When it pays for itself
Updated
Dominated by packaging minimums and by a testing cost that people often leave out.
Two kinds of cost
Fixed: equipment, insurance, label artwork, packaging minimum orders, stability and challenge testing, the website, and safety data sheet authoring.
Variable: components, raw materials, labor and freight per bottle.
Contribution is price minus variable cost. Breakeven is fixed divided by contribution.
The arithmetic
Suppose fixed costs of 4,000 — equipment, insurance, artwork, first bottle and label minimums, a challenge test and a website — and a contribution of 3.00 a bottle at direct retail.
That is about 1,300 bottles to break even.
At wholesale, with a contribution nearer 1.00, the same fixed cost needs 4,000. The channel changes the answer threefold.
What the number says
That each additional product carries its own fixed cost: its own label minimum, its own stability testing, its own SDS and its own disclosure entry.
So a range of six does not break even at the same point as a range of two; it breaks even at three times the volume.
Which is the strongest argument in this property for launching one product properly rather than four provisionally.
The testing line
Insist on including it.
A challenge test, container compatibility, freeze-thaw and warm storage, per formula.
Leaving it out makes adding a product look free, which is exactly the decision the number should be informing.
And if the product carries pesticidal claims, registration and efficacy testing is a different order of magnitude and should be modeled separately rather than added as a line.