To be successful, candle-selling entrepreneurs need to learn how to price their candles so that they will sell while still making a profit. This can be tricky, as you want to set a fair price for both you and your customer. In this article, we will outline how to go about doing just that.
Calculate Your Expenses
To calculate the best price, you must start by looking at your expenses. This will give you a good idea of how much each candle costs. There are a few key things that you need to take into account when calculating your expenses:
Rent and Overhead
If you have a physical store, you will need to consider your rent and overhead expenses. This includes costs like utilities, insurance, and other similar expenses. You can skip this category if you do not have a physical store.
Cost of Materials
The next thing you need to consider is the material cost. This includes everything used to make the candle, including wax, wicks, and fragrance oil. Calculate how much these materials cost you per candle so that you can price accordingly.
Cost of Shipping
If you plan on selling your candles online, you will need to factor in the shipping cost. This includes the cost of packaging as well as the actual shipping costs. Be sure to research how much it will cost you to ship your candles so that you can factor this into the price.
Labor
Another expense that you need to take into account is labor. This includes how much it costs you to make each candle and how long it takes you to do so. If you sell your candles in person, you will also need to factor in the time it takes you to set up and take down your booth.
Marketing and Advertising
If you plan on marketing your candles, you will also need to factor this into the price. Marketing costs include creating a website, designing business cards, and paying for online ads.
Software and Web Services
If you use any software or web services to help you run your business, you will need to consider them as well. This includes using a shopping cart service, using a payment processor, and subscribing to a mailing list service. If you pay for a domain, hosting, or email service, be sure to include these as well.
Packaging
You also need to take into account the cost of packaging. This includes the cost of the actual packaging materials as well as the time it takes you to package each candle. Be sure to factor this into the price so that you can properly price your candles.
Track How Long You Worked
You also need to make sure you pay yourself. In order to do this, you need to track how long you work on each candle. This includes the time it takes you to make the actual candle, as well as the time it takes you to package and ship it.
Determine Your Profit Margin
After you have calculated all of your expenses, you need to determine how much profit you want to make. This will help you decide how to price your candles so that you can make a profit.
The average profit margin for candle-making businesses is 25-50%. This means that for every $1 you spend on making the candle or on your business, you want to make 25¢-50¢ in profit.
You can adjust your profit margin depending on how much you want to make. If you are just starting, you may want to lower your profit margin so that you can sell more candles. As you grow your business, you can raise your profit margin to make more money per candle.
Also, make sure to consider the difference between retail and wholesale prices. Wholesale prices are usually lower than retail prices, so you must ensure you have wiggle room if you plan on selling both wholesale and retail.
Final Calculation
Now that you have calculated all your expenses and determined your profit margin, you can calculate how much to charge for your candles.
For example, let’s say the total cost to run your business this month is $500. This includes materials, labor, shipping, packaging, marketing, and advertising costs.
If you want to make a 50% profit margin on your candles, you would need to sell $1,000 of product to make a profit of $500. Let’s say you aim to sell 100 candles this month. This means you would need to charge $10 per candle to make a 50% profit.
Other Tips To Keep In Mind
However, this formula isn’t strict. You may need to adjust your prices depending on the type of candles you sell, how popular they are, and how much competition there is.
For example, if you are selling soy candles similar to others on the market, you may need to lower your prices to compete. On the other hand, if you are selling unique or luxury candles, you may be able to charge more.
It’s also important to keep in mind that your prices may change over time as your business grows. For example, as you get better at making candles and become more efficient, you may be able to lower your prices. Or, as your business grows, you may need to raise your prices to meet the demand.
You will need to experiment with different prices to find what works best for your business. Be sure to track how many candles you sell at each price point so that you can make informed decisions about how to price your candles.
Start Selling Candles
Pricing your candles can be tricky, but it’s essential to make sure you are making a profit. Be sure to calculate your expenses, determine your desired profit margin, and keep in mind the type of candles you are selling. With some trial and error, you can find the perfect price for your candles.