General Candle, & Craft Costs Guide Work It Out

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GENERAL CANDLE AND CRAFT COSTINGS  -  ALSO APPLIES FOR WHOLESALE COSTINGS 

The most important thing before you sell any products is to know how much it cost you to make and how much time it took to make.  With that information, you can work out a base cost to break even for your products and then put a mark up to give you a profit (which is what we all want when we are making our crafts).  For the purpose of this example I have used a simple wax melt and used example figures.  Yours will differ.  You can do it as a batch and divide by the number of products you made with the whole batch.

First Step

Make a list of all the things you need to consider when you need to make your products.

- 320g soy wax - makes 10 melts approximately
- 30g scent - approximate
- 4 drops liquid colour 
- Time to Prepare Ingredients & Moulds, Melt Wax, Add Colour and Scent, Pour, Demould, Package,   
  Label and Clear Up Afterwards.  Approx 45 mins to 1 hour.
- Shrink Wrap
- Labels - Scent and Safety - Ink & Electricity

Second Step

Take your full costing and divide by how many products you make.  These costings are not fully accurate and are a guide only.  You need to do your own costings.  

For this example:

320g soy wax - 20000g in a box so at £73.13 for  a box, it makes 7313p/20000 for each gram.
0.0036565 for each gram so for 320 g it is a total of £1.17.

Add up your other costings the same way.

Wax £1.17 +  £0.20 for Electricity = £1.37
Scent  £0.12
Colour £0.10
Shrink Wrap £0.10
Labels £0.06
Time £5.00

Total = £6.75 for a Break Even Cost for 10 melts so divide your total by 10 for the single cost., 
ie £6.75 / 10

1 Melt = £0.675 each 

For a wholesale cost, the average mark up would be 1.5 x the cost of making and retail 2 x,  hence:

Wholesale = 0.675 x 1.5 = £1.01

Retail = £1.35

Wholesale profit per melt would be £0.33 pence.

Retail profit per melt would be £0.675 pence

Adjust your prices up or down depending on your maket and the level of profit you are willing and able to work towards.

WHOLESALE CONSIDERATIONS

For large wholesale orders, you need to consider the following:

Insurance
Product and public liability would be advisable and it is not expensive, ie, prices start from approximately £70 - £100 per year.

Necessity for burn testing.
Safety Labelling and Instructions

Adherence to National Guidelines for Companies that Require them.In 2007, BSI standards were introduced for candle making and labelling which document methods for testing and labelling.  While they are not yet legally mandatory, it would be advisable where possible to follow these and always ensure you have safety labels on all your candles.

Practicality
Do you have the space to store large orders and the ingredients needed to make them with?
Can you fulfill them in the timescales required for your customer?
Can you afford to take a loss if they don't pay (terms of payment considerations)
Do you have the ability to fit the orders around your daily lifestyle?
Are you good enough at your craft to be able to fully complete the order with the same quality throughout?
Do you have the time to test your products fully, or have them tested by a British Standards Company?

Terms of Payment
For all new wholesale suppliers, you need to set your payment and terms upfront and make the decision on whether you are going to provide credit (ie you make the goods before payment) or take payment before you order and make any goods.

To start off with, it is certainly advisable to take payment up front for all orders and although this will not protect you fully, you will have payment to enable you to order supplies and begin making your products.

Another option may be to take your break even cost up front to cover all time and materials in making your products and take the rest at dispatch to cover the full amount of your profit and ensure you have the full delivery cost covered.

Agree method of payment upfront, ie cheque, cash, credit card, paypal and stick to it.   If it is by cheque, ensure they are fully away of lead time for cheque to clear before you begin to make the products.  Don't be pressurised into making before you have received your agreed levels of payment.   With time you may make some good relationships that will allow you to bend your own rules where you feel comfortable but that takes trust, good payment records and confidence in the reception your products will receive by your clients customers.

Minimum Orders
Most  real wholesalers operate a minimum order facility, and may charge a small order fee, or delivery for smaller orders where they do not sell them at retail costs.   A good minimum order level for starting off is around the £100 (popular level) mark and do not be tempted to let someone beat you down lower.   More and more wholesalers have upped their minimum levels to the £200 + mark without incurring extra costs.  

At lower levels, your profit disappears and many clients will try to take advantage and ask if you can lower that for a first order, or promise you lots of future business.  Some may be genuine and they will mean it at the time, but you cannot make a good business off promises.   Doing so means that you are making at retail levels, hence higher supply costs and less profit for you, but you can be assured that they will take the full retail price or more for selling your hard work.   The point of wholesale prices being less is that you only supply them at the lower cost if a certain purchase value is reached and then both you and your client can make a reasonable profit and feel that you have a fair deal.

WORDS OF ENCOURAGEMENT

For all of you considering wholesale selling of your craft products, the best of luck in getting your orders, costing them and making those all important sales.    Ensure you get bulk order costs for your supplies for wholesale orders or you will find difficulty competing in a growing craft / handmade market.   Your products will also need to look professional and appealing for the end customer to make your wholesale customer want to come back for more, more, more.    

Wholesale selling is very satisfying and takes away much of the problems that are encountered by dealing with members of the general public.

 

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