How To Start a Soap Making Business [Step by Step Guide]

How To Start a Soap Making Business [Step by Step Guide]

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You've stumbled upon the idea to build a soap business and now you're ready to take the next steps.

There's a lot to think about when building a business, so we put together a guide on how to get started, launch, grow and run your soap business.

We also provide you with real-life case studies and examples of founders running successful soap business (and how much💰 they're making today).

market size
$82.3B
avg revenue (monthly)
$122K
starting costs
$14.9K
gross margin
40%
time to build
7 months
growth channels
SEO
business model
E-Commerce
best tools
Quickbooks, Instagram, Google Analytics
time investment
Side project
pros & cons
35 Pros & Cons
tips
7 Tips

💡 Introduction To Starting A Soap Business

How To Make Soap

Surprisingly, the process of making soap is simple and there are not many ingredients or materials involved with making the product.

Additionally, the cost to make soap is very low (we'll get into exact costs in the startup cost section below).

We've outlined a few tips to consider when getting started:

Tools to start making soap

  • Slow cooker
  • Plastic, glass, or stainless steel container (for measuring lye)
  • Heavy duty plastic, glass, or stainless steel container (for mixing)
  • Scale
  • Silicone spatulas
  • Immersion blender
  • Thermometer
  • Silicone loaf mold (or individual molds)

Ingredients to start making soap

(note that these ingredients may vary depending on the soap you are making - these are great ones to get started and DIY):

  • Coconut oil
  • Olive oil
  • Distilled water
  • 100% pure lye
  • Essential oils
  • Colorants (optional)

The process of making soap

The process of making soap takes about 1-3 hours depending on the type of soap you make.

Follow 6 easy steps to making your soap here.

Identify the fragrance style you want (essential oils)

This depends on the target audience you are going for.

For example:

  • Mass Market are great for scents such as vanilla, lavender, strawberry
  • Mid-market (one level up) typically prefer grapefruit or lemongrass
  • High-end (prestige) market look for more unique and complex scents like fig tree and blossom & basil

Research supply companies to source products

Here are some common suppliers:

Here are the top ten suggested essential oils to use as a beginner soap maker.

Is The Soap Business For You?

Let's look at the pros and cons of starting your own soap business

Pros:

  • Flexibility: One of the biggest advantages of starting a soap business is that you can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
  • Ability to start your business from home: It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
  • Little startup costs required: The cost to start a soap business costs significantly less money than most businesses, ranging anywhere from 1,057 to 27,919.
  • Rewarding work: Starting a soap business can be really rewarding and fun work. After all, you're bringing joy and excitement into peoples lives.

Cons:

  • Crowded space: Competition is high when it comes to your soap business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.
  • Finding the right supplier: Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.

Creating a successful soap business means that you will have the ability to sell, provide stellar customer service, communicate with vendors and motivate your team (even if it's down the road)!

Players

Big Players

Small Players

Big Players

How To Name Your Soap Business

It's important to find a catchy name for your soap business so that you can stand out in your space.

Here are some general tips to consider when naming your soap business

  • Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
  • Conduct a search to see if others in the space have the same name
  • Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
  • As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!

Why is naming your soap business so important?

The name of your business will forever play a role in:

  • Your customers first impression
  • Your businesses identity
  • The power behind the type of customer your brand attracts
  • If you're memorable or not

It's important to verify that the domain name is available for your soap business.

You can search domain availability here:

Find a domain starting at $0.88

powered by Namecheap

Although .com names are the most common and easiest to remember, there are other options if your .com domain name is not available. Depending on your audience, it may not matter as much as you think.

It's also important to thoroughly check if social media handles are available.

As soon as you resonate with a name (or names), secure the domain and SM handles as soon as possible to ensure they don't get taken.

