How to price

Skincare has unusually good percentage margins and unusually high fixed costs per product, and pricing badly in this category usually means pricing too low.

The cost base is not the formula

For a 30 ml serum, the ingredients are frequently a small fraction of the unit cost. The bottle, the dropper or pump, the label, the outer carton and the fill labor are most of it.

Which means the instinct to economize on ingredients moves a small number and damages the only thing differentiating you. The effective levers are packaging volume pricing and reducing the number of lines.

What testing costs, amortized

This is the cost skincare has and other categories do not. A challenge test per formula. A stability study per formula in its packaging. A safety assessment, which has no small-business exemption.

Those are per-product rather than per-unit, so they are brutal on a range of twelve and modest on a range of three. Spread over a first batch they can exceed the cost of goods; spread over three years of a line they are negligible.

The conclusion most brands reach late is that a small range done properly is both safer and cheaper than a large range done cheaply.

What the category expects

Customers accept a wide price range here and read price as a signal of efficacy more than in almost any other category. Underpricing an active serum can suppress sales rather than drive them.

They also compare per milliliter, so a small pack at a high absolute price needs a reason: the active, the packaging, the freshness, the period after opening.

Setting it

Build the true unit cost including packaging, fill labor and a share of the per-formula testing over a realistic run. Then wholesale at roughly twice, and retail at roughly twice that.

Check the product is viable at the wholesale number, because that is the number a growing brand increasingly sells at, and a product that only works at retail margin cannot take a stockist.

References