If you’re yet to launch your skincare business but have no idea how to price your products, be rest assured you’re not alone.
If you feel like you’ve been in business a while but are treading water, you’re also not alone.
I’m guessing you started your skincare brand because you’re passionate about creating beautiful products for your customers. Not because you love finances and numbers – am I right?
But one thing I’m sure we all want more of is profit. And that’s because…
Profit = $$$ = FREEDOM.
Often if you find you’re not making as much profit as you’d like it means:
1) Your costs are too high AND/OR
2) Your price is too low.
Both of these factors will reduce your profit margin, so here are three tips to help boost your profits.
Tip #1 – Know your costs
The good news is, it’s never too early or too late to start looking at your costs. You might be surprised by what you find out. Remember you’ll need to factor in costs such as ingredients, packaging, labels, merchant fees, insurance and other overheads. And don’t forget to pay yourself.
If you’re new in business and aren’t sure of all your overheads, you can add a set % to your base product cost to cover them, and then re-assess it after the first year in business.
Tip #2 – Get your prices right
Ideally you want to get your prices right before you launch so your business can be profitable and sustainable. Often our money mindset affects how much we think our products are worth. We’re afraid our products will be too expensive and no one will want to buy them, so set the prices too low.
But once you’ve worked out your prices based on your costs, doing competitor research can give you some reassurance that your prices are reasonable.
Your prices need to have enough wiggle room to cover extra unexpected costs such as ingredient price rises. And you also need to consider what your wholesale price would be even if you aren’t thinking about wholesaling yet.
Tip #3 – Maximise your sales
Once you know your costs and profit margins, you can be confident that when you scale up sales, your profits will increase. Maximise your sales through increasing the average order value on your website, e.g. by offering bundles or upsells, and also by encouraging repeat sales and loyalty by making sure customers have the best purchase experience possible.