Here's some inspiration for naming your soap business:

  • Bare Skin check availability
  • Vita Soap check availability
  • Barr-Co. check availability
  • Green Touch check availability
  • Body Desire check availability
  • Body Kantina check availability
  • Pure Bliss check availability
  • Green Soap Inc. check availability
  • Happy Clean check availability
  • Naturalis Soap Co. check availability
  • Skin Paradise check availability
  • Lemonbay Soap check availability
  • Cocosoap check availability
  • Nature Hues check availability
  • Soapanic check availability
  • Golden Glow check availability
  • Molly’s Soap check availability
  • Monarch Soap check availability
  • Sparkle Smirk check availability
  • Golden Kiss check availability
  • Heavenly Scents check availability
  • Poppy Soap check availability
  • Soaptopia check availability
  • Vivian Gray check availability
  • Love+Light check availability
  • Cosmix Soap Co. check availability
  • RichRelics Soap Co. check availability
  • NatureMoto Soap Co. check availability
  • Lux check availability
  • Lexi check availability
  • Queen check availability
  • Beauty Plus check availability
  • Shiny check availability
  • White Queen check availability
  • Suds And Buds check availability
  • Soap Suds check availability
  • Covered In Suds check availability
  • Soap On A Rope check availability
  • Scent Of Soap check availability
  • Soothing Soaps check availability
  • Soap Soothers check availability
  • Soap Scents check availability
  • Clean Aromas check availability
  • Clean Team check availability
  • Squeaky Clean check availability
  • Scrubbed Clean check availability
  • Scrubbing Soaps check availability
  • Luscious Lather check availability
  • Lather Up check availability
  • Soft Soaps check availability
  • Lush Lather check availability
  • Luxurious Lather check availability
  • Lather Luxury check availability
  • Leftover Lather check availability
  • Bubbles Of Beauty check availability
  • Bubble Up check availability
  • Bubble Town check availability
  • Bubble Bounty check availability
  • Beauty Bubbles check availability
  • Wewash check availability
  • Wonderful Wash check availability
  • Lush Wash check availability
  • Wanted Wash check availability
  • Soap Slope check availability
  • Soapy Suds check availability
  • So Soapy check availability
  • Suds Of Love check availability
  • Loving Suds check availability
  • Soap Symphony check availability
  • Serenity Soap check availability
  • Soapmakers check availability
  • Soapmakers Unlimited check availability
  • Bath And Body check availability
  • Body And Bath check availability
  • Grateful Body check availability
  • Soapy Hands check availability
  • Soapy Skin check availability
  • Skin Treat check availability
  • Pampered Skin check availability
  • Pamper Products check availability
  • Bath Soaps check availability
  • Beautiful Bath check availability
  • Bathing Beauty check availability
  • Love Thy Skin Soap check availability
  • Artisanal Soaps check availability
  • Love+Light Soaps check availability
  • Come Clean check availability
  • Essentials Soap check availability
  • Nature Lives check availability
  • Visionary Finds check availability
  • Goddess Skin check availability
  • Skin Of The Gods check availability
  • Soft Touch check availability
  • Entangled Love check availability
  • Softly Laced Soap check availability
  • Sweet Scents check availability
  • Bathtime Delight check availability
  • Pretty Skin check availability
  • Kiss Of Skin check availability
  • Visual Glow check availability
  • Golden Light Soaps check availability
  • Shine Bright Soaps check availability
  • Lavender Love Soap check availability
  • Lovely Touch Soaps check availability
  • Joyful Skin Soaps check availability
  • Soap Love check availability
  • Soapy Baby check availability
  • Bubble Blow Soaps check availability
  • Bubble Kisses Soaps check availability
  • Glitter Gold Soaps check availability
  • Skin Caress Soaps check availability
  • Tension Release Soaps check availability
  • Contact High Soaps check availability
  • Beauty Bars check availability
  • Massage Me Soap check availability
  • Skin Hug Soaps check availability
  • Special Soaps For Her check availability
  • Kiss The Skin Soaps check availability
  • Touch Me Soap check availability
  • Sleepy Time Soaps check availability
  • Sweet Spot Soaps check availability
  • The Bath Babes check availability
  • Scent Of Her Soap check availability
  • Beauty Drop check availability
  • Shades Of Love check availability
  • Lightworker Loves check availability
  • Crystal Soaps check availability
  • Bars Of Light check availability
  • Soap Bars check availability
  • The Bro Bars check availability
  • Softbabes check availability
  • SOAPossible check availability
  • Fuzzy Fun check availability
  • Beautiful Bubbles check availability
  • Wow Spa check availability

Read our full guide on naming your soap business ➜

🎬 How To Start A Soap Business

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Identify Target Customer

A very critical piece in building soap business is to identify your ideal target customer.

