The single most common mistake new lipcare founders make is pricing based on what they think the market will pay. The right starting point is what it actually costs you to make the product.
This is the formula we teach in week twelve of the trainings programme. It's not complicated, but it requires honest numbers — and most people are reluctant to sit down with honest numbers at the start.
The cost-up formula
Start with your cost of goods: every raw material in one unit at the price you actually paid, divided by how many units that quantity makes. Add your packaging. Add your labels. Add your time — at a fair hourly rate, not zero.
- Raw materials per unit — weigh everything. No estimating.
- Packaging per unit — jar, lid, and any extras.
- Labelling per unit — including printing and application time.
- Labour per unit — your time making the batch divided by how many units the batch produces. Minimum ₦1,500 per hour.
Add all four. That number is your cost of goods per unit. Multiply by 2.5 for retail price.
Why 2.5x and not less
The margin between your cost and your retail price has to cover: restocking raw materials, replacing equipment when it fails, packaging updates when you redesign, marketing (even if it's just content creation time), platform fees, and eventually — when you're ready — stock for a stockist.
Founders who price at 1.5x or 2x tell themselves they're being competitive. What they're actually doing is slowly running their business into the ground while appearing to grow.
When to adjust
Once you have twelve months of sales data, you can look at your actual margins and adjust. Until then, the formula holds. Do not undercut yourself at the start to win customers you can't afford to retain.
— D