Are you looking for the best tips and strategies to price homemade candles? If YES, here are 7 great tips and strategies to price homemade candles. In the United States and almost everywhere around the world, it is possible to make money making and selling candles from home. However, you will have to realize that your profits will more or less depend on the number of sales, candle price, cost of ingredients, and customer acquisition costs.
According to reports, the profit margins for a homemade candle range between 50 to 70%. However, to ensure that you make money selling candles, you must focus on providing quality candles while reducing your expenses.
Note that the faster you can make quality candles, the earlier you can grow your business. If you can make quality candles that entice customers, then it is only a matter of devising a means to attract them. Also, note that the biggest setback with homemade candles is the labor-intensive process to make each candle. A good number of homemade candle businesses will involve you doing most of the work, however, pricing is still an area to pay serious attention to.
Have it in mind that setting your candle price is a foxy process. If you attempt to price your candles too high, then no one will buy them; and if you price them too low, then you will lose money. A simple price increase of $1 per candle will give you an additional $100 for every 100 candles sold. For a candle business, that’s quite enticing.
Coming up with your prices includes surveying your competitors and being aware of how much money your customers can afford to give until they stop buying. However, remember not to sacrifice the quality of your candles for the sake of profits. New candle makers can expect to earn around $500 and $1,000 per month. Homemade candle makers can expect to make around 50% to 70% profit margins. Meanwhile, having employees will reduce your profit margin so you will be earning between 25% and 50%.
Tips and Strategies to Price Homemade Candles
Pricing is without doubt an ongoing adventure for you and your business. To help price your homemade candles adequately, here are tips and strategies to consider.
Calculate Your Basic Material Cost
Most successful candle shops can tell you how much every component of the candle costs. Note that this is very necessary because you will lose money if you don’t charge at least the same price as the total cost of the materials used to make the candle.
Indeed, this might seem simple and easy, but a good number of beginner candle makers cut their costs so much in a frantic attempt to make easy sales. To properly find out your material costs, break apart every component of the candle. If your product line has multiple candle varieties, this exercise can be done for each kind.
Do Your Research
Although you can have your pricing formula, however, it is up to you to research other sellers, find out what they are charging and tweak your product mark-ups where relevant. Some necessary questions to ask include:
- How much are competitors charging for a similar product?
- How does the quality compare to your product?
- Are they using sustainable materials or organic ingredients that might justify a higher price?
- Do they charge for shipping or incorporate the cost into the overall price?
Decide On Your Mark-Up
Simply put, your mark-up is the amount added to your production cost to settle on your selling price. A mark-up is more or less a percentage, and once you’ve realized your overall cost, you need to double it to obtain your wholesale price and then double it again to reach your retail price. Note that everyone’s idea of what is acceptable profit is different, so there isn’t a hard and fast rule.
Know Your Labour Costs
In this line of business, it can be quite easy to ignore the time you put into your business when you are creating something you love. You can calculate your labor costs by leveraging the formula: Manufacturing Time x Hourly Rate. If it takes you three hours to make a candle and your rate is $10 per hour, your labor costs are $30.
Quantify Your Premiums And Intangibles
Always remember that your product is a mixture of Objective and Subjective. The objective component is everything you can measure – material costs, overhead, equipment, etc. The Subjective costs are those aspects of your work you charge for that aren’t measured easily. When quantifying your premiums and intangibles, always remember these three questions.
- Who are you selling candles to?
- What sort of candles are you selling?
- What is your market position?
Offer Extra Value To Stand Out
According to reports, the market for original and homemade products is growing massively. The growth in the industry buttresses the fact that many consumers value high-quality, bespoke items over cheaper options. Owing to that, if you want to sell at a higher price than the competition, there are a few ways you can make your items feel premium and attract customers who are eager for something special.
- Include a short, handwritten note with each order
- Entice customers by including a gift box or beautiful packaging
- Offer bespoke options at an additional cost, like the chance to include a personal message on your product’s label
- Make your packaging eco-friendly to attract sustainable shoppers
- Include a small gift with orders above a certain amount
Test And Refine Your Pricing
If you aim to turn your passion for homemade candles into a profitable business, then it is necessary to spend time finding the right prices. Have it in mind that some people love to create and are quite satisfied just having their creative item go to a new home. However, if you want to sell in shops and make it a proper business, then you have to get your prices right.
Consider reviewing your pricing annually to benchmark it against material costs, or you can even do it every month or two when you first start. Note that business Platforms like Etsy are vital since the costs are low if you aren’t selling anything, and it gives you plenty of space to test what works.
Have it in mind that the price of your candle is a reflection of the confidence you have in your product, and how well you understand your customer’s needs. Always view your candle pricing as a fine balancing act on the tip of the wick – when everything is aligning well, it will come through as lovely as the flame underneath.
Regardless of how you choose to price your candles, always examine how you will run sales or deals, and how malleable your pricing strategy is over time. Operating a thin profit margin has its benefits, but it can be very challenging to hinge when you want to consider other pricing solutions.