  • Develop a niche and create a consistent brand that reflects your target customer.
  • The colors, logo, content, and overall website should resonate with your target customer and should draw them in by helping them solve their specific "need".

For example, Outlaw Soaps speaks to a very specific (and niche) customer: one that loves adventures and the scents that come with it.

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One of our most divisive scents is Fire in the Hole. It's campfire-inspired, which immediately turns some people against it... but we love the smell of a good campfire.

It reminds us of nights with friends out in the dusty high desert, drinking terrible beer and standing around a bonfire laughing about a good joke that someone told (and then someone else retold, because it's a little loud).

Our mission since the very beginning of the business has been to find our right customers wherever they are, and build the most frictionless buying experience possible.

-  
Danielle Vincent, on starting Outlaw ($380,000 revenue/mo) full story

Write a Business Plan

Writing a business plan from the start is critical for the success of your soap business.

Why?

Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.

For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.

You may want to consider expanding upon these sections in your business plan:

  • Executive Summary: Brief outline of your product, the market, and growth opportunities
  • Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
  • Products and Services: Specifics on the products and services your business will provide
  • Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
  • Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
  • Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
  • Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
  • Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
  • Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.

Learn more about how to write a business plan here

Determine Which Business Bank Account You Need

There are hundreds of banks out there, and it can be overwhelming to find one that's right for your business.

Here are some factors you may want to consider:

  • Location - Is your bank close enough that you can easily make deposits or get cash?
  • Low Fees - Make sure to understand any and all fees associated with setting up and maintaining your bank account. Ask for a list - banks usually try to keep this hidden and in the fine print.
  • Online Banking Services - Make sure you can easily navigate through your online portal and you have easy access to everything you need.
  • Line of Credit - What do your options look like (even if you don't need this now, you may need this down the road).
  • Every bank has something that differentiates them from the rest, so make sure whatever that is applied to your needs and values.

Check out this list of the 13 Best Banks for Small Business in 2020 and what makes them so unique.

Setting Up Your Soap Business (Formation and Legal)

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

Need to start an LLC? Create an LLC in minutes with ZenBusiness.

Revenue Expectations

We've interviewed several different founders in the soap business and asked them how much $ they're making today.

Alegna Soap

  • $60K/year in revenue
  • Sells handcrafted soap.
  • Solo founder
  • 0 employees

The Purple Sage

  • $33.6K/year in revenue
  • Sells soap, lotions & bubble bath
  • Solo founder
  • 0 employees

Outlaw

  • $4.56M/year in revenue
  • Sells life-changing scents
  • 2 founders
  • 13 employees

Mirai Clinical

  • $1.2M/year in revenue
  • Sells deodorizing products
  • Solo founder
  • 1 employee

How To Find A Supplier For Your Soap Business

Here are the steps to consider when finding a supplier/manufacturer:

Know your design

One very critical step to finding the right supplier is having an initial idea of what your design/product will look like.

Sketching is one of the most simple ways to get started in the design phase.

What's great about sketching is that you can practically do this anytime, anywhere - even on the back of a napkin.

To get started, all you need to do is pick up a pen and paper and start drawing - or if you are working on a virtual/software product this can be a diagram that outlines the user interface or experience.

Decide your supplier type

You'll want to identify the type of supplier you are looking for.

Here are some questions you may want to ask yourself prior to searching for a supplier

  • Are you looking for a manufacturer to produce your product idea?
  • Do you want to find a supplier that can simply purchase existing products for you?
  • Do you want a drop-shipper to supply and fulfill orders?
  • Do you want a domestic supplier or an overseas supplier? Read more about the pros and cons of each here

Where to start your search

Once you have an understanding of what type of manufacturer/supplier will be best to bring your idea to life, there are several areas you can start your search:

Domestic Suppliers

Overseas Suppliers

Manufacturing Your Product In House

It's also very common to manufacture your soap product on your own - either from your home or in a shop.

