Monday, April 13, 2015

Top Handcrafted Soap and Cosmetic Trade Associations And Why You Should Join


Are you wondering if you should join an industry trade association?  


I joined the Handcrafted Soap and Cosmetic Guild in 2009 and have remained a member.  I have used a lot of their member benefits and have been to multiple conferences.  In fact, I teach at the conferences these days.  I have certifications through the guild and appreciate their work to lobby for its members.  I would certainly recommend them, but feel you should learn a little bit about your options, which are kind of slim in the handcrafted industry.

Let's take a look at the benefits of the major ones.

A trade association is an organization founded and funded by businesses that operate in a specific industry. An industry trade association participates in public relations activities such as advertising, education, political lobbying and publishing, but its main focus is networking.
Associations may offer other services, such as producing conferences, networking or charitable events or offering classes or educational materials. Many associations are non-profit organizations governed by laws and directed by officers who are also members.
  • Handcrafted Soap and Cosmetic Guild (HSCG)
  • Indie Business Network (IBN -formerly Indie Beauty Network)
  • Guild of Craft Soap & Toiletry Makers (GCSTM)

Handcrafted Soap and Cosmetic Guild (HSCG)


Taken from their website:
The Handcrafted Soap & Cosmetic Guild is the only international non-profit trade association serving the handcrafted soap and cosmetic industry. The object and purpose of The Handcrafted Soap & Cosmetic Guild is:
  • to promote and educate the public about the handcrafted soap and cosmetic industry;
  • to act as a center of communication among, and to circulate information beneficial to, members of the handcrafted soap and cosmetic industry;
  • to foster the handcrafted soap and cosmetic industry through education and training; and
  • to represent the handcrafted soap and cosmetic industry in matters concerning legislation and regulations affecting the industry.
Membership is open to all soap and cosmetic handcrafters anywhere in the world who make any type of handcrafted soap and/or cosmetics, as well as to the vendors who provide products and/or services to the handcrafted soap industry.
Benefits include:
  • $1M Product Liability Insurance
  • Free webstore and business listings
  • Numerous discounts with vendors
  • Soapmaker Certification Program
  • Annual Conference

Costs (annually):
  • $100 Professional membership
  • $480 with insurance in US
  • $500 with insurance in CA

Taken from website:
The Handcrafted Soap & Cosmetic Guild's Soapmaker Certification Program was undertaken in order to encourage and promote the highest professional standards among HSCG members. The Program also presents criteria by which members can measure their soap making knowledge and skill as well as creates a centralized repository for industry-standard information and resources. 
The Certification Program benefits the handcrafted soap making industry as a whole by establishing an industry-wide standard of excellence in soap making. Achieving these certifications will benefit the member as it demonstrates dedication to professional standards and builds credibility with customers.
There is NO certification program that is recognized by the governing bodies of most countries.  This is not the same as being permitted to sell (or certified to sell) these products within the EC guidelines.

Indie Business Network (IBN)


Taken from website:
Launched in 2000 by award winning home-based business advocate Donna Maria Coles Johnson, Esq., Indie Business Network is the first trade organization serving manufacturers of handmade soaps, cosmetics, candles, artisan perfumes, aromatherapy products, jewelry, baked goods, confections and other artisinal consumer products. 
Benefits include:
  • Educational materials
  • Liability insurance
  • Supplier discounts
  • Business promotions
  • Indie Cruise

Costs (annually):
  • $150 Membership
  • $398 Additional for insurance in US

IBN is run by an individual for profit.


Guild of Craft Soap & Toiletry Makers (GCSTM)


Taken from website:
The Guild of Craft Soap and Toiletry Makers (GCSTM) is a non-commercial organisation which provides information and guidelines about handmade soap crafting and the EU legislation that regulates the cosmetics and toiletries industry. 
GCSTM is run by volunteers who give their time freely for the benefit of both our members and the profession as a whole. The Guild operates an open admissions policy and membership is FREE to any soap or toiletry maker who holds safety assessments for their product range. 
The Guild has two very specific aims:
  • To raise awareness of the legislative standards that are in place that apply to craft soap and toiletry products
  • To register as members of the Guild crafters who work in compliance with this legislation and who hold relevant public liability insurance
There are a handful of smaller soap and cosmetics groups, which offer the following:
  • Networking
  • Conferences or Events
  • Supplier Discounts
  • Industry Education

There are also numerous associations for larger businesses in cosmetics and fragrance.

You may want to consider joining local organizations such as a Chamber of Commerce, as these often offer networking opportunities outside of the industry.

