You’re here because you need a pricing strategy that works for your business, not to do what everyone else (and their neighbor) is doing.
Learn the intricacies of how much to charge for your candles no matter where you find yourself in the candle making journey. Profits can keep your hobby alive, grow your business, or just plain give you some side moola to enjoy!
The price of your candle comes down to three factors:
- Materials – what do the supplies cost?
- Overhead – what does it cost to produce and fulfill an order?
- Profit Margins – how much is your net-profit after every sale?
To answer the ultimate question of how much to charge for your candle, answer a few supporting questions first. Let’s get started!
1. Figure out who you want to sell to
Beginner candle makers jump right into “how much to charge” without considering a whole lot of other things.
Some have prepared a business plan to accommodate their journey, but there’s still a lot to the pricing game to consider outside of the bottom line price.
Who are you selling candles to?
There are 7.5 billion people on planet earth.
Do you expect to sell to everyone? Selling is a lot like dating – do you just wait for anyone to say yes, or do you have some idea of who you want to end up with before you meet them?
It’s easy to focus on the profit, but every product has a market. You need to define who you want to sell to. It’s better to find a more specific audience instead of trying to find everyone – they’ll bring their friends!
The question ties in to your identity as a candle maker and your position in the market.
Your price point will directly correlate to who is buying your candles (and where you’re selling them).
Consider the following gathering of candles on the market:
| Marketplace | Candle | Price | Customer Base |
|---|---|---|---|
| Walmart | $5.819 | Largest | |
| Target | 9oz Lidded Glass Jar Crackling Wooden Wick Candle Coconut and Honey - Threshold™ | $13.00 | Large |
| Etsy | $33.50 | Small | |
| Jo Malone | $75.00 | Smaller | |
| CIRE Trudon | $125.00 | Smallest |
What are the fundamental differences between each of these?
- Brand awareness
- Status signals
- Target audience
- Supply
They are all still candles and they all function the same way.
Each uniquely targets a different part of the market – shoppers who buy Jo Malone aren’t typically found in Walmart, and vice versa.
Some of these are brands only luxury audiences have even heard of.
Yes, there are differences in quality, but the price point discrepancies aren’t caused by the “materials” cost alone. More about that later.
These candles are successful because they have identified who they want to sell candles to and tuned their product, prices, and marketing strategies accordingly.
They are not trying to sell to everyone (with the minor exception of Walmart).
What are you selling?
Obviously you’re reading this because you want to sell, or are already selling, candles.
The art of selling is a deep subject. Thousands of books have been written on the subject and billions of dollars are spent on it each year.
So why do you think it’s as simple as picking a number and seeing what happens?
Seth Godin writes in his book, This Is Marketing, that making a key doesn’t make sense when there is no lock. It’s more productive to find something that needs unlocking and then building a key. The same can be said of most products – people want to buy a solution to their problem.
Simply “selling a candle” doesn’t set you apart from anyone else in the market. There are millions of “unique, scented candles” out there, so you can’t expect to stand out with “just another key”.
Find your lock.
What are you actually selling? With some exception, people don’t buy products, they support brands.
Companies like CIRE Trudon and Diptyque sell status and luxury experiences.
Their marketing is focused purely on customers that want that.
Search “candle” on Etsy and you’ll get get over a million results (literally). However, if you search for “personalized birthday gift candles” you’ll only find a fraction of that.
The second kind meets a specific need to create a personalized gift for someone else, and just happens to be a candle.
What is your market position?
Once you’ve figured out what you’re selling and who you’re selling to you’re ready to price your product and find your place in the market.
Jumping in without that framework will only muddy the waters.
Your market position defines everything about how you’ll sell. The market position also informs some key components of your work too:
Where you want to sell
If you don’t have a team it can be difficult to play every position, in-person and online, but not impossible.
Where you sell is relevant for how you deal with sales, taxes, advertisem*nt budgeting, and potentially shipping costs.
Who your competition is
Who is your competition for the same group and how are they pricing similar products?
Suppose you’re trying to undercut Diptyque’s price with the same product. In that case, you might lose that market altogether simply because that market cares more about who makes the candle (and the accompanying, brag-worthy price tag) versus finding a bargain.
A larger market, such as Target’s middle-of-the-line candle, is saturated by “average” candles – most candle makers compete in this market where price is tied to quality.
Most shoppers in this area seek a bargain without sacrificing “artisanship.”
2. Calculate your basic material costs
Successful candle shops can tell you exactly how much each component of the candle costs. Why is this important?
You’ll lose money if you don’t charge at least the same price as the total cost of the materials used to make the candle!
It seems obvious, but a lot of beginner candle makers undercut their costs so much in a desperate attempt to make easy sales. This is dangerous for a few reasons:
- Extremely low cost candles give a false perception they are low quality (eek!)
- Every sale becomes a lost opportunity to rake in the profits you need to grow. Instead you’re losing money with each sale!
