Calculating the cost of producing soap
Soap – Hmm, what could be the cost of making soap? We hear that alot when we are out and about at shows and art fairs. And the truth is there is a formula that takes a number of things into factor. Here are some thoughts of what we consider when establishing a price:
- cost of raw ingredients – that would be the oils, the lye, the water, the botanicals, essential oils, colorant
- cost of supplies – We consider things like a scale, heating source, containers to work with, measure, stir, blend
- cost of packaging – the wax wrappers we use, the printing cost for the labels, cost of scrapbook paper for the bands, tape
- storage – having a place to store and display the soap
- marketing, advertising, and labor (time and skill)
Some costs are steady and unchanging, yet others fluctuate based on classic economic principles…. Lye, for example has been making a steady upward price increase for the last two years, while the cost of some of our oils fare constant or have dropped because the supply in the market has increased.
We actually have a program that helps calculate the cost per batch of soap, and then ofcourse it breaks down to the cost per bar. We have just started paying ourselves for the labor cost, but it is still not a huge factor in the pricing structure.