x 1.75 = $1.00

    Vitamin E: $11.99/591 drops = .02 per drop Recipe has 4 drops, so .02 x 4 = $0.08

    Ingredient Price Per Tube

    The calculations above are for one batch of our lip balm.

    Each batch in my organic lip balm recipes makes approximately 17 tubes. 

    We ned to add the amounts above and divide by 17 to get the cost of ingredients for each tube.

    1.12 + 0.41 + 1.00 + 0.08 = $2.61 / 17 tubes = $0.15 per tube

    This calculation is how certain bloggers say,

    “I made my own lip balm at home for ONLY FIFTEEN CENTS!!!” 

    Technically, yes…but they spent $44.88 to do it.

    Not including packaging.  

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      Breakdown of Packaging Costs

      Lip Balm Tubes: $23.49/100 = 0.24/each

      Shrink Wrap: $26.87/500 = .05/each

      Shipping Mailers: $12.95/50 = 0.26 each

      Business Cards: approximately 0.50/each

      Labels: $14.95/375 = 0.04/each

      Muslin Bags: $16.99/50 = 0.34 each

      Thank You Notes: $19.99/1,000 = 0.02/each

      Samples: approximately 0.20/each

      Packaging Price Per Tube

      As you can see, this is where your business branding completely impacts the cost of your product – you are selling an experience, not just a balm.

      Your decisions in materials, unboxing, and shipping all matter!

      0.24 + 0.04 + 0.05 + 0.34 + 0.26 + 0.02 + 0.50 + 0.20 = $1.65 per tube

      Avery WePrint

      ‘Listing’ Fees

      0.20 Etsy listing fee

      0.25 office supplies (I include office supplies under listing fees for ease of calculation…you will see other makers go about this different ways. This is an average for all of the ‘overhead’ used during creation such as printer ink, internet usage, electricity, equipment, packaging tape, etc.)

      5% Transaction Fee

      *Depending on your ecommerce platform, remember to factor in all of the things you pay for, such as shipping label services, collecting/remitting sales tax, website fees, plugin costs, etc.

      Now we have the exact information to plug into our formula:

      Base Price = [(Ingredients) + (Packaging) + (Listing Fees)] x Transaction Fees

      Lip Balm Base Price: [(0.15) + (1.65) + (0.45)] x 1.05 = $2.36/each

      Points to Note:

      • Most profit calculators will suggest that you also factor in the time you spend on creating your products.  While this is sound advice for services, I find it tricky to calculate that on handmade items such as ours.  Instead, when I am able to purchase ingredients or packaging in bulk, I keep my pricing the same – this results in a higher profit margin (thus, more ‘take home’ pay).
      • This base price is a starting point.  It lets you know what you absolutely cannot sell your product under in order to earn a profit.
      • Since packaging is the majority of our product costs, there is so much room for flexibility when grouping your products in bundles.  For example, selling your lip balms in sets of 6 or pairing a lip balm with an eye cream for a gift set listing.  This drops the price considerably for you and your customer.

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      Pricing DIY Skin Care for Retail

      Lip Balm Base Price: [(0.15) + (1.65) + (0.45)] x 1.05 = $2.36/each

      Price for your site = Base Price x 2 (if not pricing for wholesale)

      $2.36 x 2 = $4.72 Retail Price

      This is YOUR product line. If you feel like rounding this number up to $5 so it’s even, then do!

      If you want to match a certain competitor and bring the price down to $4.25 or other, then do!

      Keep in mind that there’s an art to raising and lowering your prices while retaining your current customer base.

       

      Discounts

      After pricing out your entire skin care line, put together a spreadsheet of all individual products, gift sets, combinations you will list along with the discounts precalculated.

      This way when it’s time for a sale or a customer asks for a bulk deal, you don’t have to break out the calculator over and over again:

      Discount 1: 10% off your site price

      $4.72 x 0.1 = 0.47 • $4.72 – 0.47 = $4.25

      Discount 2: 20% off your site price

      $4.72 x 0.02 = 0.94 • $4.72 – 0.94 = $3.78

      Discount 3: 25% off your site price

      $4.72 x 0.25 = 1.18 • $4.72 – 1.18 = $3.54

      Pricing DIY Skin Care for Wholesale

      The best way I have found to see if one of my products will still be profitable for wholesale is to calculate if my base price can be multiplied by 3 (instead of 2) to sell on my site and still be in the same ballpark as similar retailers.

