Price Fix: How Indie Beauty Brands Determine What To Charge For Their Products
In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask 16 brand founders and executives: What’s your price range, and how did you land on it?
- VALERIE OBAZE Founder and CEO, R&R Luxury
Our products are priced between $5 and $36. As a brand, it was important to me that we ensure our products are affordable and accessible to as many people as possible. Our pricing has changed only twice over the past nine years, and slight increases have occurred where new formulations have been developed and where our packaging has been upgraded.
It’s important to make sure you give your products and yourself the credit they deserve. One of the most helpful business tools I’ve ever used to date is the Price-O-Matic system from Lela Barker of Lucky Break Consulting. It is a great tool which calculates your cost of creation from raw materials to packaging and production time and, then ,allows you to set markups (you can find the standard for your industry online). The tool gives you suggested wholesale, distribution and retail price for each product. It is simple to use and effective.
- JEN AUERBACH Co-Founder, Clary Collection
When calculating our price structure, we wanted to ensure we were accessible to most. We had to take into account that our products were made with the highest quality unrefined organic ingredients, poured only into glass and packaged with earth-friendly biodegradable packaging.
Trying to do right by your skin and the environment comes at a premium. I remember my business partner Adriel saying, “I want to have a small tin for $5 at the checkout of every Walgreens.” And me saying, “But what if that cheapens our brand and people think we are only worth five bucks?” It turns out it only took me two years to see she was correct, and we should be offering both price points.
We now have a large balm at $26 and our smallest size at $8. Our mission has always been to give access and education to safe skincare and, if that means sacrificing a larger markup on some items, that’s a moral cost we are willing to eat.
- Kara Soule CEO and Co-Founder, Verdant
Pricing can be head-scratchingly difficult and complex. Our prices are determined by our values, customers and costs. We’re intentionally entirely self-funded, so thankfully we don’t have to factor in outside investor profitability requirements. We value supreme ingredient quality, so we spent a year very patiently sourcing the best ingredients. Our better ingredients are much more expensive (surprise, surprise!), but we also wanted a realistic product price point.
We spent significant time reevaluating and honing our supply chain to reduce costs without sacrificing quality. Ultimately, we achieved our goal of an outstanding product at a market reasonable price that generates a fair, business-sustainable profit. Our current products range in price from $45 to $145.
- Thomas Neuberger Co-Owner, P.F. Candle Co.
When we were first starting the business, we had a couple of complicated formulas that we used for pricing. First was to add up the cost of materials, figure out how long each product took to make, then add an hourly wage to that. That was complicated and didn't really scale when we started hiring staff. So, our next method was just to price it a certain percentage above the cost of materials.
That worked great until we had a very labor-intensive product, our incense, and we didn't price that labor correctly into the price of the product. We now add up our estimated labor cost and price of goods, and aim to make a particular profit margin with both included. That is ideal, but there are specific price points we want to hit based on competitors' products and what we think our customers will pay, so we will sometimes eschew our margin goals to get a product out that will sell well.
Since I've started working at P.F. in 2013, we've done plenty of price decreases with a discontinued product, but only three increases. The first was when we moved our standard 7.2-oz. candle from $16 to $18. We were overwhelmed with business, and our wholesale customers were complaining they couldn't compete with the prices, so we just raised them. We didn't say much, but also the company wasn't too old, so we didn't know any better.
The second increase was incense. When it got into production, it was much harder than we had anticipated. We didn't think about hand batching 15 sticks, which takes a long time. At first, we just raised the price and got a complaint, so we came back with a whole marketing campaign explaining why we had to do it. It was either raise the price or get rid of the product. Consumers loved knowing why we were doing what we were doing. We raised the rates on five products this year, employed the same strategy, and got an excellent response.
- Brian Oh CEO and Co-Founder, VENN Skincare
Our product prices range from $65 to $185. We don’t have a preset product price in mind when we create our formulations. We build our formulations based on the best ingredients we can source (both quality and efficacy) and, then, calculate our product prices based on our costs.
As a new brand, it’s very important to compete with quality since we can’t simply sell a product based on brand power, so we set as our internal R&D policy not to think of ingredient costs when creating our formulations.
- MARISKA NICHOLSON Founder, Olive + M
From the very beginning of my journey as a single mother of two, my main goal was to create clean and effective products that a single mom could plug into her budget. Inclusivity through accessibility.
We launched the line in 2015 with several products with prices ranging from $58 to $68: Face Oil (2 ounces, $68), Cleansing Oil (4 ounces, $62) and Body Oil (4 ounces, $58). Then, from 2015 to 2018, we expanded the line by adding travel sizes of our three originals as well as adding five more SKUs to the line: Eye Serum, Face Polish, Body Polish, Antioxidant Balm and Shimmer + Glow Body Oil. This expanded our price range from $36 to $68.
As a brand, we have seen increased growth over the past year. This shift has opened up a larger network for not only sourcing the highest quality ingredients at a lower price, but decreasing our manufacturing costs as well. Make no mistake, we are still keeping our promise to deliver ethically-sourced, all natural products because that is a vital part of our clean-beauty-for-all initiative.
When this shift in sourcing and manufacturing happened, I presented my team with the idea of lowering prices to pass these savings along to our customers. We all agreed that it was our social responsibility for linking back to the DNA of the brand: inclusivity through accessibility. As of May 2019, our price points range from $24 to $48, with our intro set (a tester trio of our three originals) priced at $18, down from $30.
