Cost to make 1 candle: approx. $5.00 - 6.00!

[msant]

Ok..I sat down today to recalculate my cost to produce my candles. I took into account the shipping cost of my materials as well. (Unfortunately I'm in Florida and suppliers do not exist here!) I've hit $3.88 and have yet to add my fragrance cost and my labeling/packaging cost! I'm assuming based on prior calculations that this may add an additional $1.50. Plus I haven't even paid myself! Which I've read is part of determining cost of production.

So if this is the case if my candle costs $6.00 to make..$1.50 for my labor = $7.50!

Wholesale is $15 ?

Retail is $30 ???

What am I doing wrong? No way is anyone going to shell out $30 for a 10 oz Country Comfort Jar Soy candle!

Now I can't sleep!

[Chefmom]

I cost my items in a food cost way, so I add up ONLY physical costs. I have the total cost of the jar, shipping is included because it is part of life with shipping in the jars. I assign a shipping % for costing wax because I can ship wicks with no increase in shipping if I order wax.

So, I add up the wax cost and divide it down to a per ounce cost. Then add the jar plus the wax, I add .25 per candle to cover color and wick, then the fragrance cost based on how much is used per pound of wax, so then how much fragrance is in each jar. Once I add that up I have my working costs. Then I add on the cost of the box and label. To save on label costs I have been learning calligraphy so that I can just write the name of the fragrance on the box.

That is my total cost to produce the candle. No labor is added in until I know how many candles I can produce in an hour, then I will break down labor and add that in for a final cost. You also have to figure your market and what they are willing to pay for X sized candle.

a.) I have no idea how Yankee can charge what they do and people pay it. I have never been able to afford their candles, even on sale and have only bought very small ones and votives.

b.) I have no idea how people can sell a 8-ounce jelly jar candle for $5 to $8 unless they are not using much scent or getting their wax dirt cheap (from somewhere I have never heard of).

The best way to compare to market is to figure out how many hours your candle will burn. If people balk at a $15 to $20 price you can then stress that your candle also burns X% longer than "blank candle company."

It's a tough business world and that is why so many start and fail.

[chuck_35550]

I buy my jars from a wholesale company that offers free shipping if you buy over $250.00 worth of jars and lids. That brings the cost of my jars (12 oz salsa) to about .63 cents apiece for lid and jar. I look for fragrance oils that offer shipping deals and do not require more than 6-7% per pound of wax. I buy long wicks and wicking assemblies that triple the number of wicks from each 100. I print up my jar labels using mostly black and white with just a little color so that my ink costs are lower. HTH

Steve

[rjdaines]

I have a spreadsheet that I set up that calculate my cost and then the profit. The small Elemental Jars (sig pic) I sell cheap and make a couple of $$ and hopefully pay for a table. The idea being that someone tries my product and may want to now buy the larger candles. More profit built into the bigger ones. Do I think I'm going to get rich doing this? Nope but one never knows. I have too much competition from larger players in this area; Gold Canyon Candles, WalMart, Bath and Body Works, and Yankee.

[TallTayl]

Are you buying in bulk, or in small quantities?

[JJCandlesCrafts]

Buying in bulk REALLY helps bring costs down. Especially with the heavy stuff where shipping will kill your expenses. Plus, I've seen Oz bottles of FO for, say, $2.50, where 16 Oz is "only" $15-20. HUGE savings. Double or Triple using long wicks helps a lot too.

Luckily I have a supplier within about 30 mins of me where I don't have to ship much, sadly you state that that isn't the case for you. I know a lot of people here have to have their wax shipped, so maybe someone can give some pointers?

