How To Make Your Products Profitable As A Small-Business

How To Make Your Products Profitable As A Small-Business

As a home-based small business owner, I am daily making decisions to better my business and improve my customer’s shopping experience. I had to make a very hard decision the other day—I am discontinuing a product in my shop.

There two main reasons a maker will stop making and selling any product: enough customers aren’t interested and/or it is no longer profitable. For me, it was the latter.

Watch the video below to learn which product and my in-depth explanation as to why YOU might need to discontinue a product as well.

Here is the formula again:

The base costs $85 per gallon

85 ÷ 128 = $0.66 per ounce
0.66 × 2.25 = $1.49 worth of product in the jar

jar + lid + label + labor = $1.50
1.49 + 1.50 = $2.99 manufacturing cost 

Update: I called the company and it turned out the lotion base with tax and shipping was $87.15. So, reworking the formula the lotion costs $3.03 to make.


As explained, the cost of manufacturing is less than half the cost to produce the product and I can’t see charging my customers more money. Typically, you want charge at least twice the cost of manufacturing for wholesale and three to four times for retail. Since I am nowhere near those parameters, selling lotion is no longer viable for my business goals. I have other products available to fill the void and I could bring back the lotion for special gift sets or bundles, but the base is currently too expensive.

Are your products as profitable as you need them to be? Try using the formula I explained in my video or consider purchasing my How-To eGuide which has more detail and a printable sheet for you to break down the manufacturing cost as well as the projected wholesale and retail costs for your products.


In Conclusion

As a small-business, it is important to maintain and protect our profit margins as much as possible. A business doesn't need a million dollar profit margin to be successful--it just has to meet your expectations and goals for yourself.

Peace & blessings.

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