To figure out your material costs, break apart every component of the candle. If your product line has multiple candle varieties, this exercise can be done for each kind (if applicable). Here’s a few typical items and how to calculate them:
Wax
Every candle has wax, right? Every modern candle, at least. Wax is typically sold by the pound and normally requires shipping (unless you happen to live near a supplier – congrats!).
Your candle has a specified amount of wax in it. Check out this guide for calculating candle wax if you’ve been winging it up to this point.
Wax Cost
- Find total weight of wax required for candle, in ounces (A)
- Find total weight of wax in the batch of wax it came from, in pounds (B)
- Find total amount paid for the batch of wax it came from, including shipping (C)
- Wax Cost = (A) x (C) ÷ (B) ÷ 16
Example:
Purchasing 50 lbs (B) of wax from a supplier, and paying $60 for the wax and $12 shipping – total payment of $72 (C). The candle you make from it requires 8 ounces (A) of wax.
The total wax cost for that candle = 8 x 72 ÷ 50 ÷ 16 = $0.72
It costs $0.72 of wax for that candle.
$0
Running Total
| Component | Cost per Candle |
|---|---|
| Wax | $0.72 |
Wick
The wick isn’t very expensive but still worth determining. Fortunately, it’s much easier to find the wick cost since these are sold in bulk and you’re only ever using a handful (or just one).
Wick Cost
- Find total amount of wicks used in the candle. Should be easy – they’re sticking out of the wax! (D)
- Find total amount paid for the batch of wicks (E)
- Find total number of wicks in the batch they come from (F)
- Wick Cost = (D) x (E) ÷ (F)
Example:
Your candle is a 1-wick candle (D) purchased for $14 (E) in a pack of 200 (F).
The total wick cost for that candle = 1 x 14 ÷ 200 = $0.07
It costs $0.07 to wick that candle.
$0
Running Total
| Component | Cost per Candle |
|---|---|
| Wax | $0.72 |
| Wick | $0.07 |
Fragrance Oil
Fragrance oil can be easy or hard, depending on your batch size. If you’re a great record keeper you probably know how much fragrance ends up in each batch. If that’s a mystery to you, read this guide to calculating your fragrance load for candles.
Your candle has a specified amount of fragrance in it. Fragrance oils, especially essential oils, typically end up being the most expensive unit in an average homemade candle. As price points increase, that pendulum swings more towards the container.
Fragrance Oil Cost
- Find total weight of fragrance required for candle, in ounces (G)
- Find total amount paid for the individual fragrance, including shipping. Shipping costs can be split however you want if multiple items were shipped together. (H)
- Find total weight of fragrance in the container it came from, in ounces (I)
- Fragrance Cost = (G) x (H) ÷ (I)
Example:
Your candle requires 0.80 ounces of fragrance oil (G) which came in a 16 ounce bottle (I) for $20.95 (H)
The total fragrance oil cost for that candle = 0.80 x 20.95 ÷ 16 = $1.05
$0
Running Total
| Component | Cost per Candle |
|---|---|
| Wax | $0.72 |
| Wick | $0.07 |
| Fragrance Oil | $1.05 |
The Rest
At this point candles might diverge depending on what kind of candle they are. Almost every candle will have fragrance, wick, and wax, but not every candle will have everything else.
Quantify every other supply that is required to create your candle design. Find the unit price, including shipping, for a single candle. Some things you should consider are:
- Container
- Container lid
- Safety sticker
- Branding label
- Decorative appendages
- Dye (yes, even dye. Use $0.01 – $0.02 per candle if you don’t have a different basis for it)
- Wick stickers
Do not include anything that becomes property of the customer once they buy the candle. This includes:
- Time
- Equipment
- Shipping costs (inc. shipping packaging)
Example:
Your candle is a container candle with a few additional costs:
- $1.25, container + lid
- $0.05, safety sticker
- $0.02, wick sticker
- $0.15, branding on container
- Total, $1.47
$0
Running Total
| Component | Cost per Candle |
|---|---|
| Wax | $0.72 |
| Wick | $0.07 |
| Fragrance Oil | $1.05 |
| Container & Lid | $1.25 |
| Safety Sticker | $0.05 |
| Wick Sticker | $0.02 |
| Branding | $0.15 |
Material Costs
In the example above, you would use $3.31 in supplies every time you made the 8-oz candle described, therefore just to break even in materials that’s what you would have to charge.
Material Costs are only part of the equation. To grow, your profits need to pay for materials, equipment, research, time, advertisem*nt budgets, overhead, and many other components of the candle, too.
3. Calculate your overhead
It’s common advice to figure out how much your time is worth. It’s a very industrial way to think, as if you’re clocking in and out while making candles.
Only include labor if you have a tangible monthly cost associated with it, really.
Overhead
Some items in the production of a candle, like material costs, are easily strapped into a “per candle” unit cost, but not everything is. Those items are easier to outline on a “per month” basis (or any other period of time that makes sense for your business).
