What to charge
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Lip balm has a harder price ceiling than almost anything else in handmade personal care, and it is set by products you are not competing with on quality.
The anchor is set by somebody else
A customer has a number in their head for a lip balm, and it came from a drugstore shelf. Handmade carries a premium over it, and the premium is a multiple of a small number rather than a different order of magnitude.
Which means you cannot price your way out of a thin margin. You price into the band or you do not sell.
Build it from the packaging
Cost the tube, the cap, the label, the band and the share of the carton first. In this category that is usually more than the formula.
Then the materials, at the price you actually pay at the quantity you actually buy, not at the drum price you hope to reach.
Then your time, at a rate you would accept, against a realistic number of finished units per session rather than per batch.
People often discover the answer is uncomfortable, and that discovery is the point of doing it.
Three price points
Direct, at market or online, which is your best margin and your highest cost of selling.
Wholesale, conventionally around half of direct, which is where volume lives.
Distribution, below that again, which rarely works in this category at craft scale.
Set the direct price so wholesale still clears. Setting direct first and discovering wholesale is below cost is the standard mistake, and by then the direct price is public.
Where the margin actually comes from
Not from the tube. From the basket: a balm added to a larger purchase, a three-pack, a gift set, a counter display that moves eight units instead of one.
And from removing time per unit. At this price the only real lever on unit economics is how many finished tubes come out of an hour.