In order to get the product right, you may want to consider experimenting with different scents, designs and formulas.

Warina Foster, founder of the Kiss My Crown Essentials walks us through her manufacturing process:

I design all of my products from home.

I select the soap base that I want to use depending on the consistency, look, feel, and design I’m going for. My main soap bases are Shea Butter, Aloe Vera, Goat’s Milk, and Mango Butter. Each of these has its own set of health benefits for the skin.

I start by combining my ingredients like essential oils, carrier oils, flowers, freeze-dried fruits, etc. Next, I select the type of mold or shape I want this soap to take once it sets.

After pouring the soap in the selected molds I have about 2-6 hours to gather the materials for wrapping the soaps once they are set. That usually includes shrink wrap, my logo stickers, and ingredients labels for the back of each soap. I think of my business like my baby, therefore most of the packaging, labels, and designs are done by me.

Each order I fill and ship is carefully customized. I allow customers gift messaging when shipping my products because too often gifts are bought with little to no thought invested.

My customers are invested, they are wowed each time they receive gifts from me. No two shipments are ever the same.

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-  
Warnisha Foster, on starting Kiss My Crown Essentials ($1,200 revenue/mo) full story

How Much Does It Cost To Start A Soap Business

If you are planning to start a soap business, the costs are relatively low. This, of course, depends on if you decide to start the business with lean expenses or bringing in a large team and spending more money.

We’ve outlined two common scenarios for “pre-opening” costs of starting a soap business and outline the costs you should expect for each:

  • The estimated minimum starting cost = $1,057
  • The estimated maximum starting cost = $27,919
Startup Expenses: Average expenses incurred when starting a soap business. Min Startup Costs: You plan to execute on your own. You’re able to work from home with minimal costs. Max Startup Costs: You have started with 1+ other team members.
Office Space Expenses
Rent: This refers to the office space you rent out for your business. To minimize costs, you may want to consider starting your business from home or renting an office in a coworking space. $0 $2,000
Utility Costs (office space): This refers to the first month's utility bill for your office space. If you are not responsible for this bill, this would not apply to starting your soap business. $0 $150
Office Supplies: Although these may seem like minor costs, things like your desks, chairs, pens, paper, filing cabinets do add up. In general, all the necessary things that you can use in the office regularly are included as Office Supplies. However, to avoid these adding up too much, try to be as lean as possible and go paperless! $30 $100
WiFi: Whether you work from home or in an office space, WiFi is an expense that's tough to avoid. Although the cost is minimal in most cases, it should be appropriately budgeted for each month! $10 $100
Total Office Space Expenses $40 (min) $2,350 (max)
Equipment & Supply Expenses
Technology Office Equipment: This includes (but is not limited to) physical items such as: laptops, cameras, monitors, microphones, speakers, headsets. Technology needs grow as your company evolves, so to minimize costs, try and only purchase what is needed for you to run your business at the time. $500 $5,000
Total Equipment & Supply Expenses $500 (min) $5,000 (max)
Inventory Expenses
Upfront Costs For Inventory: This includes all upfront inventory you will need in order to launch. Be sure to compare prices of wholesalers to ensure you're getting the best deal and margins remain high. $300 $5,000
Inventory Storage: If you decide to have a physical space for your soap business, whether it be used for inventory or as a showroom, you may have monthly rent payment or a large down payment associated with renting/buying the space. $0 $5,000
Package Design: Packaging refers to wrapping and protecting products during distribution, shipping, and sales.Your package design is your customer's first impression of your brand, so it's important you spend some time and energy to get this right from the start.Many businesses design their own packages using design software and tools. There is always the option to outsource this to a design expert, but that route tends to be much more expensive. $50 $3,000
Shrinkage: Shrinkage refers to the loss of inventory at any point between the purchase from your supplier and the purchase by your customer. Although you will try to avoid this at all costs, this does happen sometimes (especially in the learning stages of your business), and it's important to plan ahead financially in case this happens. Fortune states that retail shrinkage costs U.S. retailers approximately 1.4 percent of their total sales. $0 $1,000
Distribution costs: Depending on what distribution plan you choose, expenses such as renting vans, hiring delivery drivers and gas costs can add up. If you are looking to save money upfront, you may want to consider conducting distribution on your own. $0 $750
Total Inventory Expenses $350 (min) $14,750 (max)
Software Expenses
Design Programs & Software: These programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others. This is typically a monthly subscription ranging from $10-$50/mo. $0 $50
Email marketing tool: If you plan to grow your email list and email marketing efforts, you may want to consider investing in an email marketing platform (ie. Klaviyo, MailChimp). We put together a detailed guide on all of the email marketing tools out there + the pricing models for each one here $0 $100
IT Support: IT support installs and configures hardware and software and solves any technical issues that may arise.IT support can be used internally or for your customers experiencing issues with your product/service.There are a variety of tools and software you can use to help with any technical issues you or your customers are experiencing. This is a great option for businesses that do not have the means to hire a team of professionals. $150 $2,000
Accounting & Invoicing Software: It's important to have an accounting system and process in place to manage financials, reporting, planning and tax preparation. Here are the 30 best accounting tools for small businesses. $0 $50
Project Management Software: You may want to consider using a project management and collaboration tool to organize your day-to-day. This can also be very beneficial if you have a larger team and want to keep track of everyones tasks and productivity. For a full list of project management tools, check out this full list here. $0 $25
Internal Communication Tool: If you plan to have multiple members on your team, you may want to consider an instant message tool such as Slack or Telegram. The cost is usually billed per month (approx $5/user/month) or there are freemium versions available on many platforms. $0 $20
Social Media Management Tools: If you plan to do social media marketing for your soap business, you should consider investing in a social media automation or publishing tool. This will save you time and allow you to track performance and engagement for your posts. Here is a list of 28 best social media tools for your small business. $0 $50
Payroll Software: The main purpose of payroll software is to help you pay your team and track each of those payments (so that you don't have to do it manually). If you do not have any employees or have a very small team, payroll software may not be necessary at this stage. Here are the 11 best payroll tools for small businesses! $0 $200
Online data storage: It's important to make sure the information for your soap business is stored and protected should something happen to your computer or hard drive. The cost for this is affordable and depends on how much data you need to store. To learn more about the different options and pricing on the market, check out this article. $0 $299
Total Software Expenses $150 (min) $2,794 (max)
Website Costs
A Domain Name: Your domain name is the URL and name of your website - this is how internet users find you and your website.Domain names are extremely important and should match your company name and brand. This makes it easier for customers to remember you and return to your website. $12 $200
Email hosting: Email is a critical piece for running your business. Once you have your domain name, you will want to set up email accounts for each user on your team. The most common email hosts are GSuite (typically starting at $6+ per user, per month) or Microsoft Office (typically starting at $5+ per user, per month). The number of email accounts you set up will determine the monthly cost breakdown. $5 $75
Total Website Costs $17 (min) $275 (max)
Advertising & Marketing Costs
Customer Research & Surveys: Many soap business's conduct industry and consumer research prior to starting their business. Often times, you need to pay for this data or hire a market research firm to help you in this process. $0 $300
Affiliate Marketing Commission & Fees: If you want to increase revenue for your soap business, affiliate marketing is a great way to promote your product to a new audience. When determining affiliate commission rates you will offer, you will want to take into account the price and margin for your product to ensure affiliate marketing is worth it for your business. According to Monitor Backlinks, the average affiliate commission rate should be somewhere between 5% to 30%. To learn more about how to set commission rates, check out this article.. $0 $250
Influencer Marketing: Partnering with like-minded influencers is one of the most effective ways to grow your social media presence. Many small businesses simply gift a free item in exchange for an influencer post, or pay the influencer directly. $0 $750
Press: If your business and story is unique enough, press and media attention may come to you, but odds are, you may need to do your own outreach and budget for this. We put together a guide here that discusses different press opportunities (both free and paid). $0 $500
Google Ads: With Google Ads you have the ability to control how much you spend by simply setting a monthly budget cap. Additionally, with these ads you only pay for results, such as clicks to your website or phone calls! It's okay to start with a small budget at first and make changes accordingly if you see valuable returns. $0 $300
Facebook & Instagram Ads: With Facebook and Instagram ads, you set your budget and pay for the actions you want (whether that be impressions, conversions, etc).You can learn more about pricing based on your impressions here. $0 $350
Total Advertising & Marketing Costs $0 (min) $2,450 (max)
Other Expenses
Credit Card Processing Fees: If you process credit cards then you will need to deal with interchange fees - which is usually around 3% of total charges. These fees are often forgotten about and can hurt cash flow if not taken into account. $0 $300
Total Other Expenses $0 (min) $300 (max)
Total Starting Costs $1,057 (min) $27,919 (max)