Are you a member of a trade association?  How do you feel about your membership?  Share comments below.  Just click on the number of comments to open the text box.

Soapmaking, Bath & Body and Candle Making Classes
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Monday, April 6, 2015

Starting a Soap or Cosmetic Business Is Like Being On a Roller Coaster


Starting your own business of any kind is a lot like being on a roller coaster.  Some days you may be excited, while other days you are downright terrified.  Okay, so maybe you are terrified the entire time.  While the feelings for the ride fluctuate, the laws of physics still exist.

If you don't take the time to buckle your seat belt, you could end up flying off the ride.  

Now you are probably thinking that the first part of that analogy made some sense, while the seat belt comment lost you.  The seat belt is a just metaphor for educating yourself on how to run a business to keep it safer.  While that roller coaster ride may end up being your greatest adventure, it could still be a catastrophe, regardless of the seat belt.  But without a seat belt (or education) you could very well be doomed.  It makes you feel more confident on the ride, too.

There are different methods of educating yourself, including plenty of good business books you can read about starting your own company.  Simply check out your favorite book store and be sure to read the reviews.  There are also lots of great free courses by SCORE, which I highly recommend.  The only problems with these books and courses is that they apply to any business of any size and do not address the special needs of the soap or cosmetic maker.

There is only one course specific to soap and cosmetic businesses, and that's the one created by us at Bath Alchemy Lab.

In our class, you'll gain the know how to start a business, making you feel more confident and keeping you on the path to success.

This course teaches you...

Before you start

  • How to know if owning a business is right for you
  • Determine if you have a business or a hobby
  • The importance of choosing the right name
  • How and why to find a niche

Getting started

  • Business start-up checklist for success
  • How and why to write a basic business plan
  • Start up costs to consider and funding options you might not have thought about 
  • Choosing your business structure for tax purposes
  • Finding the correct registrations, licenses, and permits in your area
  • The differences between trademarks, patents, and copyrights in layman's terms

Money matters

  • Pricing your products for profit
  • Bookkeeping 101 - the basics

Soap and cosmetic considerations

  • Trade association memberships and their benefits
  • Why you need product liability insurance and where to find it
  • A primer on labeling and good manufacturing practices
  • Soapmaker Software to track your business

Selling your products

  • Everything you need to know to start selling at craft and trade shows
  • Getting started in an online web store
  • Important considerations for wholesale and consignment

Marketing 101

  • Branding your business for success
  • Basic marketing principles
  • Crash course in social media marketing 

It's a little of everything to start a successful soap and cosmetic business.  There's over 8 hours of slideshow videos plus a manual with added examples and resources.

If you are nervous about starting your own business and want to set yourself up for prosperity, sign up for the online business class.  You can work at your own pace, anywhere in the world at any time.  You have lifetime access to the content and can ask questions throughout the course.

Start the business of your dreams today!


Soapmaking, Bath & Body and Candle Making Classes
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Monday, March 30, 2015

New Online Soap Making Class - Spring Fling


Yay!  Time for a new class sampler.  Are you ready to give these techniques a try?  Go to the Bramble Berry site to join.
This course contains 5 soap designs that demonstrate one or more intermediate to advanced soapmaking techniques.
  • Springtime Lavender Pinwheels - created using a free pour and swirl technique
  • Egg Hunt Pot and Drop Swirl - multiple pot swirls are created and dropped into soap
  • Easy Chevrons - stripes are layered and a hanger is dragged through soap
  • Carnation Pink Lattice - a simple lattice is 'carved' and decorated with candy balls
  • Rainbow 'True' Peacock Marble - a peacock in the soap industry is called a bouquet in paper marbling. A 'true' peacock marble (as traditionally named in paper marbling) is a series of striped arches creating a soap that has lots of mini rainbows.
While our classes at Bath Alchemy Lab follow a progressive curriculum building upon each new skill learned, this course is more of a sampler of various techniques from several different courses we offer. It is a great way to learn a variety of techniques in a short class. While the lessons are thorough, if you find that you are lacking some of the theory and skills you need to be successful, you can optionally take any of our full courses at Bath Alchemy Lab.
Watch the teaser!

Do you have questions?  Leave in the comments below.
Soapmaking, Bath & Body and Candle Making Classes
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Wednesday, March 25, 2015

How to Adjust Your Prices While Maintaining a Profit


First, you may want to read the two posts that lead to this article.


Let's say after reading my previous pricing posts, you feel your prices are way too high for your market.  Perhaps, you did your calculations using the formula provided and your price per bar of soap was $22, while your neutrally priced competition are selling soaps for $8 or 9 each.  In case you forgot, this is your pricing formula:

Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail

What do you do?  Start by checking your figures.

