What is the most important thing in business? Money!
Without it you won't be in business very long and all your other wonderful ideas: such as giving to charity, being sustainable etc will disappear along with it.
It is for this reason that it is so important that you know to the penny how much your product is costing you.
It sounds complicated but really it just takes a little time.
So lets take a look at it; First of all we need to know the individual elements of your product!
Your candle is broken down to a few parts:
- The Jar
- The Wax
- The Wick
- The Fragrance
- The Labels
- The Boxes
don't forget to include delivery fees!
Then we need to think about the other costs!
- Insurance
- Postage
- Packing
- Electricity
- Your Time
- Website fees
And the hidden costs!
- Advertising (Facebook Listings, Promoted Posts etc)
- Third Party fees (Amazon, Ebay, Etsy etc all take a cut)
Its a lot to consider and forgetting something can cause you issues down the line so its important to make sure you have everything listed.
Here is an example of working out your candle cost.
Jar
36 pack : £55.00 + £5.00 delivery = £60.00
> £60.00 / 36 = £1.67 per jar
Wax
10kg wax: £40.00 free delivery = £40.00
10kg (10,000g) so 1g is 40/10000 = £0.004 per gram.
My candle takes 200g of wax therefore we do 200x 0.004 = £0.80
Wick
100 wicks: £2.50 free delivery = £2.50
>2.50/100 = £0.025 per wick
Fragrance
1kg Fragrance: £50.00 + £4.95 delivery = £54.95
1kg (1000g) so 1g is 54.95/1000 =£0.055 per gram.
we use 20g of fragrance per candle therefore we do 20x0.055 = £1.10
Ok so lets assume this candle doesn't have a label or a box. The final candle price for its physical parts are the total of each of the individual elements:
- Jar: £1.67
- Wax: £0.80
- Wick: £0.025
- Fragrance £1.10
Total = £3.60 (rounding up the half penny)
The other costs are a little different, because you have to estimate how many candles you are selling a month. for instance lets say we are selling approximately 100 candles a month.
If your insurance is £10.00 per month, then that would be £10/100 = £0.10
so that would add on an extra 10 pence to your candle cost.
I'm sure you can see how this could add up!
Its always better to be over estimating your costs rather than underestimating!
I hope this article was easy enough to follow along with. If you have any questions about calculating your costs I would be happy to answer them below - just leave a comment!
Have a great day,
Adam
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