Business Strategies


Pointers to Make Sure Your Handmade Soap’s Price is Right

One of the most challenging aspects of running a handmade soap making business is determining how much you will charge per handmade soap that you are about to sell.

Going too low might not cover your handmade soap recipe costs or worse, it might correspond to losses on your end, like taking away quality fragrance oils from your recipes.

Pricing handmade soap making kits too high, however, might turn off your potential buyers, too. To find the sweet spot in pricing your merchandise, determine and calculate how much it will cost you. For starting a handmade soap business or any business, the universal formula to be used is:

(Raw Materials + Fixed Cost + Labor Cost) x Markup = Retail Price Per Piece

To achieve the minimum base production cost, add up the raw materials, fixed cost, and labor cost. This basically gives us an idea of how much the handmade soap is worth.

On the other hand, the markup or profit is the amount added on top of your base price to arrive at your selling price. To give you a better idea of each component, check out the 4 pricing aspects you should always consider:

1. Raw Material

Find out what type of handmade soap you want to sell in the first place. Your choice will ultimately be the baseline on how to price your products.

Will it be a bath bomb or an organic handmade soap? Perhaps it’s a fruity one or one with essential oils? This will also determine what method you are going to use. Will it be melt and pour, cold/hot process or milling, DIY bath bomb?

Each type will require different handmade soap supplies that may raise or lower your overall cost. See below for a sample breakdown of raw materials for a purple lavender handmade soap:


Fragrance: Lavender $6.50
Color: Purple $8.00
Oils: Olive $15.00
Water: Distilled $4.00
Lye $15.00
Packaging (Wrapper, Jute String, Logo Print Out) $10.00
TOTAL $58.50

 $ 58.50 / 75 pcs = $ 0.78

(Total Raw Materials / Number of Bars = Raw Material Cost per Bar) 

2. Fixed Cost

Basically, fixed cost is the cost of running any business. This covers electricity, rent, and other utilities required to produce your handmade soap products.

Fixed cost may vary from month to month depending on your manufacturing consumption so it is important to accurately compute this to cover your monthly recurring expenses.

Assuming you’re working at home, here’s a sample calculation below, omitting the room/store rental:


Electricity $30.00
Water $15.00
Phone $20.00
Internet $70.00
Equipment (i.g. Mold, Tools) $45.00
TOTAL $180.00

(Monthly  Fixed Cost / Number of Bars = Fixed cost per bar)

3. Labor and Manufacturing

Never ignore your own labor costs. Determine how much per hour will you charge for yourself and establish how many hours it would take to complete a batch of your handmade soaps.

Don’t forget to factor in your prep time, cleaning up and doing your own packaging. These would already give you a rough estimate of your own monthly rate. Here’s an example:


Preparation Time $30.00
Making the handmade soap $15.00
Cleaning Up $20.00
Packaging $70.00


Preparation Time $30.00

 2hrs & 30min x $10.00 per hr / 75pcs = $0.33

(Hours x Hourly Rate / Number of Bars = Labor cost per Bar)


4. Markup

After figuring out how much your handmade soap bar costs, it’s time to include your revenue per product sold or your markup. Adding this to your base production cost will ultimately give you your final retail price. Experts recommend markup of 150%-200% or multiplying the base cost by 2.5 to 3.

Based on our sample above, here’s the final selling price of the lavender bar handmade soap:

(Raw Materials $0.78 + Fixed Cost $0.40 + Labor Cost $0.33) x 2.5 Markup = Retail Price Per Piece $3.78

All these aspects are what makes up the overall pricing of your handmade soap making business. Keep in mind to work on a trial and error basis by adjusting your costs and experimenting on your mark up in order to find the right price for your homemade handmade soap products.

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Pricing Strategies to Increase Your Profit Margin

How to Get Your Handmade Soap it’s Deserved Profit

Starting a soap making business requires research, choosing soap making supplies, manufacturing handmade soap and of course, making a profit out of it.

Now, before going out there and finally getting soap making kits available for purchase, make sure to correctly price the handmade soap to cover the costs and still make enough revenue out of quality soap recipes.

Here are the different pricing methods one should take note of to maximize the business’ profit margin, before arriving on the final retail selling price:

1. Penetration Pricing

The biggest challenge in launching a new handmade soap into the market is intense competition. To be given an opportunity for the customers to try your new soap handmade soap, one way to go about it is to price it relatively low and thus enter or penetrate the market. This tactic is setting a low initial entry price or what we usually see as an “introductory offer”.

On a short-term basis, introductory offer may not generate your soap business with surprising revenue increase due to the low profit margin. However, in the long run, being able to induce trial and capture a huge market share will reap long-term profitability.

     Photo Credit: Spruce 

2. Fixed Amount Strategy

By the name itself, this method is all about determining and adding a fixed amount on top of your cost to arrive at your retail selling price.

This approach is widely used since those starting a soap business will know for certain the amount of gross profit margin each sale will generate. The con however, is that the amount may not reflect competitive pricing within the market. Here’s a sample formula:

Unit Cost X Markup % = Selling Price

$ 10.00 x 150% = $ 15.00

3. Psychological Pricing

This technique is used to assign certain price points where buyers may think they are getting a bargain for the handmade soap. This is based on the theory that certain amounts give a psychological impact on the purchasing behavior of buyers. Usually these target customers are looking for value for their money.

As an example, a potential buyer might think your soap priced at $15.00 is too much. But they might buy your item for the cost of $14.99 thinking this is cheaper.

Photo Credit: Pinterest 

4. Bundle Pricing

This strategy is basically putting together two or more of your soap handmade soaps and selling them at a certain price that would be relatively lower if sold individually. This is a known method in selling out your slow-moving items by bundling them at a lower price altogether which can give a notion to your customers that you are giving them something for free.

You can also pair up a less bought soap with your bestselling one to induce trial for your bestselling soap patrons. Here’s a sample scenario:

Lavender Soap (Bestselling Item) = $10.00

Milk Soap = $8.00

Special Bundle Offer for Lavender + Milk Soap = $14.00

Take these strategies into consideration to make sure you still make a profit out of your soap business. Study the homemade soap industry and determine which method would best fit your handmade soap. In the long run, it’s all about having the tenacity to implement various methods in order to arrive with the pricing strategy that works for your business model.

Need craft supplies for your DIY Soap and Bath Bomb projects?

Our handmade soaps are carefully curated to bring to you the best of the marketplace including All Natural Bulk Dried Edible Flowers, Skin Safe Liquid Soap Dye, and Mica. Creativity drives us to keep our offerings on trend and in style.

Purchase from our Store and get these resource booklets for free!

Interested in crafting ideas like Bath Bomb Recipe, DIY Bath Bomb, How To Make Bath Bombs and more? Let us inspire the creative spirit in you. Browse our blog for more handmade soap recipes.

Let’s connect via Facebook and Pinterest and you might just win a free giveaway!

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