🚀 How To Launch Your Soap Business

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Build A Website

Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).

  1. Pick a domain name that's easy to remember and easy to type
  2. Choose a Web Hosting Plan (ie. Shopify, Squarespace)
  3. Make sure you choose the right theme and design
  4. Implement the proper page structure (ie. about page, contact page, pricing etc)

To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.

Traditional Launch Strategies For Your Soap Business:

There are various different ways you can launch your soap business successfully.

Here are a few different strategies to get customers excited about your soap business:

  • Set up a Facebook page for your business. This is a great way to establish an online presence
  • Host an event in a fun location with drinks & food. This is a great way to get exposure in the local community.
  • Get Press! Pitch your story to the media and you may just land in an amazing publication
  • Live sales to get customers excited
  • Send a hand-written letter in the mail with a discount on your services to the local community/neighborhoods.

How To Price Your Handcrafted Soap

One of the most challenging aspects to starting a soap business is determining how much to charge for your handcrafted soap.

When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.

Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.

On the other hand, when businesses over-price, this tends to be just as damaging to the business.

When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.

Here are some factors to consider when pricing your product:

Understand your customer

It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:

  • Customer demographic: Age, gender, location, etc.
  • Buying habits of your customer: What they buy + when they buy
  • Level of price sensitivity with your customer

All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.

Understand your costs

When pricing your handcrafted soap, it's critical that you first identify all of your costs and consequently mark up your handcrafted soap so you can factor in a profit.

The actual cost of your handcrafted soap may include things like:

  • The actual cost to make the product (ie. raw materials, supplies, manufacturer).
  • Shipping + overhead fees
  • Rent
  • Operating costs to run your business

You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.

Create revenue goals

When determining the price of your handcrafted soap, you'll want to create goals for revenue + how much profit you want your soap business to make.

This process is simpler than you may think:

  1. Think about your breakeven cost (by completing the above step).
  2. Create a revenue goal based on your break-even cost
  3. Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
  4. Divide your revenue goal by the number of items you plan to sell

This figure will help determine your estimated price per product in order to meet your revenue goals.

Evaluate your competition

The last piece in determining how to price your handcrafted soap is by simply looking at your competition.

The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your handcrafted soap fits best in the marketplace.

All of these factors play an equal part in pricing your handcrafted soap, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.

Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:

I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.

The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.

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Lauren Costanza, on starting Bluminary ($500/month) full story ➜

Danielle Vincent, founder of Outlaw Soaps talks honestly about pricing your products and how to ensure profitibility:

Gross Margins

Our gross margins across all our sales channels and products is about 57%.

Personal care has not historically had great margins, and as we move more into the grocery market, margins get slimmer (we distribute through UNFI, who takes 18% - 20% of our wholesale price). Because grocery margins are so slim, we’ve had to re-evaluate our strategy for grocery stores, and now practically cover it as a “marketing expense.” We cover costs, overhead, and labor, but there’s almost nothing on top of that.

Even though our products are on the higher end of price, we still barely break even. When people tell us that they think our prices are too high (which happens), we just have to grin and bear it. There’s no way to cut our prices without cutting our costs, and right now, we don’t have the volume to cut costs.

So yeah, we can still sell a lot of product and only come away with a little money. The economies of small business really are surprising.

