Hey guys today I'm going to be talking to you about how to price your candles. If you haven't
already, you want to start this video by watching our video, called How to Determine Your Cost of
Goods Sold. So your pricing is definitely going to need to take into consideration what your
costs are. So you want to start with that video. We'll drop the link below if you haven't watched
it already. Come back to this video next and start with the video on determining your cost of goods.
So if you've already watched that video, and you know what your cost of goods are, you're now ready
to start pricing your products. And there's a few considerations and steps in market research that
you want to take. The biggest thing I find is that candle makers are often under charging for their
products and they feel that they just can't get the price that they want in their market for their
products or for the level of luxury or quality that they offer. So, i'm here to tell you that if
you are interested in selling your products for a premium, you definitely want to watch this video
because I'll walk you through how to determine what the appropriate price is for your candle. So
I always start in one place and that place is market research. If you have a luxury brand,
take your time, research plenty of other luxury candle brands. You especially would like to look
for those that have any sort of similarities to your brand. So if you're using a marble vessel,
or you're using a lid, or nice packaging, look for brands that also have those same qualities to them.
And ideally look for products that are similar size to yours. You don't want to compare a 5 ounce
tin to a 13 ounce candle because the prices will be totally different. So, look for similar products
in a similar place. I like to just compile them as spreadsheet and have the product name, and the
price. That way I can compile 10, 15 or more options, and I can look at kind of generally what's going
on in the market, and what others are doing. And if they're successful brands, that's generally who I'm
trying to look towards. I can see a great market example for what people may be willing to pay for
that product. So in that same token you want to ask where does my customer shop? Is this candle being
made for somebody who shops value and bargain? Or is this candle being made for somebody who shops
luxury or natural products? Again, that will all tie into your market research so you
can determine what your customer is willing to pay for the product that you're selling.
Next, you also need to take into consideration your cost of goods. So
head on over with me to my computer, and we're going to crunch some numbers, and I can explain
to you guys how to price your products if you're selling retail and wholesale. Be right back!
Okay so now that we've done our market research, and we've also determined what our costs are, now
we can look at actually pricing our products. So simple formula that you guys can use,
you may want to use a different formula if you don't plan to sell wholesale - which means
that you're not going to sell to retail stores or other businesses that will resell your products. So,
if you plan to sell wholesale, please keep in mind that most wholesale stores expect a 50 reduction
on your retail price, and you definitely want to keep that in mind when you're pricing out the
retail price for your candles. So a formula that most candle makers use it's very tried and true
is four times your cost, will be your retail price, and two times your cost will be your
wholesale price. So, we have our cost of goods listed right here. I don't typically especially
for a product like this one that's priced at a higher premium, like to go down to the exact 4x
amount. So, I am just going to use $60 as my price point, which is roughly, it's a little bit under
4x of what my costs are here and clearly this is a luxury candle that we're making. So, my wholesale
price is going to be half of that, we'll call this your retail cost, and your wholesale cost will be
30 dollars. So, if we do the math basically what you you will do is you're going to take your retail cost,
subtract your sorry your retail price and you're going to subtract your cost and then you're going
to divide that by your retail price. So that is going to give us our margin on the product.
So you would have approximately 74% margin on your retail, and on your wholesale we're going
to follow that same formula. You'll take your wholesale price, you will subtract your
costs, and you are going to divide it by your wholesale price and that's going to give us
about a 49% margin. So pretty close to a 50% margin. These are super super healthy margins for you
guys. You can also, depending on your market research which is critical to this piece, you can
bring these costs up or down if you feel you can charge more for your product based on your
market research, great do it. If you feel you need to be more competitive then you may want
to consider taking a lower margin and bringing these costs down a bit. You can of course play
with that right here now that we have our margin in this column. You can see what does it look like
if I charge $55 retail and 20 whatever that is $27.50 wholesale. And you can play around with that
and determine what sort of margins you'll have based on the price point that you feel
suits your market and that your customer is willing to pay. So, hopefully this video
really helped you guys to determine your price point and if you have questions about what you
feel you should be charging for your product, I definitely suggest you join our facebook group
the name of it is Wooden Wick Co. Candle Making. You can get constructive feedback, and just insight from
our community on what they think of your price point based on what type of candle you're selling.
Feedback is critical in this kind of beginning stage of determining your branding and your
pricing. So the more feedback that you can get the better. Thanks so much for watching and be sure to
subscribe to our channel to stay in the know on all the latest makers tips and tricks happy making!