- Amber Fawson Co-Founder, Saalt
Our single cup currently retails between $27 and $32.99. As we were developing our first product, the Saalt Cup, we made every choice knowing that we wanted to make a premium cup with premium materials in a world-class manufacturing environment in the US while keeping the price at about $30 so customers didn't have to compromise on quality or price.
Though we knew there was room to create a top-of-the-line product at a higher price, it was important to our company mission that our cup also be available to a person who is stretched on their budget. We wanted our cup to be one of the best investments you could make for yourself so that customers couldn’t help but tell their friends about it.
- Lourdes Gaudiano Co-Founder, Luly Gaudiano
My price range is between 30.00 and 55.00 Swiss francs for the full-size products (250 milliliters) [or $30 to $54 at the current exchange rate.] Since it’s a Swiss-made brand, I knew it was going to be on the higher range, not only because the workers here get paid properly, but, when it comes to quality, the Swiss make sure to get the best of the best. I’m very lucky to work with a producer that has the same values as I do, so the ingredients I use are sourced directly by them, making sure that they are first quality, and that the workers have ethical working conditions and are paid fairly.
The bottles come from a well-known British packaging company, which means they have recyclable plastic made with high-quality materials. The labels are produced in Austria by a top label producer who won an award for best employer of the year. All of these add to the final price. I wanted to make sure that the person buying my brand knows that they’re buying a product with good karma.
- Kan Cao Founder, Bluelene
We made the decision early on to offer our brand on Amazon as well as on our own website to make quality skincare available to the masses. Our line currently has two SKUs and a third set to launch. We felt that products that fall in the $34 to $40 range were more appealing to our demographic. Why not make innovative skincare affordable for most everyone?
- Emilie Hoyt Founder, Lather
I think the mistake many other brands make is to put all of their money into packaging instead of the formula. We follow the 80/20 split, which means 80% of our product cost goes into the formula, and 20% goes to packaging. For most other brands, it’s the other way around, and it may look good on the shelf, but does it really work, and will the customer repeat purchase?
Additionally, in the natural skincare world, many brands price their products so high that it becomes an unattainable luxury to use clean and safe products. My motto is that everybody, particularly those who don’t have a high disposable income to invest in their wellness, should be able to access and use (on a long-term basis) healthy, nontoxic skin, body and haircare products.
- Jennie Fresa Founder and Owner, Copal Clean Beauty
Our price range is about $35 to $75 for a cleanser. For our brick-and-mortar location in Madison, Conn., I did some market research and learned that most of our clients (average age 45 to 55) who were interested in switching to cleaner beauty were coming from using more high-end traditional cosmetics. That said, I also wanted to provide good products for millennial clients. Our online store, Copal, is definitely aimed at this market.
- Dave Wongk Founder and CEO, Pure Tropix
Pricing to me is all about perceived value. You need to know your customer to extract how much they are willing to pay. This starts by assessing and adding all of the benefits a customer will get from using your products.
I used a different process to find the best pricing for our products. In fact, I still haven’t completely perfected our pricing because we haven’t been around long enough to have enough records to compare. This part of our strategy is pretty much trial and error. Thanks to our unique selling proposition, we know we have the ability to play with the pricing of our products. If we sold only commodity products, we wouldn’t have any leverage at all.
Basically my pricing strategy consists of setting a base price for any product at a small premium. I then reprice our products at regular intervals making sure to take notes on how the product performs at each price.
- Michelle Ranavat Founder, Ranavat Botanics
I think this is a question that is very brand specific. I wanted to keep the price point at a place where I could afford to put luxurious ingredients, but not alienate a large portion of the consumer base.
My personal philosophy is to always include. So naturally with my line, I would rather have more customers (due to a lower price point) than fewer customers at the higher price. I think in the long run, having more customers that try and love your product can turn into even more happy customers.
- Amy Regan CEO, Skinfix
We did a thorough analysis of the skincare market. We looked at both natural products and conventional. We wanted to be an accessible prestige brand, so determined the target price points (depending on the product) that made sense and took into consideration our cost of goods, the fact that we are natural and the fact that we are problem-solution.
We came up with pricing that we felt represented a good value for the consumer. We offer a premium, effective, natural product at a very accessible price point. I think our pricing strategy is one of the key reasons behind our success.
- PAAYAL MAHAJAN Founder, Essential Body
My products start at $95 and go up to $1,111 for my Couture Vanity (I only make five of these at a time). My pricing model had to work in line with my brand’s positioning. It also had to account for my costs and my ability to turn a profit from my business.
My costs of production are high. I source my ingredients carefully and thoughtfully. I don’t bulk order ingredients and let them languish on my shelves. When you aren’t doing high volume production, your costs will be high. Essential Body is not intended to be a mass brand. It is couture skincare.
When compared with global products, my prices fall into the luxury category. But, among Indian brands in India, mine is the most expensive. Then again, if you’re looking at creating something that is in line with sustainability and couture, every detail has to represent it. People are perceptive and know right away when you’re cutting corners. That is not an option for me.
- Sébastien Tardif CEO and Co-Founder, Veil Cosmetics
Veil falls under the prestige category. Before launching, we worked in the beauty industry within that category and range, so it was a natural choice to follow. Choosing quality ingredients and packaging, being made in Canada and being an indie brand with smaller order quantities are all factors driving the cost of goods upward. Therefore, the [products are at a] prestige price point.
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