Understand your breakeven

For people who are starting out small manufacturing businesses, be sure to calculate the number of items you need to make and sell per month in order to break even. Can you make that? Can you sell it at a price that’s attractive to your target market? Will you need to up-scale your target market in order to have customers at that price point?

As it turns out, a person has to sell a lot of soap to break even.

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Danielle Vincent, on starting Outlaw ($380,000 revenue/mo) full story

Make Sure You Get The Package Design Right

The way you package your soap business is often the first impression your customer has - so it's important to get it right.

You may want to ask yourself these questions:

If my product is on a shelf next to hundreds of other similar products:

  • Will my soap business stand out?
  • Will the branding/packaging create a connection with my customer, and hence, lead them to buy?

There are hundreds of tools you can use to help with packaging and design:

  • Canva - Allows non-designers to create beautiful Instagram/Pinterest posts, flyers, business cards, etc.
  • Stickermule - High quality custom stickers you can include on or in your packaging.
  • Noissue - Custom tissue paper and compostable mailers
  • Rollo Label Printer - A great tool to print all shipping labels at home

Alegna Soap Packaging Example

Once the soap is fully cured, it’s time to wrap them.

I admit I have a complicated packaging procedure, but I love my labels.

They were designed by a local Long Island graphic art company called Digho. Since my soaps are natural I wanted a way to add color and Digho had some really great ideas. I wrap a strip of colorful material around the soap and then attach a see-through vellum label around the bar. I think it makes my soaps look high end. It’s time-consuming and I know that I’ll need to simplify the process someday. But for now, I take the time to wrap.

The creative part is the personalization of the soap or the decorating and scenting. I think of each of my soaps as being different individuals. What feeling do I want to evoke, what color do I want the soap to be, which botanicals will work with the scent blend? And the blending of essential oils to get just the right scent is another kind of magic.

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Angela Carillo, on starting Alegna Soap ($5,000 revenue/mo) full story

🌱 How To Grow Your Soap Business

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Improve Your Email Marketing

Different types of emails

Here are the most common types of email campaigns you can send to your customers and their benefits:

  • Welcome emails - the perfect way to provide information from the start with a clear CTA. Make sure to tell your customer everything they need to know about your product or service.
  • Newsletters - a great way to give customers updates or send out your latest content
  • Product launch emails - the quickest (and easiest) way to increase sales is by selling to current customers. Make sure they're the first on the list to know about your new product
  • Promotional emails - promote discounts, deals coupons etc. Try and make this feel exclusive and for a limited time only
  • Abandoned cart emails - give your customers a reason to complete their purchase!

Here's a great resource for finding curated email designs, for all types of email campaigns!

Outlaw Soaps Email Marketing Hacks

Be Yourself

In my emails, I am always a person writing as myself: Danielle Vincent, Bosslady of Outlaw Soaps.

I don’t pretend to be doing anything I’m not…

I’m personable and I write frankly about our little company, express our excitement about a product, recount a particularly amazing product review, ask if people have a band (and if they do, would they share their music with us?), and generally be a human being running a company.

Cadences

And I try to keep a regular weekly cadence. Weekly? Yes, it seems like a lot, but we’ve found this is a good sweet spot.

Tell Your Story

I wrote an article for GoDaddy about how to tell your brand story on your website. In the article, I talk about a business’s story being their core differentiator from the bazillions of other companies and manufacturers out there.

Side note: you can see what I mean by subscribing to our newsletter.

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Danielle Vincent, on starting Outlaw ($380,000 revenue/mo) full story

Marketplaces

There are various different marketplaces that you can effectively sell and promote your soap business, whether that's local or online!

Here are some of the most common ones:

  • Your own website! Shopify is known to be the best for e-commerce stores
  • Local places! Gift shops, farmers markets, festivals, grocery stores etc
  • Etsy - E-commerce website for craft supplies
  • Craft is Art Marketplace to buy and sell handmade crafts & fine art
  • Aftcra Online marketplace where you can buy and sell handmade products
  • Storenvy Marketplace for authentic brands
  • Amazon

Outlaw soaps distribution channels

These days, we have a diverse set of distribution channels. I found that having just one revenue channel puts us at unnecessary risk.

