Pricing Handmade Skin Care Products for Profit

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.

Get out your calculators, receipts, and keep scrolling!

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 was my own version of several (upon several) examples that I had seen online when I first started my business.

I used this formula for my shop and it somehow earned me enough so that I could quit my day job and become a work-from-home-mom (WARNING – I WAS STILL DOING IT WRONG!!! READ THIS ENTIRE ARTICLE FOR CORRECT PRICING!):

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

If this formula is familiar to you, you’ll understand that the below details were (what I assumed was) essential to figuring out the pricing formula:

⭐️ Ingredients (including shipping fees)

⭐️ Packaging (including shipping fees)

⭐️ Ecommerce site listing fees, transaction fees, shipping fees

To demonstrate how (I thought) I was calculating for profit, I’ll be using my organic lip balm recipe.

Base Pricing for DIY Organic Lip Balm

Breakdown of Ingredient Costs

*ingredient prices at the time of writing this post and for demonstration only

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. Or five million other details.

Inventory cost and pricing banner by Paper and Spark

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 (This is what I THOUGHT was an average for all of the ‘overhead’ used during creation such as printer ink, internet usage, electricity, equipment, packaging tape, etc…I was oh-so underselling myself.)

5% Transaction Fee

Now (I, again, erroneously thought) I had all of the exact information to plug into my 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

DOES THIS FORMULA/THOUGHT PROCESS LOOK FAMILIAR? KEEP READING!!!!

Pricing DIY Skin Care for Profit (Correctly!!!)

I would like to take a moment to emphasize the fact that I am NOT a CPA.

Obviously.

I am a certified aromatherapist, essential oil specialist, and organic skin care maker – a successful business owner for years.

And I STILL got a wake-up call as to the training, guidance, and support I needed from a qualified professional when it comes to pricing (and inventory & taxes).

I earned a profit for YEARS on my business – but not the profit that SHOULD HAVE been coming in.

Not by a longshot.

So much was missing from the formula I shared above:

an hourly wage for myself (duh).
the cost for the educational courses I was taking simultaneously (dang).
accounting software, insurance, and other professional service fees (oof).
a brand-specific profit margin that would still allow for a healthy income even during huge sales times such as Black Friday (cha-ching).

The spreadsheets by Paper + Spark help you PRICE correctly, get organized for your raw material orders, AND set you up for success come tax time.

You’ll double over in embarrassment when you see this firsthand.

(And if you’re a newbie reading this article, thank your lucky stars you’re getting this advice at the beginning.)

The spreadsheets and guidance by CPA Janet (who is also a handmade batch-maker like us) are a one-time fee and completely replace the need for other costly ongoing financial programs that rhyme with ThickThooks, FreshThooks, and Thicken.

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.