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Collaboration / Custom Order


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Hi all,
I have searched the forum and couldn't find any resources/postings regarding this topic.
So if you guys can share your opinions, point of views or any advice, that would be greatly appreciated.
At the end of the month, my friend and I will be launching our beeswax candle business. A portion of our sales will be consistently donated to a local non profit organization that offers access to quality medical & mental health services in our community. Our candles will hopefully help shine a light & bring knowledge on these programs for the under resourced communities.

With that being said, we were recently approached by local shop to do a collaboration. This shop will carry our candles (wholesale) but also want to collaborate on  a custom candle of their own, with their logo up front, and our logo/company information in the back of the candle vessel. They will also pick out the vessel/jar of their choice, FO, custom labels. We will be in charge of making the candles, testing, etc. They will also honor the donation aspect of our business.

They want an initial order of 60 units, they will no doubt have a budget for this project so that number might change. We will charge them (at cost) of the vessels, FO, & amount of wax that will be needed. Also will be charging them labor costs. That's about it. Are we missing anything else? We have our own costs; wholesale, retail for the our own beeswax only candle lineup already locked and figured out. But since this is a custom order with different vessels, ingredients that we don't use, I'm having a difficulty in figuring out how much to quote them? The cost of goods will be passed directly to them. Is labor the only thing we should charge, and not mark anything up?

This ended up being lengthy, thank you so much for your time.

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That is called "Private-Labeling".  Some charge only for the labor and some will mark up on ingredients and parts also.  It all depends on how much you want to make.  If they only want 60, then you should charge more than big volume order.  Many big private-labelers would ask for minimum order of 200 or 300 per scent.  

 

You also mentioned "They will also honor the donation aspect of our business.".  Be careful what you state in your website or advertisement about donating certain portion of your sales.  If you mention that your portion of sales go to certain non-profits, then it is regulated by fundraising regulation.  Each state has different regulation on this.  So, check your state government's regulation about what you can claim and not.  It is State General Attorney in CA, who we have to register and file paperwork for doing such.

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With this type of arrangement, expect it to cost you several times what you plan for in both time and $. Testing a new fragrance in a new vessel with wax that varies from lot to lot is ALWAYS riddled with unexpected issues. You will face container supply issues, and likely fragrance supply chain issues (usually unannounced reformulation).

 

then the collaborators tend to make little tweaks often, which cost $. Lock in the agreement at the very beginning to charge appropriately for changes to every aspect.
 

don’t get in too deep until you figure out all the little things that tend to go sideways in these arrangements. For this type of short run project, development fees start at a few hundred $ in my world. 

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18 hours ago, BusyBee said:

That is called "Private-Labeling".  Some charge only for the labor and some will mark up on ingredients and parts also.  It all depends on how much you want to make.  If they only want 60, then you should charge more than big volume order.  Many big private-labelers would ask for minimum order of 200 or 300 per scent.  

 

You also mentioned "They will also honor the donation aspect of our business.".  Be careful what you state in your website or advertisement about donating certain portion of your sales.  If you mention that your portion of sales go to certain non-profits, then it is regulated by fundraising regulation.  Each state has different regulation on this.  So, check your state government's regulation about what you can claim and not.  It is State General Attorney in CA, who we have to register and file paperwork for doing such.

Thank you for this! i'll definitely look into the non-profit/fundraising regulations in CA, didn't even know about this. Thank you.

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18 hours ago, TallTayl said:

With this type of arrangement, expect it to cost you several times what you plan for in both time and $. Testing a new fragrance in a new vessel with wax that varies from lot to lot is ALWAYS riddled with unexpected issues. You will face container supply issues, and likely fragrance supply chain issues (usually unannounced reformulation).

 

then the collaborators tend to make little tweaks often, which cost $. Lock in the agreement at the very beginning to charge appropriately for changes to every aspect.
 

don’t get in too deep until you figure out all the little things that tend to go sideways in these arrangements. For this type of short run project, development fees start at a few hundred $ in my world. 

thank you for taking your time and sharing your input and experience! 

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So, you are in CA.  Your operation would fall under "Commercial Coventurer".  https://oag.ca.gov/charities/pf

 

Below are some of private-label candle companies in Southern CA.  They should give you some idea about how you would want to charge.

http://www.modern-candle.com/

http://candleconsultants.com/

https://uniquecandles.net/

California Candle Supply also do private-labeling.  They had low MOQ and was asking for $3 labor for each candle.  That was few years back, and they might have raised the price since hour minimum wage has gone up since.  They do private-labeling only if everything was bought from them.  That means they make profit on ingredients & containers also.

 

Good luck!

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21 hours ago, BusyBee said:

So, you are in CA.  Your operation would fall under "Commercial Coventurer".  https://oag.ca.gov/charities/pf

 

Below are some of private-label candle companies in Southern CA.  They should give you some idea about how you would want to charge.

http://www.modern-candle.com/

http://candleconsultants.com/

https://uniquecandles.net/

California Candle Supply also do private-labeling.  They had low MOQ and was asking for $3 labor for each candle.  That was few years back, and they might have raised the price since hour minimum wage has gone up since.  They do private-labeling only if everything was bought from them.  That means they make profit on ingredients & containers also.

 

Good luck!

Thank you for sending those links, really helpful! I'll dig into "commercial co venturer" more.

 

thank you again!

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