Rules to follow when
setting a price for your perfume

In brief —

  1. The price of a perfume depends on the environment in which it is sold.

  2. The price must cover all costs and leave you with a profit.

  3. Working backward, you discover what you can afford to pay to produce your perfume – and if you can't produce it for this cost or less, profit becomes impossible.

There is a formula for setting a retail price for your perfume. This formula won't give you an exact retail price but it will give you a tight range within which to set your price. To work this formula you first must gather up some data.

Lesson # 1 — The retail price you can set for your perfume is limited by the environment in which is will be sold

This means you have to look at where your perfume will be sold and what fragrances are being sold in that same retailing environment. If your perfume is being developed for high end boutiques, you have to look at how others are pricing their fragrances in this market. Your price should fall somewhere in the range of what others are charging. Why? Because this is what buyers expect.

If you're selling in a middle market or a bargain shopper market, again you must look at what others are charging. This tells you the price range buyers find acceptable. Pricing your fragrance higher or lower puzzles buyers. They start feeling you're doing something wrong, that you don't understand what you're doing, and they become suspicious. This hurts sales.

Lesson # 2 — Selling environment is just the starting point

From your planned retailing environment you can make an estimate of how your perfume should be priced. But this is only an estimate. Now you have to work backwards from that estimate to establish the most you can afford to pay to produce a bottle of your perfume.

To get this number you start with your anticipated retail price. Then you subtract the portion of that price that you will not receive, the discount that will be given to retailers, which should range from 40 to 60 percent, depending on the relationship you are able to develop with stores. Don't count on everyone paying you the same price. You may want certain stores to take your fragrance for the prestige. In other cases you'll just offer a "standard" discount and hope that you can get it. Now for distributors.

If you plan to distribute your fragrance widely, you will use various distributors and jobbers. Now you must allow for the discounts they will want. Then – take a deep breath – you'll want to allow yourself some money for advertising, administrative costs, and returns. After these considerations you must still allow for the cost of producing your perfume – and your profit.

As you take each of these costs into consideration, you begin to understand just how important your production cost has become. Now looking at these obligations, you begin to ask yourself, "Can I do it? Is it even possible for me to make a profit?"

Lesson #3 — Eliminate all non-essential production costs

Some of the lessons: alcohol costs less than perfume oil. Don't go overboard using oil when you could be using alcohol (In most cases this will please your buyers. They don't really want a heavy fragrance!) Water is less costly than alcohol. Don't use pure alcohol when you can use a pleasant alcohol/water blend. Don't aspire to a custom bottle when so many good stock designs are available. Women will prefer a spray pump over a splash bottle. For men, splash is a good choice and a cap is a good deal cheaper than a spray pump (although a sprinkler neck bottle may cost you a few pennies extra.)

And the fragrance itself. "All natural" is good but presents some challenges. Some natural ingredients are cheap but the really lovely ones are quite expensive. That is why the industry has struggled to develop excellent synthetic substitutes. That may sound like heresy to you but, unless you're marketing your fragrance to a very aware, picky audience of people who will pay more, avoid those beautiful expensive naturals or blend just a tiny bit with your synthetics to give them more character

.

When you've finally got it together and whittled your cost down to something reasonable, look at where you stand on potential profit. After you've covered the cost to produce your fragrance and all the costs mentioned above, how much profit are you going to squeeze out of every bottle you sell? That's the number you have to look at when you decide whether or not to go ahead with your project.

If you want to read more about trimming costs and producing your fragrance at a cost that will give you a good markup, read Creating Your Own Perfume With A 1700 Percent Markup! It's available as an instant pdf download and, as a photo-illustrated softcover at Amazon.


archander
Perfume and Flavor Materials of Natural Origin

Steffen Arctander's Perfume and Flavor Materials of Natural Origin was first published in 1960 and is the classic, authoritative reference for natural products used in perfumes, scents, flavorings, foods, and medicine throughout the world. Part One defines and describes processing methods used to extract or refine the products into usable form; Part Two includes more than 500 monographs on the natural raw materials used to produce perfumes, flavorings, etc. Appendices include a classification of important materials by their scent, and worldwide production figures for major products. Fully indexed, the book also includes 62 pages of photographs, making this the standard reference work on natural materials for perfumers and flavor chemists. The preface contains practical descriptions of available materials, their origin, production and processing methods, appearance, odor and flavor type with brief notes on their main constituents, replacements and common adulterants.


