You are about to start creating your first batch of candles to sell for your small business, but then you have a thought. How much should you price your candles to be profitable in your candle-making small business?
We have a sample candle pricing worksheet as well as tips for your business. We will learn about:
- How to recognize and calculate variable costs.
- How to recognize and calculate fixed costs.
- An example for calculating the cost of making a 4-ounce candle.
- The key 3 tips for pricing your candles, including the recommended profit margin, in which your business should achieve.
Differentiating between variable costs and fixed costs is important for calculating what price at which you will sell your candles.
Calculating Variable Costs of Making Candles
Calculating the variable costs of making candles includes taking into account how much candle supplies, labels, and shipping all cost.
The Candle Supplies You Need
The bulk of your variable costs will come from how much it is for the amount of candle supplies that you use to create each candle.
Candle supplies include:
- Candle wax.
- The Candle wicks.
- Fragrance oils.
- SKU (if applicable)
Once you have purchased all of your candle supplies, you need to note how much it costs per unit. You can find this information in the product listing on the wholesale website that you use to purchase your candle supplies. You can also simply calculate the unit cost by taking the total amount you paid and dividing it by the total number of units in the package you received.
If you are not sure where you want to get your candle supplies, start with CandleScience. This company is America’s #1 top soy wax supplier for those who wish to make candles as a hobby or even small business candle makers.
Calculating the Cost of Making a 4-ounce Candle
Let’s calculate the cost of making a 4-ounce candle by evaluating the cost of using wax, wicks, and fragrance oils to create the candles and the containers, lids, and labels to package the candles.
Let’s do a calculation example. CandleScience sells their 45 lb. case of Golden Wax 464 Soy Wax for $90.19, which is $2.00 per pound. One pound is equal to 16 ounces. Hence, one pound can make four 4-ounce candles.
Purchasing a 45 lb. case can create eleven 4-ounce candles. Hence, the soy wax alone costs 50 cents per 4-ounce candle.
Candle wicks are important to help burn the candles evenly when clients burn them in their home.
CandleScience sells a pack of 1,000 ECO 2 6 “pre-tabbed wicks, which cost $61.20. This equates to 6 cents per candle wick.
According to Scandinavian Candle, you only need about 2.7 ounces of fragrance whenever you make 4-ounce candles.
A 5 lb. jug of cypress and bayberry fragrance oil from CandleScience costs $108.85, which is $1.36 per ounce. Hence, there are 80 ounces in this 5 lb jug.
Hence, A 5 lb. jug of fragrance oil can make twenty-nine 4-ounce candles.
To make one candle, add an additional 3 cents total cost of creating one candle. You can discover this by making 2.7 ounces per candle divided by the 80-ounce jug in which they are taking these ounces from.
Whether you want to use tins or glass jars, you need to use a suitable container to be able to package your candles.
For example, the cheapest case of 120 tins that fit 4-ounce candles costs $85.59 total, which is 71 cents per tin.
Some candle-making wholesale companies sell lids separate from the containers, while others sell containers with lids. In this case, we will not add lids to the calculation because we found CandleScience tins that come with lids.
According to Rival Branding, if you print about 2,500 product labels yourself, that costs about $425 which is 17 cents per label. Of course, this depends on the type of labels that you purchase, what wholesale company that you use to purchase them, what software you use to customize your labels, etcetera.
You can actually design your own product and warning labels by following these steps:
- Design the label and note the dimensions of it in the design software in which you are using.
- Purchase labels that correspond to these dimensions so that they fit on there.
- Print a test batch of them to be sure that they come out correctly.
- Edit accordingly until the label is to your desired specifications.
If you prefer to have someone else complete the design work for you, it could cost an extra $100 to $250 depending on what the designer charges as their rate. Hence, going this route could run you about 21 cents to 27 cents per label instead of 17 cents per label, making it yourself.
As for warning labels, they are easier to purchase on a wholesale website. It costs $20.36 to purchase a roll of 1,000 warning stickers that measure 1.25 inches each. That would cost 2 cents per label, as you would only need to put one on the bottom of each candle.
Shipping depends on the following variables:
- The size and weight of the candle.
- The cost of the box you use to ship it in.
- The cost of shipping labels.
- The shipping provider you use whether USPS, FedEx, or UPS.
- The state in which you are shipping it from and the state you are shipping it to.
For sake of calculation, let’s say that it costs about $1 to ship one 4-ounce candle to a client if you were able to sell a candle without being in person.
Determining the Fixed Costs of Selling Candles
Fixed costs of selling candles would include labor, insurance, and listing fees.
Labor costs would be calculated based on the number of candles you are able to produce versus the amount of money you pay yourself for one hour of working.
