Pricing your 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.

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Base Pricing Formula for DIY Skin Care Products

The Profitable Pricing Formula that I will show you below is my own version of several (upon several) examples that I have seen online.

There is no ‘perfectly right way’, and other sellers may say that ‘abc’ should be added in 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

To determine the selling price of your products,  you will need to know the price of your ingredients, packaging, if your ecommerce site has any listing fees, transaction fees, shipping fees, etc.

*When calculating the price for your ingredients and packaging, don’t forget to include any shipping costs that you incurred to get the products – those details ADD UP!

I’ll walk you through this formula step-by-step!

To demonstrate exactly how to calculate for profit, I will be using my natural lip balm recipe and the average prices from our Ingredients page.

Ingredients for Organic Lip Balm:

Breakdown of Ingredient Costs*    ( 1 oz = 2 Tbsp  ••• 1 oz = 591 drops)

*costs at the time of writing this post – subject to change daily

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 in the above table are for one batch of our lip balm.  Each batch in my natural lip balm recipe makes approximately 17 tubes. We need to add the amount up 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.  

Packaging for Organic Lip Balm:

Breakdown of Packaging Costs*

*costs at the time of writing this post – subject to change daily

Lip Balm Tubes:

$23.49 / 100 = 0.24/each

Labels:

$14.95 / 375 = 0.04/each

Shrink Wrap:

$26.87 / 500 = .05/each

Muslin Bags:

$16.99 / 50 = 0.34/each

Shipping Mailers:

$12.95 / 50 = 0.26/each

Thank you notes:

$19.99 / 1,000 = 0.02/each

Business Cards:

Approximately 0.50/each 

(when purchased from Moo.com)

Samples:

Approximately 0.20/each

(will vary GREATLY per item)


Packaging Price Per Tube:

As you can see, this is where your own branding completely impacts the cost of your product – you are selling an experience, not just a balm.  Your decisions in materials, extras, and shipping all matter!

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

Listing Fees:

0.20 listing fee (for Etsy, as an example)

0.25 office supplies (I added this in on my own….you’ll 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.)

Transaction Fees:

5% Transaction Fee (for Etsy, as an example)

*If you don’t sell on Etsy, remember to factor in all of the things you pay for that’s included in Etsy’s transaction fee, 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.

Pricing Your DIY Skin Care Line 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

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 other Etsy shops and bring the price down to $4.25 or other, then do!  Keep in mind it’s difficult to raise your prices after lowering them and still keep your current customer base.

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 0.2 = 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

I highly recommend putting together a spreadsheet for ALL of your individual products, gift sets, and any combination you will list on your site along with the discounts above precalculated:

ProductSite10% off20% off25% off
Single lip balm$4.72$4.25$3.78$3.54

That way when a bride-to-be messages you and says, “can I get a discount for getting 20 sets of ‘abc’ product?” or it comes time to advertise your sales on social media, you don’t have to break out the calculator over and over again.  

Put in the work NOW for TONS of saved time later!

Pricing Your DIY Skin Care Line for Wholesale

After you have been selling for awhile, have everything down to a science and are working efficiently, you may be interested in wholesale inquiries.

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 other sellers.

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.

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:

COMPARE CORRECTLY

First, make sure you are comparing apples to apples.  There are tons of lip balms that are advertised as ‘natural’, but are really made with fragrance oils and other synethics.  Essential oils and organic ingredients are more expensive – and worth the cost! Make sure you are actually comparing a similar product.

THE POWER OF BULK PURCHASING

Remember that a lot of successful product makers are buying in bulk.  You will get there, too!  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.

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 actual listing price.

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.

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!

LOOKING FOR HIGH-CONVERTING SKIN CARE RECIPES?

The best way to give ‘cushion’ to your pricing is to make sure you have a variety of products to offer that have different profit margins.

Creating Natural Essentials, my Natural Skin Care and Wellness Recipes ebook, was written (by yours truly) specifically for handmade skin care entrepreneurs…or those that aspire to be!

I included every ingredient, every recipe, and every ecommerce listing that I used to take my handmade skin care shop from earning $30 a month to a full-time income.

This ebook provides you with:

  • products (and their step-by-step recipes) that are popular for ONLINE sales
  • business notes about what DOES and DOES NOT work for each product category
  • listing ideas for gift sets and bundles
  • hyperlinked ingredients and resources for quick & easy access

Click below to get this game-changing recipe book sent to your inbox…on the house!

Do You  Have Any Other Tips for pricing your DIY Skin Care line?

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Author, Christine Glaser

Author, Christine Glaser

DIY Skin Care Mompreneur, Treesnail Natural Essentials

Christine has spent the last decade making and selling natural skin care products on Etsy, Shopify, Woocommerce, Pattern, Squarespace, +++. She is passionate about teaching other makers in the handmade industry how to build and grow successful businesses to help spread the importance of chemical-free living.

Follow on Instagram: @diyskincaremompreneur