The rough breakdown of our distribution channels is as follows:

Amazon - 40%

OutlawSoaps.com - 30%

Grocery - 10%

Wholesale - 10%

Subscription - 10%

We immediately embraced Amazon as a sales channel because I feel like Amazon is going to take over the world. I recorded a quick video overview of Amazon and how the Fulfillment by Amazon works.

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Danielle Vincent, on starting Outlaw ($380,000 revenue/mo) full story

Social Media Advertising

Social Media Advertising is one of the leading ways to get the word out when it comes to soap business.

There are various different Social Media platforms available to you. Some may be more critical for your marketing efforts than others, however, it's important to have an understanding of what's out there and available to you.

Let's talk about a few of the main platforms and what makes them unique:

  • Facebook Advertising - more than 2 billion monthly users. Facebook is the best for lead generation + capturing email addresses for e-commerce businesses.
  • Instagram Advertising - approximately 500 million monthly users and has a higher audience engagement rate than any other platform. Instagram ads are best for linking to a product page or landing page and reaches the 18-29 age group most effectively.
  • Twitter Advertising- Small businesses typically use twitter ads to drive brand awareness, but the platform is meant more for organic engagement (and is not as heavily used for paid advertising)
  • Pinterest Advertising - 175 million monthly users and most effectively reaches the female audience. Pinterest is great for promoting products without "promoted". The promoted pins have a way of blending right in.
  • LinkedIn Advertising - 227 million monthly users and is geared towards the B2B market and generates the highest quality leads. Great platform for recruiters, high-end products and services that will help businesses

It's important to first define your goal/objective so that you don't waste time and money into the wrong platform:

Here are some different questions to ask yourself as it relates to your goals:

  • Do I want to simply drive brand awareness?
  • Do I want to drive users to my website to gather information?
  • Do I want to increase sales and get my customer to take action?

From there, choose the platform that targets your audience best and start experimenting!

Learn more about social media advertising ➜ here.

🏃🏼‍♀️ How To Run Your Soap Business

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Diversify Your Product Line

Adding new products to your business is a great way to expand into new markets and grow your business.

It's important to note that adding new products and diversifying may not be in the cards for you right this moment, and that's okay. You can always consider it down the road.

Here are some reasons you may want to considering adding/diversifying your product

  • Meeting the needs of your customers
  • Establish yourself as a top provider in your industry and stay ahead of the game with competition
  • Resistance to downturns/trends fading
  • Create new revenue streams

How Danielle Is Diversifying Her Soap Business

  • Expanding their relationship with Whole Foods
  • Pitching the primary military store distributor
  • Launching their new spray cologne
  • Creating holiday-specific products!

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Danielle Vincent, on starting Outlaw ($380,000 revenue/mo) full story

Build a Referral Program

Word of mouth is one of the best ways to get the word out about your business and acquire new customers. Especially when you are starting out, it’s important to build a solid referral program to encourage existing customers to help you find new ones.

A great way to do that is by offering a reward (ie. credit on your service or cash) to customers that refer you to their friends and family.

A fantastic referral program will help with clout, credibility, and establishing yourself in the space.

Warnisha Foster, founder of Kiss My Crown Essentials implemented a loyalty and referral program for her customers:

To encourage my customer to come back I implemented a loyalty program. If customers continue to return and buy products they get exclusive discounts. I even started a friend of friend discount so that when my customers shared my products with other both parties would get discounts off of their purchases.

Also, building a rapport is what worked for me. I treat all of my customers like friends.

They can message me anytime with questions about my products and skincare. And I create those personal interactions for them. I never want my customers to feel like their only interaction with me is transactional.

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Warnisha Foster, on starting Kiss My Crown Essentials ($1,200 revenue/mo) full story

Tools to get started:

As a soap business, there are some tools and platforms you may want to consider when getting started:

Resources

We put together the best resources on the internet to help you start your soap business.

Tools

Books

Web Resources

Videos

Case Studies

Pat Walls,  Founder of Starter Story

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Tarek
about 2 months ago

The information i found are unbelievably helpful, well written and summarized, couldn't hope for anything better.