How to price a handmade perfume

Price a handmade perfume from its cost, and get the cost from the batch record: what each line actually weighed, at the price per gram of the bottle it came from. Once the cost of one filled bottle is a number you trust, the price is that number under a margin you choose, and the margin is a method rather than a guess.

How do I work out the cost of a perfume formula?

The cost of a concentrate is the sum of its lines, and each line is grams weighed multiplied by the price per gram of the bottle on the shelf. Two corrections make this honest:

• Price the bottle you weighed from, not the material. A 10 percent dilution you made yourself costs a tenth of the neat price plus the solvent. A line weighed from it is priced at the dilution's per-gram rate, which is the neat rate multiplied by the strength, plus the solvent's share.
• Use the invoice, not the catalogue. Your price per gram is what you paid divided by what arrived, shipping included. A 15 ml bottle of a natural bought with a courier fee costs more per gram than the listed price says.

Dividing the total by the concentrate's mass gives the cost per gram of concentrate, and that single figure is what every bottle calculation starts from.

A worked example

The figures below are placeholders chosen to make the arithmetic easy; put your own invoice prices in their place. A 100 g concentrate:

• Bergamot essential oil, 25 g at 0.20 per gram: 5.00
• Hedione, 30 g at 0.10 per gram: 3.00
• Iso E Super, 20 g at 0.08 per gram: 1.60
• Vetiver essential oil, 10 g at 0.60 per gram: 6.00
• Javanol, 5 g weighed from a 10 percent dilution whose neat price is 4.00 per gram: 0.5 g of Javanol at 4.00 is 2.00, plus 4.5 g of solvent at 0.02 is 0.09, so 2.09
• Musks and the rest, 10 g: 1.00

Total 18.69 for 100 g, so 0.19 per gram of concentrate. Notice that the vetiver, a tenth of the mass, is a third of the cost, and that the Javanol line would have been priced wrong by a factor of ten if the dilution had been ignored. That is the commonest costing error, and it always flatters the number.

What does one finished bottle cost?

Take the concentrate figure through the finishing arithmetic and add everything that leaves with the customer:

1. A 30 ml bottle holds about 24 g of finished perfume. At 18 percent concentration that is 4.3 g of concentrate and 19.7 g of perfumer's ethanol.
2. Concentrate: 4.3 g at 0.19 is 0.82. Alcohol: 19.7 g at your invoice rate, say 0.03, is 0.59.
3. Bottle, pump, cap, label and box, at what you paid per unit for the quantity you bought.
4. Your time, at a rate you decide, for weighing, resting, filtering, filling and labelling, spread over the number of bottles the batch made.

The materials are usually the smallest part of that list. The packaging and the labour are the price, and a hobbyist who prices from the concentrate alone is subsidising every sale.

How much margin should a handmade perfume have?

Do not borrow a multiplier from a forum. Work the method: price equals cost divided by one minus the margin you want, so a 60 percent margin on a bottle that costs 8 to make is 8 divided by 0.4, which is 20. Then check that price against three things: what your market will pay, what a stockist takes if you sell through one (they will want their own margin on top of yours, so a wholesale price has to carry both), and whether the batch size you actually make can be sold before the perfume ages. Round the result to a price that looks like a price, and keep the working, because a cost that rises when a supplier reprices a natural should raise the price and not quietly eat the margin.

Why keep a batch record for pricing?

Because the formula is what you intended and the batch is what you made. A record of the weights that went into the beaker, priced at the bottles they came from, is the only cost that is true. Two batches of the same formula differ in cost when one line was weighed from a fresh, dearer bottle, and the record is what shows that. It also tells you, when a material is reordered at a new price, exactly which formulas moved and by how much.

PerfuMate prices the batch record for you: every line is costed at the price per gram of the bottle it was weighed from, dilutions corrected, with the dearest lines first and a call-out for the one that takes a large share of the cost and a small share of the smell. The cost per bottle follows from the finishing sheet's concentration, and the batch calculator runs the concentrate arithmetic free in the browser. The bench is free to start.