How to Price Your Handmade Cosmetics for Profit
A practical guide to calculating true COGS, setting wholesale and retail prices, and building profitable margins for your handmade cosmetic business.
One of the biggest mistakes new cosmetic makers make is underpricing their products. If you are not tracking your true cost of goods sold (COGS), you are likely losing money on every sale.
Why spreadsheet pricing fails
Most makers start by adding up ingredient costs and slapping a markup on top. This misses several real costs that eat into your margin: labour time, packaging, overhead (electricity, insurance, workspace), waste, and testing batches.
The COGS formula
Your true cost per unit should include:
Ingredient cost — the actual cost of raw materials for one batch, divided by the number of units produced. This is where knowing your price per kilogram matters. If you buy shea butter at CA$28/kg and your recipe uses 50g per batch of 10 bars, that is CA$0.14 per bar just for the shea butter.
Labour cost — track how long it takes to make a batch from start to finish, including setup, cleanup, and curing time for soap. Even if you are not paying yourself yet, assign an hourly rate.
Packaging cost — boxes, labels, shrink wrap, tissue paper, bags, stickers, tape.
Overhead allocation — a percentage to cover rent, utilities, insurance, equipment depreciation, website hosting, and other fixed costs.
Setting your prices
A common pricing framework for handmade goods:
- Wholesale price = COGS × 2 (100% markup)
- Retail price = Wholesale × 2 (or COGS × 4)
This gives you a 50% margin at wholesale and a 75% margin at retail — enough to cover the costs that fall between COGS and profit.
Example calculation
A batch of 10 lotion bars:
- Ingredients: CA$12.50 (CA$1.25/bar)
- Labour: 1.5 hours × CA$20/hour = CA$30.00 (CA$3.00/bar)
- Packaging: CA$0.85/bar
- Overhead: 15% of ingredients = CA$0.19/bar
COGS per bar: CA$5.29
- Wholesale: CA$10.58
- Retail: CA$21.16 (round to CA$21 or CA$22)
Tracking costs over time
Ingredient prices change. Your COGS from six months ago might be wrong today. The upcoming FormulaNorth costing tool will auto-calculate COGS from your formula using current ingredient prices, so you always know your true cost.
Resources
- Browse Canadian supplier pricing to benchmark ingredient costs
- Check our shop for a COGS calculator spreadsheet
- Explore the ingredient database for typical usage rates
Cost a real product
Try the free Cosmetic Cost Calculator — get cost per unit, cost per batch, and suggested wholesale and retail pricing in seconds.
Open the cost calculator