With more and more people working from home and the trend continuing in the near future, more people are spending time at home—which means they’re looking to make their home and home office the best place it can be. So how can you tap into that market of home and office décor while making your own profit? By making your own candles, of course! But is the business profitable?
Is candle making profitable?
The profit margin on candles is 25 to 50 percent. While profit is dependent on how much inventory and product you have, along with any outside costs such as a building space or payroll, if your investment is initially $1,000, your net profit could be between $1,250 and $2,000. If you decide to move forward and invest more, you could make between $25,000 and $50,000 a year.
Like most businesses, your potential business can only make money if you put money into it. But what is the average cost of your candle? What are the most profitable? Where can you sell your candles, and how can you make even more profit off your product? Read on to find out more.
What is the average cost of a candle?
At this time in the market, the average cost for an 8-ounce candle is about $3, while they are sold at around $10 to $15 each. With these profit margins and current costs, Yankee Candle’s standard 22-ounce glass jars only cost somewhere between $8 and $15 to make. The average cost of a homemade candle on Etsy is around $10 to $20, so know that if you choose that outlet. If you decide to sell in a physical storefront, many candles will be sold at a higher profit margin as well.
What do you need to start a candle making business?
If you’re planning on selling your candles online or within another business, your overhead will be much less than if you jump immediately to selling in your own physical location. When you sell out of your home online, you only need about $1,500 to start your business, which includes inventory, a website or Etsy page, and your own marketing.
If you want to upgrade to your own physical space, you’re looking at around $31,000 for the storefront and all your business fees, along with payroll and marketing. While this may seem like a large number, there are options to physically sell your candles, like going to flea markets or partnering with other businesses to sell your candles out of a booth in their stores.
What should I name my candle company?
What types of candles are most profitable?
Most candle purchases are going to be for home décor or aromatherapy. Consider the most popular scents on the market before you make your own lines—are people looking for beach scents, or traditional vanilla? You should also consider the trends from month to month, like pine scents in the winter months.
Because the cost for supplies varies depending on your type of candle, it’s important to decide early what kind of candles you are making and what supplies you intend to use. There are many specialty candles you could make, but that would increase your price. Also consider your potential customer base and whether they would prefer paraffin wax candles, which can be made cheaper but are the byproduct of crude oil refinement, or if they would prefer a more natural option like soy, palm, or beeswax.
Where are candles most profitable?
Much like any other retailer at this day and age, e-commerce seems to be the most popular for candle sellers. It’s easy for customers to find what they want online, and they can be shipped right to their door. Unfortunately, with e-commerce, your customers cannot smell your fragrances—so make sure you describe them well in your product descriptions.
If you’re selling at a craft market, your product is going to sell for a lower price than it would at a boutique small business. Make partnerships with your local small businesses if you do not have a physical storefront to make sure you are getting the most profit for your work.
If you are in a touristy region, consider working with local gift shops. People love to get mementos of their vacations, so why not make a local line of candles to promote your community and your brand?
How do you increase profit?
A tip in learning how to increase your profit is know exactly how much money you spend on each candle—and adjust prices as needed. While you’re already considering the wick, the container, and the wax, what about the cost of the glue to attach the wick to the bottom of the container? Are you counting the color you use for each candle, or the fragrance? What about the label and the ink for the printed label, along with shipping costs if you are selling online?
Another way to increase profit is to decrease your overhead. If you are creating candles as your primary source of income, don’t be afraid to purchase your supplies from a wholesaler—you’ll save money in the process, which means your profit margins will be that much higher.
It may seem overkill or too much information to break the cost down to individual drops of color or fragrance, but in the long run, you can see just how much it takes for you to make a candle, so you can better determine if your costs are fair and appropriate to the market price.
With those partnerships, don’t be afraid to step outside the box. Consider partnering with a salon or spa—they are able to sell retail items, and promoting a relaxing scent in a location like that can give you a leg up on your competition. If you want to get creative, work with a coffee shop and promote scents that evoke the smell and vibe of that shop.
When considering whether candle making is profitable, it all comes down to what your definition of “profitable” really is. Your profit margins are very good for the retail business at 25 to 50 percent, so if you stay within that profit margin, you will be making a profit from your business. The best thing you can do for yourself in starting your candle business is research—know not just the existing market, but your local market. You can make profit casting a wide net online, but people love purchasing from local businesses and supporting their small businesses, especially near the holidays. In a case like this, starting small may actually increase your profits—and when you have enough profit, you can start to branch out.
Which is better to sell my candles, my own website or an online seller like Etsy?
Both your own website and Etsy have their pros and cons. You will have to pay for a point-of-sale system through your website if you want to sell that way, while Etsy charges you per sale. On Etsy, though, you have to go through less business hoops than you would by selling on your own website. They also provide some marketing opportunities.
How do I make my candles have more smell?
When you’re creating candles, it’s important to note that just adding more fragrance may not affect the candle. In many cases, it is part of the candle making process or the wax you are using. Some waxes hold scents better than others, and using artificial oils or essential oils makes a difference. Make sure the wax you use holds scent well and add that scent at a high heat, stirring thoroughly before placing it into your container or mold.
What kind of wax is best for my candles?
While it depends on personal preference or preference of your chosen market, you have several options to choose from. Soy wax, palm wax, and beeswax are all natural choices and may be a favorite of your customers, but they can appear differently when adding color or even fragrance. Beeswax tends to be more expensive, while palm wax is firm and soy wax is soft. Gel wax can be used for more decorative candles if you choose to go that route. For many, paraffin wax is the tried and true type of wax used, but because it is created from the crude oil refinement process, many customers focused on the environment may shy away from those types of candles.
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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.