Getting Down to the Nitty Gritty of Soapy Finances

On the days that I make soap, I admit that I get very excited in anticipation of the day. Because I work full time at a secular job, I don't devote my time entirely to soaping, but have to set aside a time in the week for it. The time I set aside is a real treat for me and I look forward to that day that I have set aside immensely.

So, at this point at least, making soap is not my method of making ends meet, not even close. It IS a desire of mine to make that a goal, however. With that thought in mind, I chose to review what my costs are to make my soap, and how much I am making as profit on my soap...or am I making a profit?

As with most new little start up businesses, and this is a business for me, they don't always make money intitially. In the first few years of opening my little soap business, I showed a loss because of buying equipment and getting enough supply to make it viable. Then, it was drawing customers to my soaps and building a customer base. It all takes time. Now, I am at a point where I am breaking even (whoo hooo!) I am learning to make the most of my soaping methods. Still, I would certainly like to do much better than "break even".

It was time for me to review how much it is costing me to make my soap. Am I charging enough for this amazing stuff? Am I counting in all my cost factors? So, I began to break it all down...the results were just a bit eye-opening for me. I already know basically how much soap I will make this year based on customer purchases and trends from the previous year, so base my cost per estimated bars I will make.

Here is how I broke it down:
I added up the cost of the supplies I use most often in my soap per batch, such as oils, sodium hydroxide; the basic stuff.
I added up the cost of the "extra" supplies that I most often use per batch, accessory stuff like, calendula blossoms, rose petals, fragrance or essential oils, oxides, micas and other fun little additions to the basic soap formula.
I added my basic cost of packaging each bar of soap.
I averaged the yearly cost of supplies that I use regularly, such as soap molds, wax paper, bowls, scales etc and broke it down per bar.
I added basic prep and production time per bar of soap (like paying myself wages for making them)...about 1/2 the amount per hour that I make on my "usual" secular job.
I added Paypal fees, listing fees, fees when the soap is sold, and average per year craft showing fees per bar of soap.

I did not add cost of electricity, sewer, water, phone, internet access, although I should if I were to be more accurate.

The end result?

At my current charges per bar of soap, I only make about $1.62 per average size (4 to 4.5 oz) bar! That is paying myself wages. So, this little extra money would be the stuff I would put in the my savings for my next vacation?

At that rate, it will be years before I get a vacation!

Could I cut more corners and make more $$$? Absolutely! It would take some additional sacrifices of freshness of the oils I purchase and quality of my product to do it though. If I bought more bulk product, it would certainly be much less expensive. The down side is that I don't make enough product right now to ensure freshness of my oils if I bought bulk, so resort to making smaller batches at this time. There are a lot of other small ways I could cut costs and I am still in the process of streamlining and revamping some of the things I do.

Doing this was a great reality check for me even though I already kind of knew it based on keeping decent records that I wasn't making the thousands that I always envision.

BUT...It won't keep me from continuing to make soap. This is wayy too much fun!