The amount for you labor: I'm sure you have a formula that had you come to $1.50/per candle. I may get flamed for this, but:

What I do is figure my "hourly rate" if you will. For ease of math lets say $10/hour. Now I calculate how many candles I CAN make in that amount of time. Let's say, with my Presto holding 7 LBs of wax, and with heating, pouring, cleaning etc. I get one Presto "fill" per hour - I'm hustling. With 7lbs, I can make about 15, 8 Oz Jellys. That would work out to about $0.66 a candle. Just because I don't have the orders to justify making 15 candles per hour, I can't really pass a $10/jar fee to a customer, nor can I change my prices for every batch I make. Yes, I'm cheating myself out of a "decent wage" when I'm starting up, but I think it is fair for the consumer as well as myself once I start with some real bulk.

As others have said, spreadsheets really do help. I list my scents on one page and calculate a Per Ounce Price for each one. I use the highest price FO I carry for all further calculations.

On another tab, I have my waxes listed, again in a Per Ounce price.

On a third tab, I list each container, how many oz it holds, and price per piece. Excel calculates the ounces, figures how much scent is needed (based on a 1 oz P.P.), how much the cost of the wax is by determining how much wax is needed * cost of that particular wax. I use a set price for Color, Wick, Label, etc. of a round $0.50, and add my "rate". Excel adds it all up, gives me "My Cost", "Wholesale", and "Retail" prices, as well as figures out my per ounce highest profit margin items. Of course this isn't "written in stone" on my prices, but gives me a good idea where I stand with everything.

HTH and I wasn't just rambling

~ Joe

[HorseScentS]

Buying in bulk REALLY helps bring costs down. Especially with the heavy stuff where shipping will kill your expenses. Plus, I've seen Oz bottles of FO for, say, $2.50, where 16 Oz is "only" $15-20. HUGE savings. Double or Triple using long wicks helps a lot too.

Luckily I have a supplier within about 30 mins of me where I don't have to ship much, sadly you state that that isn't the case for you. I know a lot of people here have to have their wax shipped, so maybe someone can give some pointers?

The amount for you labor: I'm sure you have a formula that had you come to $1.50/per candle. I may get flamed for this, but:

What I do is figure my "hourly rate" if you will. For ease of math lets say $10/hour. Now I calculate how many candles I CAN make in that amount of time. Let's say, with my Presto holding 7 LBs of wax, and with heating, pouring, cleaning etc. I get one Presto "fill" per hour - I'm hustling. With 7lbs, I can make about 15, 8 Oz Jellys. That would work out to about $0.66 a candle. Just because I don't have the orders to justify making 15 candles per hour, I can't really pass a $10/jar fee to a customer, nor can I change my prices for every batch I make. Yes, I'm cheating myself out of a "decent wage" when I'm starting up, but I think it is fair for the consumer as well as myself once I start with some real bulk.

As others have said, spreadsheets really do help. I list my scents on one page and calculate a Per Ounce Price for each one. I use the highest price FO I carry for all further calculations.

On another tab, I have my waxes listed, again in a Per Ounce price.

On a third tab, I list each container, how many oz it holds, and price per piece. Excel calculates the ounces, figures how much scent is needed (based on a 1 oz P.P.), how much the cost of the wax is by determining how much wax is needed * cost of that particular wax. I use a set price for Color, Wick, Label, etc. of a round $0.50, and add my "rate". Excel adds it all up, gives me "My Cost", "Wholesale", and "Retail" prices, as well as figures out my per ounce highest profit margin items. Of course this isn't "written in stone" on my prices, but gives me a good idea where I stand with everything.

HTH and I wasn't just rambling

~ Joe

When I pour 8 oz jelly jars, I get exactly three full jars per pound of wax/FO mixture; and by "full" I mean the wax is level with the glass ring that touches the bottom of the silver lid. So, I get 21 jelly jars per seven pounds of wax/FO mixture, and I'm wondering why you would only get 15 jars per seven pounds of wax/FO mixture. Six jars less is a big difference. It works out the same for me with the Elemental jars too.

Edited September 4, 2012 by HorsescentS

[MrsPacNW]

last year about this time I did some figuring...

I can make 8oz quilted jelly jars for $2.55 for all the materials and pint jelly jars for $4.35.

I buy the jars at Walmart.

I don't use dye.

