Candle Making – Can You Make A Living From It?

You’re having fun creating candles at home and are speculating about making it more than a hobby. Perhaps you could bring in some extra cash.

 

 But can you produce a living from it?

 

Let’s look closely at how you would approach answering this question via arithmetic.

 

First, you will need to invest capital to purchase candle making supplies in order to make money from your venture. Perhaps you have completed a candle making workshop, and have committed to selling at a local market. You would need to purchase supplies such as candle wax, candle glass, candle wicks and candle fragrance oils. This purchase would make up your opening inventory. 

 

To determine the selling price of your finished product...

What exactly did you spend to make the candle?

 

Wholesale Candle Supplies

 

This calculation includes the cost of materials, e.g.: wax, wicks, fragrance, labour, glass, candle dye. An excel spreadsheet is ideal for this exercise. Simply start by listing everything you purchased in one column. Then add the pricing in the next column.

Remember to include the cost of shipping too. What did it cost you to get your supplies from the supplier to yourself ?

 

Let’s break it right down

1. What is the weight of the wax?

Let’s say we are making ten x  300g candles.

How much did you pay for the wax, including shipping?

Let’s say you paid $39.00 for 3 kg of wax plus $5.00 in shipping costs ($44 total).

The ten candles you are making are 300g each, so we times 300 x 10 candles = 3,000 grams wax (ie: 3 KG  1000g = 1 Kg).

$39 + $5 = $44 / 10 = $4.40 each cost per candle for wax.

Soy Wax for Candle Making

 

2.     Wick cost.

You bought a bag of 50 wicks.

The total for the bag was $25 including shipping.

You used 1 wick, so $25/ 50 wicks = $0.50 each.

 

Candle Wicks

 

3.     Fragrance oil costs.

Start by determining the total weight of the fragrance in grams or mills. How much did you pay for the fragrance, including shipping? Let’s say you purchased the fragrance 300ml at $45 including postage, you would need ?

You are making ten x  300g candle at 8% fragrance loading  so you need 24 g of fragrance per candle . 300g / 24 will give us 12.5 candles. $45.00 / 12.5 candles = $3.60 per each candle for fragrance.

 

Continue on with your costings this way. Add the Esty or eBay listing fee if you sold it via a particular sales avenue. Continue adding any other supplies such as base labels or candle boxes.

 

 

Fragrance Oils for Candle Making

Do We Include labour?

Let’s say it took you one hour to make the ten candles. You might want to cost your time at your chosen rate e.g.: $25. 10 / 25 = $0.40 per candle.

 

Overheads

While will also have separate costs such as research and development, and business insurance. These costs are referred to as business overheads and are not included in the above material product costings. 

 

What price are you advertising the candle for?

Working out the final selling price will rest upon several factors. Above, you don’t want to make a loss. You want to make a profit!

You will need to figure out what your market is and what your rivals are selling for. Brand recognition and target audience are central elements. Are you a luxury brand or an entry point brand? You can’t sell to everybody. People who buy candles from Kmart, for example, are not the same people who would purchase from a specialty candle store. What sets you apart? What solution are you providing? What are you selling? Yes, you’re selling a candle, but you’re also marketing more than just a candle. People buy concepts like prestige and opulence. What need are you meeting? For example, a need for personalised candles for Christmas or penis shaped candles for Hens Nights.

 

Now that you have established what you are selling and who are you advertising it for, you can reflect upon where you will sell and who your competition is.

 

So, is this is a worthwhile endeavour for you?

 

How much is your net profit?

Cost of sales minus selling price of candle  = Your profit

If you have determined, for example,  that it costs you $8 to make a 300g candle (accounting for wax, wicks, fragrance, labels, etc..) and you have sold the candle for $25.00, you will make a net profit of $17.00. If you sold 100 candles that month, you would make 100 candles  x $17 =$1700

 If you were to leave your current job and replace your salary of $80,000 before tax, you would need to sell how many candles?

 

To work this out we divide $80,000 by $17.00 profit per candle = 4705. We can then break that down further into 392 candles per month.

Remember that as your business grows, and you begin to buy in bulk, you will be able to bring your costs down and make more profit. Many suppliers offer bulk discounts. 

Write a business plan

Writing a business plan is essential, as your journey will be more difficult without a map!

In our upcoming blog, we will be looking at sales avenues to enable you to sell the required amount of candles to bring in extra cash or replace your income.

If you'd like further individual help with this, please book into one of our private mentoring workshops for candle makers.

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