      In that case, your product pricing spreadsheet would be set up as follows:

      Price for your site = Base Price x 3

      Discount 1: 10% off your site price

      Discount 2: 20% off your site price

      Discount 3: 25% off your site price

      Wholesale pricing = Site Price / 2

      MSRP = Wholesale price x 2 (same as your site price so you match no matter where your customers see your product)

      • As you gain a larger and larger customer base, you will be able to purchase more of your supplies in bulk.  This will continually change your profit margin.
      • After you start buying in bulk, recalculate your base price and spreadsheet above to see if wholesale is right for you and your situation (financially and in terms of storage space)!  
      • While it is tempting to scream YES!!!! when the first company approaches you, remember to be realistic with your time management – getting a request for hundreds of units is so very exciting, but not always possible if you’re also juggling another job, managing your household, running kids to activities, etc.
      • You are in charge.  If you know now is not the time but the idea is intriguing to you, start a spreadsheet of interested companies, their contact information, and what items they wanted.  Reach back out to them when you are ready to grow your business in this direction.

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      Does Your Pricing Seem Off???

      What happens if you do all of the math outlined above and your prices just seem crazy high compared to other shops?

      A few troubleshooting tips for you:

      Tip 1: Compare Correctly

      Are you comparing apples to apples?

      There are tons of skin care products that are advertised as ‘natural’ but really made with fragrance oils and synthetics. Essential oils and organic ingredients are more expensive – and worth the cost!

      Make sure you are actually comparing a similar product.

      Tip 2: Bulk Purchasing

      Remember that a lot of successful product makers are buying in bulk.

      If you’re not there yet, don’t sweat! If you are okay with getting a slightly smaller profit margin now, you could price similarly to other sellers knowing that you’ll be buying in bulk later.

      Tip 3: Allocate Fees

      Many ecommerce stores have a separate section for you to add a shipping and handling fee.

      This means you could put the price of your shipping materials or office supplies in the shipping and handling portion without it being reflected on your listing price.

      Tip 4: Average Out Your Margins

      Do calculations for ALL of the products in your shop first before stressing too much about it.

      You will find that some of your products have a HUGE profit margin, whereas others have a smaller one.

      Advertise the higher profit products more heavily and make adjustments to the prices that you think are too high. Businesses do this ALL the time.

      Tip 5: Analyze Your Product Line

      Still too high? Maybe you need to own up to that and get luxury packaging so that the exterior of your product matches the superior ingredients you have chosen!

      Perhaps you need to be marketing to a completely different target market!

      (Prime example of it being a good idea to do this pricing exercise before you purchase all of your packaging/ingredients/marketing materials.)

      Whichever way you settle on pricing your diy skin care line, make sure you’re using a streamlined spreadsheet.

      Having everything together all in one spot will help with accuracy and will keep communication with your customers much more efficient.

      Happy calculating!

      Pricing your DIY skin care products is just one step to check off your list when either LAUNCHING for the first time or REBRANDING your line.

      Get insight and visual tutorials on SO MUCH MORE, such as color palettes, font pairings, product packaging, photography, customer service, website sections and visual elements.

      Take a look inside Branding Natural Essentials, the step-by-step Skin Care Business Branding Guide:

      Skin Care Business Branding Ebook and Workbook Flatlay

      SPREAD SOME LOVE BY PINNING THIS TO YOUR HANDMADE BUSINESS, ECOMMERCE, AND DIY SKIN CARE PINTEREST BOARDS!

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      Author, Christine Glaser
      Author, Christine Glaser

      Organic Skin Care Formulator, Skin Care Business Coach

      Christine has spent the last decade making and selling natural skin care products on Etsy, Shopify, Woocommerce, Wix, Squarespace, +++. She is passionate about teaching other makers in the handmade industry how to build and grow successful businesses from home.

      Christine Glaser, owner of DIY Skin Care Business and DIY Skin Care Mompreneur

      Hey there, I’m Christine.

      I teach creative natural-living-lovers how to build handmade skin care businesses from their homes…

      …on a part-time schedule…without the overwhelm.

      Let’s work together to spread the importance of chemical-free living!

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