The process of choosing a manufacturer to work with can feel daunting, which is why we’re here to help you understand how the beauty product manufacturing process works. Choosing the right manufacturers is an essential part of running a successful beauty brand, as your manufacturer will determine the quality and price of your products, and it’s much easier to find the right manufacturer when you understand how the process works.
Your product is comprised of 3 elements which include:
- Product – the makeup/shampoo/skin cream, etc.
- Primary component – the internal packaging, i.e. the lipstick tube or makeup compact
- Secondary packaging – the outer packaging, i.e. the box the lipstick tube is in
Each of your product components can be produced by separate manufacturers, or they can all be made by the same manufacturer. It is easier to have the same manufacturer produce all of them, but that may not make sense for you, depending on the level of customization you want, and on your budget.
What does the manufacturing process entail?
When working with manufacturers, you need to make 6 main decisions:
- How will you formulate your product?
- What will you use for your primary component?
- How will you design your primary component?
- What will you use for your secondary packaging?
- How will you design your secondary packaging?
- Who will you work with for each step of the process?
For each step of the process, you can choose the simplest, least expensive, and least customized option, the middle of the road option, or the most complex, most expensive, and most customized option. Choosing the most customized option will help you differentiate yourself in the marketplace, but it also costs more and requires more work from you. It’s up to you as the business owner to decide how you want to use customization in your brand and how you want to allocate your time and money.
Minimum order quantities
One of the first things you want to ask when talking to any manufacturer is “what is your minimum order quantity?” This is also known as their MOQ. This refers to the minimum amount they will allow you to order, whether it’s the number of products or the cost of the order. It’s very important to have this information because it will determine whether you can work with the manufacturer, given your budget. Additionally, consider the following:
- Some manufacturers don’t have a MOQ for products, but they do for the order cost
- MOQs can differ depending on the product components you’re purchasing
Make sure that you clarify every MOQ in your order so you don’t run into surprises later.
Determine your highest price per unit
To determine your price per unit based on the highest price the market will tolerate, use this formula:
Retail Price / 6.25 = Price per Unit
So if your Retail is $40, then:
$40/6.25 = $6.40
You can also determine your retail price based on your manufacturing cost per unit:
Price per Unit x 2.5 = Wholesale Price
Wholesale Price x 2.5 = Retail Price
So if your Price per Unit = $6.40, then:
$6.40 x 2.5 = $16 (wholesale price)
$16 x 2.5 = $40 (retail price)
To determine your wholesale price, take the price you pay per unit and multiply it by 2 to 2.5. Then take that price and multiply it by 2 to 2.5 again to get your retail price. You need to price your products much higher than what you’ve paid to give yourself room to sell them to wholesalers and to put on promotions and sales while still earning a profit.
You must keep your prices within the same range as your competitors’, or customers won’t want to buy them. Be sure to include your labor costs and packaging costs within the manufacturing cost per unit.
How to prepare before call manufacturers
Before calling manufacturers, some important information to have on hand is:
- What is your budget for your products?
- What do you want to pay for your products, including all of the components?
- Which route do you want to take to manufacture your products (private label, contract manufacturing, or custom formula)?
- Which parts of your product (product, primary component, secondary packaging) do you want more customized, and which less so?
- What criteria would make you decide not to work with a manufacturer (i.e. animal testing, using certain ingredients, etc.)?
- What are your must-haves for working with a manufacturer?
In addition to the aforementioned, make sure to have your:
- Business license – EIN number registered business
- Resale certificate (unless you are in Oregon)
If you prepare beforehand, you will have a much better chance of finding the right manufacturers for your business. Before you begin researching and calling manufacturers, you need to make the aforementioned decisions.
When it comes to private label, contract manufacturing, and custom formula manufacturing routes, be clear on which route you want to go, or whether you want a mix of different manufacturing routes for your products. Also, think about your deal breakers and your must-haves. What would make you decide not to work with a manufacturer? What do you absolutely need to have in order to work with a manufacturer?
The answers to these questions may change as you learn more about manufacturers and what they offer, but it’s important that you understand your budget, priorities, and the specifics about what you want from your manufacturer or manufacturers.
How to choose a private label manufacturer for your product formulation
To find a private label manufacturer, follow these steps:
- Call the manufacturers or look at their website and find out:
- Their minimum order requirement (MOQ)
- Their wholesale prices
- The conditions and amount of liability insurance they offer
- The time frame on initial orders
- Get a makeup kit or samples to try out the products
- Make sure to sample only products that are selling well
- Narrow it down to one or more manufacturers
Keep in mind that you may end up ordering different products from different manufacturers. At 42 Dubonnet, we worked with Ladyburd, Your Name Cosmetics, and Radical Cosmetics. However, our customers never knew that our products came from different places because they were all designed and marketed as 42 Dubonnet products.
On working with foreign manufacturers
Before moving on to the specific manufacturing paths, here are a few words of advice about working with foreign manufacturers. In our research, we noticed that Chinese manufacturers were more inexpensive, so we considered working with a foreign manufacturer.
However, upon looking into it further, we realized that the import tax outweighed any monetary benefit we would gain from working with Canadian manufacturers.
Therefore in summary, unless you have a compelling reason to work with foreign manufacturers, I recommend sticking with U.S. based providers.
After following the tips and tricks listed in this guide, you’ll be well on your way to successfully manufacturing your beauty product. Although there are many guidelines, your manufacturer will determine the quality and price of your products, which makes this a crucial part of developing your business.
Ready to start your own beauty product but don’t know how to get started
Learn How to Launch a Beauty Product covers every aspect of starting a beauty business, from creating a solid foundation and getting funding to manufacturing, branding, sales, and marketing. This guided approach keeps you on track and makes the process feel less overwhelming. To learn more about turning your product ideas into reality, sign up for our newsletters and read more about the course here.