Build a table of these items to expose your overhead – don’t include profits or revenue.
| Item | Cost per Candle | Cost per Month (based on 100 candles sold) |
|---|---|---|
| Base materials | $3.31 | $331.00 |
| Etsy Listing Fees | $0.30 | $30.00 |
| Credit Card Fees | $0.20 | $20.00 |
| Advertisem*nt Budget | - | $25.00 |
| Website Fees (Calculated per month) | - | $5.00 |
| Average Shipping Cost | $5.50 | $550.00 |
| Total | $961.00 |
$0
Monthly Overhead
In a given month with 100 candle sales, you would expect to pay $961.00 just to sell those candles. Each candle would have to be priced at $9.61, just to break even.
(the unspoken assumption in this example is that shipping is free for the customer and included in the cost of the candle)
Shipping
Shipping can be complicated. Simplify shipping costs by thinking about it this way:
- You have to pay the market rate to ship the candle no matter what
- The customer can pay whatever you want for shipping, even nothing.
Shipping is typically treated as overhead, not a material cost and is better calculated on a period basis (a period cost, if you’re into accounting theory).
4. Quantify your premiums and intangibles
Your product is a combination of Objective and Subjective.
The objective component is everything you can measure – material costs, Overhead, equipment, etc. The Subjective cost is the part of your work you charge for that isn’t easily measured.
Remember the three questions?
- Who are you selling candles to?
- What are you selling?
- What is your market position?
You also need to charge for the brilliance of your solution to the customer’s problem in your market. If you’re fulfilling their need to have a classy, but affordable, scented piece of decor in their apartment, build that into your cost.
Or perhaps your product is personalized and highly custom – the Overhead cost might not be affected by that but there is still value into that service too.
The value of this component of your work is actually defined by your customer and market. Research similar solutions to yours and see what the expected “premium” is. Branding is not something you get to decide – it is the collective value your customer’s place on your product and company. It’s what you’re known for.
Other components of your solution should be considerate of:
- Labeling and graphic design
- High quality containers, boxes or bags
- Product photography
- Perceived value of the product in someone’s home
5. Set your profit margin
After all that, it’s time to finally put a price on your candle. There are many different theories and methods for this – here are three to consider.
Strategy 1: Monthly Profit
Think about your sales in the “macro.”
Start with a goal. Define how much you want to make (from candles) in a given time period and work your way backwards. This is called The Monthly Profit Approach. It’s only one theory, but it places your focus into goal-based profits.
Answer three questions:
- How much net-profit do you want to make per month?
- What is your monthly overhead + material costs for (3)?
- How many candles can you realistically sell per month?
Price per candle = [ (1) + (2) ] ÷ (3)
Example:
If you expect to profit $1,500.00 in a month (1) by selling 120 candles (2) with a monthly overhead and material costs equal to $961.00 (3)…
Price per candle = [ $1,500 + $961.00 ] ÷ 120 = $20.51
Strategy 2: Standard Profit Margin
Standard Profit Margin’s are the typical approach most new businesses have. They are a starting point for determining prices because they leave out some financial considerations for your business.
One strategy is simply:
- Determine materials cost
- Multiply by 3 for retail
- Multiply by 2 for wholesale (selling to a customer who sells it with a markup)
The alternate strategy is to pre-determine your profit margin as a number (instead of a multiplication factor). Instead of multiplying by a certain number for retail, you choose an actual number to add to the materials cost. For instance:
- Materials Cost: $3.31
- Retail Profit Margin: $15.00 (Retail price = $18.31)
- Wholesale Profit Margin: $10.00 (Wholesale price = $13.31)
Your Mileage May Vary, so choose a strategy that works best for you to cover your costs, show a profit, and compete in your market.
Strategy 3: Price to Your Market
The first two approaches are focused inward on your business, but your candle is out there competing in a very saturated marketplace. Pricing your candle according to your market, rather than a set of targets or margins, focuses on making sales in a particular zone of customers.
This strategy requires research and reflection because you’ll be constantly chasing or leading your competition. At a high level:
- Define your competitors in your market
- Figure out what the current market expects for a product
- Price lower than your competition to steal customers (at the risk of appearing to be lesser quality)
- Price at your competition to compete directly
- Price above your competition to build the perception of higher value (at risk of losing business)
Regularly review sales, customers, and experiences and adjust your product offering and pricing according to what works in the market.
Final Considerations
However you decide to price your candles, be considerate of how you’ll run sales or deals, and how flexible your pricing strategy is over time. Running a thin profit margin has it’s advantages, but it can be difficult to pivot when you want to consider other pricing solutions.
The price of your candle is an expression of the confidence you have in your product, and the depth of how well you understand your customer’s needs and market.
Think of candle pricing as a fine balancing act on the tip of the wick – when everything is clicking it’ll come through as beautiful as the flame underneath!
