In the world of candle making, especially when running a small candle business, keeping tabs on your costs is crucial for maintaining a profitable and sustainable business. Whether you’re a small-scale artisan or a growing enterprise, managing your margins can make all the difference. Here are some practical strategies that can help you trim costs, reduce waste, and increase your profits during tighter economic times.
1. Introduce smaller vessels to your range
One simple yet effective way to reduce the retail price of the candles you take to market is by introducing smaller candle jars or tins to your range. Smaller vessels not only require less wax and fragrance but also allow you to price your products more competitively. By offering a range of sizes, you can cater to different customer preferences while keeping production costs in check. This approach also encourages repeat purchases, as customers often buy multiple smaller candles for various spaces in their homes.
2. Offer a refill service
Offering a refill service is a fantastic way to retain customers and promote sustainability. By encouraging your customers to bring back their empty candle jars for a refill, you save on new vessel costs and reduce environmental impact. This service can be incentivised with a discount, making it an attractive option for eco-conscious consumers. Moreover, it fosters a loyal customer base that values both your products and your commitment to sustainability.
3. Utilise wick tabs to make new wicks from cut-offs
Reducing waste is a quick win when looking to cut costs. Instead of discarding leftover wick cut-offs, consider purchasing wick tabs to create new wicks. When ordering wicks, think about how many wicks you could make from a 150mm v 300mm wick. This simple adjustment not only reduces waste but also saves money on wick materials. By repurposing what might otherwise be considered waste, you’re taking a step towards more sustainable production practices.
4. Track your expenses and know your COGS
Effective financial management starts with tracking your expenses, it is really important that you understand your cost of goods sold, so that you can then apply your target margin, and make a profit. Use accounting software or a simple spreadsheet to monitor your variable costs. This practice helps you identify areas where you can cut costs or if you need to increase your prices. Regularly reviewing your COGS and retail pricing, compared to the market, allows you to make informed decisions and adjust your strategies as needed.
5. Buy in bulk
Buying supplies in bulk will lead to significant savings and better profits. Items like wax, fragrance oils, and packaging are always cheaper when purchased in larger quantities. Take a look on our website and you will see various pack sizes with a reducing cost per unit. Always buy the biggest pack you can afford, you will use it, and wax and fragrance has a long shelf life.
6. Utilise free credit
If you are good with money, utilise a credit card with 55 days interest free. Buy the supplies on the card, make and sell the candles, then pay off the card before the interest kicks in! Buy Now Pay Later is another option for this strategy, although you have to pay more frequently.
7. Keep buffer stock
Always put some of your profits back into creating some buffer stock. There is nothing worse than going to make a batch of candles and you discover you have run out of your best-selling fragrance. Make sure you buy early and get everything you need for the busy season.
By implementing these cost-saving strategies and keeping tabs on your costs, you can ensure the success of your candle-making business. Remember, it is not always bout cutting costs, sometimes you need to increase your price. If you have made a quality candle with quality ingredients, your customer will appreciate the value and pay more than the cheaper candles. Not only will you maximise your profits, but you’ll build a more sustainable business that benefits both you and your customers.
Keep these tips in mind as you navigate the financial aspects of your craft, and watch your business thrive. And if you need any help or advice, just ask the team at Candle Creations.