I buy 12" wicks and get 2-3 candles from them. Small cost for more wick tabs.

I make my own hang tag and candle lable. I buy warning labels.

I use yarn or twine to attach hang tags.

I included the shipping of my case of wax as the "total" cost of the wax per pound and then per ounce.

I do the same for FO..and use my top costing FO as my per tenth ounce FO price.

I make my candles in small batches...2 8oz jars or 1 pint. So my time invested is much higher than those that "mass" produce.

I pull in a pretty fair profit for my market..but I only sell to a very select group.

[Chefmom]

This has been running through my head today. I guess I had too much time to think while watching the candles burn!!

There is another way to think about this. Instead of putting a "labor" fee in your per candle cost analysis, you don't do that at all. Every penny above physical costs is yours. The extra money will help cover that gas/electric bill at the end of the month, it will buy your groceries and put gas in your car. The same as if you cashed your paycheck and ran errands.

If you work hard, you put more hours in, and in the long run will sell more product. The more product you sell the more cleared profit you will have to compensate you for the hours put in. Hours melting wax and pouring candles, email, web care, customer service.

This is where a small, in home business is far and above better than a job in a brick store. You can work in your pj's, you can work when you want and watch tv while you do it. You can keep your business small or work harder to expand etc in the end you get out what you put in. If you really enjoy it, and look forward to setting wicks and pouring, and maybe taking the extra time to make your own cute packaging, then the money that comes in pushes you forward. If you fret over pennies then you are just creating a worry-some environment and THAT is too close to what I left behind.

I'm very lucky, I don't work anymore outside the home. Right now I don't have to sell candles to eat, and I'm sure my attitude would change if I had to. I keep the pennies pinched and the finances working without the extra money. It isn't easy, but it frees me to create something that will carry me after the kids are on their own. I'm hoping the work I'm doing now will aid me in the future, it's an investment in me and my new career path.

In the end, you are your own best marketing. You have to be able to stand up and freely tell people that you have the best product that you can produce in that price range. Don't constantly compare yourself to the more expensive companies and never apologize. Both lessons learned from Martha Stewart and Julia Child. Two Queens of Marketing!!!

[TallTayl]

Ah, but Chefmom, that is one of the reasons so many small businesses fail. Spending any and all monies over and above material costs as a paycheck without budgeting sufficiently leads to a dry cash flow. The OP is right and very wise to calculate and question the profitability of their wares.

Having a business plan solves half if the riddle. I do not budget to the penny for insurance, ink, lights, electricity for the melters, etc. per item made, but I sure do have a budget line item for them so I don't run into cash issues at critical times. Many home business owners forget to pay themselves (or rely on the income of a spouse or savings) and are deluded into thinking the business is profitable. Look at it this way. Several years ago I was injured severely enough that I could not produce anything myself. I could have closed temporarily and lost very lucrative accounts, or hire temporary help to keep things limping along. The cost to hire someone to make that product had to be factored in to the item costs. Making batches of a sufficient size to cover those costs helped remain profitable until I could get back on my feet (literally).

Working from home sure is better than punching a clock for someone else - that is until there's no cash flow to support the business and one is forced to provide outside income (job or spouse, etc) or dip into savings to support ones self and the under profitable and ill funded business. I actually find that I put in far more hours for my own business than I did while employed as an executive of a fortune 500 company (save for when assigned to international travel), but the hours are more intrinsically rewarding at my own venture.

If you're in business, you have to treat it like a business.

[msant]

Fantastic information from everyone. Thank you! I have come away with the knowledge that I do need to do my research to cut cost as much as possible. One example...I also was considering the longer wick and wick tabbing to utilize the complete length and it's great to know others doing the same. Ordering in bulk is another idea I need to take a look at. My concern is the higher initial cost but the savings may outweigh that. Fragrances are killing me. I have 2 fragrances from Sweetcakes that I love and I'm trying to see if I can factor those into my line. One is the Christmas Spice scent. Have not been able to find a substitute anywhere else!