Insurance costs would be calculated based on the total monthly business insurance you pay versus the total number of candles that you make per month.
Listing fees are contingent upon the price that an online marketplace such as Etsy or Facebook Marketplace sets for their marketplace sellers.
Labor costs would always remain the same as long as you maintain the same number of employees and the same amount you pay per employee.
For sake of calculation, we will say that it is only you creating the candles as your candle-making business is a sole proprietorship. Say that it takes you about 1 hour to make fifty 4-ounce candles. Say that you pay yourself about $18 per hour. This means that the labor cost of each candle that you make would be about 36 cents.
You will need to have some type of insurance for making candles in your home even if it is only, you as the sole proprietor doing so. Say that your business insurance costs $100 per month. You would calculate the insurance cost for each candle made based on the number of units that you create in one month. If you create 250 candles in your first month of business, then the insurance cost involved for each candle would be 40 cents.
Say that you want to sell your candles on Etsy to reach more of an online market amongst your target market. Their listing fees are 20 cents per item. Hence, you would include this 20 cents listing fee in your total cost of making each candle.
Sample Candle Pricing Worksheet
Here is a sample candle pricing worksheet based on the calculations that were made in the above text. Once you have calculated your specific totals, you can edit this worksheet to fit your business.
|Product or Cost||Cost Per Unit|
|Wax (45 lbs of 464 Golden Brands= $2.00 per pound)||$0.50|
|Lids||N/A (containers come with lids)|
|Total Cost Per Candle||$1.90|
|To reach 33% profit margin:||Sell at $3.00 per 4-ounce candles|
|To reach 50% profit margin:||Sell at $4.00 per 4-ounce candles|
Since in this example the cost is so low per candle, you can actually maximize your profit even more if you decide to charge your ounce candles at the mass market price starting at $5 to $6 per candle.
3 Tips for Pricing Your Candles
Now that you know how to calculate all the costs involved with making your candles, now it’s time to discuss some tips for properly pricing them.
Your goal as a small business is to make a profit off of your products. Use the above examples in each section as well as the sample worksheet to figure out your candle’s specific costs for making each one before you delve into deciding a price for them.
1. Pricing to Fit Your Target Market
Think about what your target market wants to pay for their candles.
Most people, which is called the mass market, usually do not want to pay more than $8 per candle. Depending on the size of the candle you are trying to sell, you can sell the candle for $4 to $5 to hit the lowest recommended profit margin for your business, say if your candles cost $2 to $3 to make per unit.
CandleScience says that mid-market pricing per candle is $9 to $14 each, and the high-end market is $15 to $22 or more per candle.
2. Profit Margin Should Be 25% to 50%
According to Epos Now, the average recommended profit margin that you should hit for a new candle business is 25% to 50%. Hence, if your candles cost $3 to make, you would have to sell them at $6 each to hit a 50% profit margin.
Profit margin is calculated as (Total Revenue-Total Costs)/Total Revenue.
In this example, if your total revenue was $6 and your total costs were $3 just for selling that one candle, then that 50% profit margin will be reached. This means that it’s best to try to sell your candles at double the cost it took to create them.
- (Total Revenue-Total Costs)/Total Revenue= Profit Margin
- ($6 for 1 candle sold- $3 to make it)/$6= Profit Margin
- $3/$6= Profit Margin
- 0.50= Profit Margin
- 50%= Profit Margin
3. Always Purchase Your Supplies in Bulk
Purchasing your candle supplies in the highest bulk value from your wholesale company will guarantee you the lowest possible unit price per product unit so that you lower the overall cost of how much money you spend creating one candle. Hence, you will make a larger profit by keeping your costs low.
Flourish In the Fire of Your Business!
Whether you are just starting out in the candle-making business or you just needed a little reminder on the best way to find out the cost and possible profit for your candles, we hope you enjoyed this resource and that it helps your candle-making business to flourish!
What size candles should I offer?
Offer a variety of candle sizes for your clients such as 4 ounces, 8 ounces, and 16-ounce candles. For the holidays, you can even offer 24-ounce candles because people burn candles more during the cold winter months and would need more wax to do so.
What types of fragrances should I offer?
Lavender and vanilla are the top candle flavors to offer, along with other floral and fruit scents. As the holidays roll around, you can offer seasonal flavors such as sugar cookies, pumpkin spice, apple cinnamon, gingerbread, and more.
Looking to start your own candle making business, check out my startup documents here
Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.
Meet Shawn Chun: Entrepreneur and Candle Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online candle business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a candle business owner at a craft fair, farmers market, retail location or anywhere else I see myself. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive. That’s why I created Candle Business Boss: I want to help candle business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.