  1. Double check your math.
    Make sure you plugged in everything correctly in the formula and made no math errors.  Did you figure the amount a full batch of soap costs to make but forget to divide it by the number of bars in a batch?
  2. Are you charging a reasonable rate for the labor?
    Labor should be figured at a reasonable amount that you would pay an employee to make the soap or cosmetic (or whatever you are making).  You might think your time is worth $30/hour, but would you pay an employee to make it at that rate?  Uh..no!  Then lower this amount to reflect what you would pay someone.
  3. Is your profit reasonable?
    You may be pulling a number out of the air, but it needs to be reasonable.  Perhaps $12 per bar of soap is too high for the profit, unless of course, you are using a premium pricing strategy.  Then you can use a high profit expecting to make fewer sales.
  4. Are your expenses through the roof?
    You can't be running a business with expenses of $10,000 per month when you only produce 10 bars of soap.  You may need to refigure your expenses (especially if you are making a projection), or you need to cut your expenses.  Maybe you don't really need an expensive studio when you make 10 bars of soap per month.
Now, let's say all your figures are correct, and your $22 soap is too expensive for your market.  How do you fix it?

There is only one answer - cut your costs.

  1. Start by shaving your expenses.
    Get rid of everything you don't need to efficiently run your business.  Perhaps you can do your own day to day bookkeeping and only pay a CPA during tax time.  Will taking a free class with the SBA (Small Business Administration) help?  Can you wait on investing in top of the line equipment until you are profiting?  Maybe turning the A/C off in your shop at night can lower costs.  Think of every way to shave things down, including if you are making projections.
  2. Rethink your ingredients/ materials.
    You may want to use real sandalwood essential oils in your products, but unless you are using a premium pricing strategy this may not be doable.  In fact, it isn't doable.  Try using amyris essential oil instead.  It has a similar scent for a fraction of the cost.  If your 80% shea butter soap is too high, try using 20% and choosing a nicely priced oil for the 60%, such as sweet almond oil.  Go through each ingredient and see if there is a comparable replacement that will lower costs while not compromising your recipe.
  3. Work more efficiently to lower labor costs.
    Sometimes, you may need to invest in slightly better equipment in order to save money.  For example, you could buy silicone liners for your molds to cut down the time it takes to line them with paper.  Maybe investing in a professionally printed box or label will cut down time spent printing and cutting your tags for soaps you wrapped manually with fancy paper.

    I once had a lady tell me that she lined a cardboard box with a trash bag to use as a mold at the suggestion of a soap teacher.  Sure this was an inexpensive way to make some practice batches of soap.  But she spent so much time shaving down her soaps so there would not be wrinkle imprints that she was not making money.  Additionally, she was throwing away the bits she cut off.  Essentially, she was wasting her valuable time and a portion of the batch.  By buying a mold she didn't have to line, she was able to save while keeping her sanity.
Even if your costs are low and your product is priced right, you may want to use a few of these tips to create a larger profit for yourself.

What can you do to lower your costs?  What can you do to increase profits?  Share what you come up with in our comments below.


Soapmaking, Bath & Body and Candle Making Classes
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Friday, March 20, 2015

How to Price Your Products for Profit



Our previous post discussed pricing strategies to consider.  If you missed it, you can find it here.

In this article, we will take you through the next step - pricing your products.  Let's walk you through the formula.  While this example is for soap, the formula will work for any product.


Formula


Materials + Labor + Expenses + Profit = Wholesale x2 = Retail

  • Materials (COGS) - Make sure to cover all your material fees. 
  • Labor – How much would you hire someone else to do the work? 
  • Expenses – Determine the costs of rent and utilities, fees online, office supplies, advertising, etc.


Materials (COGS)


Your cost of goods lists your materials that you purchase for use in a product.  Below is a description of how to determine the material costs for a bar of soap.  Since soap is made in batches, we find the COGS for the entire batch and then divide it by the number of bars we got out of the batch.

Bar of soap (materials):

Materials for a 5lb batch that will make 15 soaps 
Oils $8.74
Lye & Water $1.30
Additives $7.03
Packaging $5.27 
Total $22.34 

Divide by 15 bars to get the price of each bar

$22.34 ÷ 15 = $1.49

Labor


You need to pay for the labor to make the soap, whether you are paying yourself to make the soap or paying an employee.  