Creating Your Own Perfume With A 1700 Percent Markup! (3rd edition)

Perfume is famous for the markup it can achieve, even for a middle market fragrance. While "everybody knows" that perfume costs next to nothing to make (not completely true) the making of it is often considered an esoteric secret. "Creating Your Own Perfume With A 1700 Percent Markup!" details how a 3-person company with no experience created their own fragrance in response to a marketing opportunity that was too good to pass up. The book explains exactly what was done to create a fragrance for that opportunity but it is far more than a history of the author's project. "Creating Your Own Perfume With A 1700 Percent Markup!" lays out every step in the process of creating your own perfume, either as a do-it-yourself project – and without the benefit of automated equipment some compromises and workarounds are required – or full bore professional production under your supervision. Either way you will be producing a quality fragrance at a remarkably low cost. Do you have a marketing opportunity that would be wildly profitable if only you could obtain your fragrance at a ridiculously low cost? "Creating Your Own Perfume With A 1700 Percent Markup!" is the guide you need to do it.


Naming Your Perfume And Protecting Your Name

A really great name, a special name that is just right for a particular perfume or perfume marketer (or entrepreneur with money to invest!) can be worth a ton of money. But few individuals with great ideas ever manage to cash in on those brilliant ideas. Instead they wait while others "discover" their idea, acquire legal rights to it and make all the money while they are left out in the cold without a penny having been earned for what was once THEIR idea.

If you are struggling to name your perfume and are looking for a name that will have real value, "Naming Your Perfume And Protecting Your Name" will help you weed out low value names and point you to names that have better marketing value plus the potential to become valuable assets in themselves.

If you have a great name you want to protect but no fragrance, "Naming Your Perfume And Protecting Your Name" will guide you through the simple steps you must take to acquire a legal right to that name before someone else grabs it! Best of all, "Naming Your Perfume And Protecting Your Name" shows you how to gain strong legal protection for your name without a lawyer and without spending more than pocket change.

Never had an idea for a product name? Never thought much about perfume? "Naming Your Perfume And Protecting Your Name" may stimulate your interest in a whole new game that, when played well, can make you lots of money without your having to leave the comfort of your home office.


How To Launch Your Own Perfume Company: A Simple Business Plan

You can build a perfume business of your own using this business plan as a guide. By following its detailed strategy you learn to identify motivated groups of potential perfume buyers. Members of these groups are near the tipping point of desire for a new perfume. You don't know these people and they don't know you but you know a marketer they trust, one who does not currently sell perfume and might never think of selling perfume were it not for your approach. Here is where you step in with a professional plan, promotion, and perfume to take advantage of this ripe opportunity for mutual profit. Before your first promotion has peaked, you will already be developing a relationship with your next marketing partner. Following this plan, you will gain more and more profit with each new marketing partnership.


Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics

Now when you make your own perfume you can make it fully "commercial" meaning you will be creating a product ready for regular, continuous sales to friends, relatives, and the public! If the fragrance you've made has already won praise, why not share it with others? Some might pay you for it and want it for their web stores or retail boutiques! Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics guides you through steps that can turn your hobby project into a perfume business. Discover how close you are now and how little more you must do to take what you made with essential oils and dropper bottles into a business of your own! For an introduction to this book, watch this video.


How To Create A More Valuable Name For Your Perfume

When you name a perfume you create a valuable asset – the name itself. To sell your perfume you want the most effective name possible. But a good name can have value beyond the edge it gives your sales. In naming your fragrance you are creating a trademark and a trademark can have value independent of the product. The value of that trademark can vary. Much depends on how well, in naming your perfume, you follow the trademark "rules." How To Create A More Valuable Name For Your Perfume first helps you develop a name that will be effective in selling your perfume. It then prods you to make use of certain techniques that can turn a good name into a great trademark, strong and valuable. If you have questions about how to protect a name, How To Create A More Valuable Name For Your Perfume will answer many such as:

  • Can you protect your name yourself or do you need a lawyer?
  • Can you register a trademark without a lawyer?
  • What does it cost to register a trademark?
  • How do I enforce the rights I have established?

How To Create A More Valuable Name For Your Perfume covers both state, federal, and international protection.


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Philip Goutell
Lightyears, Inc.