[HorseScentS]

Fantastic information from everyone. Thank you! I have come away with the knowledge that I do need to do my research to cut cost as much as possible. One example...I also was considering the longer wick and wick tabbing to utilize the complete length and it's great to know others doing the same. Ordering in bulk is another idea I need to take a look at. My concern is the higher initial cost but the savings may outweigh that. Fragrances are killing me. I have 2 fragrances from Sweetcakes that I love and I'm trying to see if I can factor those into my line. One is the Christmas Spice scent. Have not been able to find a substitute anywhere else!

Using locally available jars will help you a lot, if you've been paying shipping on heavy glass. There's a lot of info on here about which jars are safe for candle making from Dollar Tree, Hobby Lobby, Walmart -- all of which can be ordered by the case and picked up at the store -- and of course, how to get canning jars during winter without paying shipping.

[Chefmom]

Using locally available jars will help you a lot, if you've been paying shipping on heavy glass. There's a lot of info on here about which jars are safe for candle making from Dollar Tree, Hobby Lobby, Walmart -- all of which can be ordered by the case and picked up at the store -- and of course, how to get canning jars during winter without paying shipping.

Also, don't assume that locally available jars are cheaper. I did that. I found a supply place about 1 hour drive away. One night I added up the cost for 2 cases of wax and 10 cases of jars. Imagine my shock to figure out that the local place was only $36 cheaper than having it delivered to my house with the Happy UPS guy to help me take my order to the basement. That $36 would be eaten up, and more in gas for the drive.

Now if I purchased more at one time, then it would probably eventually swing the other way, but that's far off right now. That's why knowing your price with the included shipping etc is really important.

[chuck_35550]

You might be able to co-op with other hand crafters in your area. Each year our local soapers make a Columbus run and everyone makes their order and drives to pick it up from whomever is in charge of the co-op. Buying in bulk gives you the security of knowing that you are ready for any possible large order that might come up during the holidays and can also be reported for income tax purposes as on hand inventory. Don't be afraid to order cases of wax or cases of jars, you'll use them up one way or another. http://www.sks-bottle.com/ is a great place to order. HTH

Steve

Edited September 5, 2012 by chuck_35550

[Candybee]

Wholesale; buying in bulk is the way to keep costs down. Find out what the cut rate is for bulk and buy that amount or more to take advantage of it. Also, make sure you use precise weight and % rates when measuring wax and FO, and additives. Never eyeball it-- use your scales and calculator. I keep a candle pouring spreadsheet for each jar size and amount of wax, FO, etc. in the candle room when I pour.

Also, some jars are way more expensive than others. I had to rethink my jar to cut costs. Once I was happy with my new jars I started making more money and saved a lot in jar costs.... and shipping.

Shop around for suppliers. Generally the closer the supplier the least amount you will pay in shipping. Generally, but not always. So always check and see what the actual costs are for shipping the same product to you from a variety of shippers so you know what is your best deal. This will also let you know who your backup supplier is. Handy to know when one runs out out your wax, jar, etc.

If you can't get a decent wholesale price on a product its not ready for wholesale. It took me a year or two of making candles to finally start making a great candle at a great price worthy of wholesale.

[HorseScentS]

Also, don't assume that locally available jars are cheaper. I did that. I found a supply place about 1 hour drive away. One night I added up the cost for 2 cases of wax and 10 cases of jars. Imagine my shock to figure out that the local place was only $36 cheaper than having it delivered to my house with the Happy UPS guy to help me take my order to the basement. That $36 would be eaten up, and more in gas for the drive.

Now if I purchased more at one time, then it would probably eventually swing the other way, but that's far off right now. That's why knowing your price with the included shipping etc is really important.

By "local" I don't mean a 1 hour drive away, I mean close to home so you're not spending gas money to get them. I can get glass within 15 minutes from home at Hobby Lobby, Dollar Tree, Tru Value Hardware, Lowe's, Walmart, Michael's.