Bar of soap (labor):
$10 per hour x .75 = $7.50
Divide by 15 bars to get the price of each bar
$7.50 ÷ 15 = $.50

Expenses 


Let's face it.  You spend a lot more money to run your business beyond the cost of the materials.  There are advertising costs, printing your business cards and flyers, water and electricity to make the soap and power your office, fees for your website and the internet, insurance, fees for attending a craft show, and more.  All of this needs to be included in your product.  Take your yearly expenses (not materials to make the soap) and divide by 12 months.  If you are a new business, research a little and estimate what you may spend each month.  Think of all aspects of running the business.  

Bar of soap (expenses per month):
Rent $65
Utilities $15
Internet fees $10
Misc. $10 
Total $100 
Divide by number of soaps we would like to see per month (2 per day x 30 days)
$100 ÷ 60 = $1.67

Next you need to figure out how much you can reasonably sell on average each month. Sometimes this is just a goal. How much do you want to sell per month (maybe two items per day)? Divide the expenses by your monthly sales goal.  Here is an example.  We have $100 in monthly costs and we sell or will sell an average of 2 soaps a day per month (30 days).


$100 monthly costs ÷ 60 items = $1.67


Profit


Profit – This is something you will just have to come up with on your own without a formula. Sometimes, you can work the rest of the formula out without the profit to get an idea of the price the bar may end up being and then add in a reasonable profit. Perhaps $.25 - $1.00 per item if moderately priced? This is entirely up to you. For this example, we felt $.25 was probably a good profit for each bar of soap.


Bar of soap (profit):

Profit per bar $.25


Final costs:


Materials + Labor + Expenses + Profit = Wholesale x2 = Retail
$1.49 + $.50 + $1.67 + $.25 = $3.91 ($4) X 2 = $8 

Wholesale = $4
Retail = $8


Applying Pricing Strategies


As you can see, this price wouldn’t work for penetration pricing as you wouldn’t be able to compete unless you bought in bulk, streamlined production, and lowered profit per bar.


Moderate would work. Many handmade soapmakers sell their soaps at $6-9 per bar depending on ingredients, location, etc.


Premium pricing would require you to increase your profit. Premium soaps would sell for $10-15+ per bar, but your brand, photos, packaging, etc. would all need to warrant this price.


Try the pricing formula and see where you land. Share what you have found and by all means ask questions.


In the next article, we'll explain what to do when your prices seem too high.

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Wednesday, March 18, 2015

3 Pricing Strategies for Small Business



Pricing Primer

Pricing products is a tricky task. When running a business, you want to make a profit, but you don’t want to price yourself out of the market. There are numerous formulas listed on the Internet you can try.
Before diving into formulas for pricing, consider your pricing strategy and how this will align with your marketing.


Strategy #1 – Premium Pricing


This attempts to take the maximum amount of money from the fewest customers. It’s a luxury brand strategy.
  • Branding, photos, descriptions are critical
  • Focus on brand building
  • Takes time to build, therefore sales are slow in the beginning
  • High profits, but very few customers

Things to be aware of:
  • Do not use sales and gimmicks 
  • Do not have price wars

A marketing strategy used by luxury retailers is to use a price decoy. A luxury retailer sells an item for $2,000, but has a price decoy item for $300. The rich will take the $2,000 item, which others will envy. The moderate shoppers may purchase the $300 item to have a chance to own something by the luxury brand, usually for status.


Strategy #2 – Neutral Pricing


This attempts to keep your prices similar to your competitors – not too high, not too low.
  • Branding, photos, descriptions lead to a loyal following
  • Focus on ways to get customers beyond pricing 
  • Less opportunity to gain high profits per transaction or very high sales volume
  • Moderate profits, moderate transactions

Things to be aware of:
  • This is a safe zone
  • Do not have price wars

Since this is a safe zone where most companies price similarly, you will have to get creative with how you will attract and keep customers.


Some things you can try are:
  • Loyalty rewards
  • A unique experience
  • Top-notch customer service
  • Giveaways and free samples


Strategy #3 – Penetration Pricing


This attempts to keep your prices as low as possible and bases sales on a high volume of transactions.  This might seem like a good idea, but you may not be able to compete
  • Profit is extremely low, and you will have to work to streamline your process and do more work for less money
  • Concept is to penetrate market with very low prices to take market share
  • Low profits, many transactions

Things to be aware of:
  • Very difficult to survive this strategy
  • Price wars are the key

Our next article will tell you exactly how to price your products correctly.  But first think of your pricing strategy.


Are you a luxury brand, a bargain brand, or somewhere in the middle?  Will any of these strategies help you solidify where you stand in the marketplace?  Share your thoughts.

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