Handmade soaps in a tub with a sign showing prices.

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Pricing your DIY skin care products correctly is essential if you want to turn that 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.

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 Products for Profit (social image)

This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links (at no cost to you). Please read the disclosure for more information.

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

To walk through this pricing exercise with me, make sure you have your invoices (or estimated prices) on hand for your:

⭐️  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.

Herbal Blend Natural Lip Balm

Pricing for DIY Organic Lip Balm

Breakdown of Ingredient Costs

*ingredient prices at the time of writing this post and 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 need 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.  

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

‘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 e-commerce 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 raw ingredients in bulk 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.
Set of 10 organic lip balms.

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.

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 e-commerce 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!

Grow Your Skin Care Business!

Browse through the resources below to boost your handmade business visibility and profitability!

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