June 11, 2025 • 27 mins
#004 Pricing candles correctly is crucial for profitability, growth, and sustainability in your candle business, going well beyond the outdated 3x markup rule.
• Understanding your target customer and what they're willing to pay should be your starting point
• We price our classic 10oz candles at 5x cost ($5.50 cost → $26 retail price)
• When wholesaling, retailers pay 50% of retail ($13), still giving us solid profit margins
• Visit stores where your target customers shop to research pricing in your desired niche
• Differentiate your product visually to stand out in a crowded market
• Proper pricing allows for promotional strategies like "buy 3 get 1 free" that increase average order value
• Free shipping thresholds can encourage customers to add more items to their cart
• Consider your long-term costs when setting prices, as bulk purchasing will lower your per-unit costs
• Re-evaluate your pricing strategy every six months based on market conditions and performance
• Your margins must support discounts, reinvestment, hiring, and future growth plans
If you found this episode helpful, we'd love it if you'd leave us a rating and a review. It really helps us reach more makers like you.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
So if you've been pricing your candles using that
3x rule or worse, you've justbeen guessing you're probably
leaving money on the table.
In today's episode, I'mbreaking down what it really
takes to price your candles forprofit, growth and
sustainability.
Whether you're just startingout or you've been selling for a
while, this might be thewake-up call that your pricing
(00:21):
strategy needs.
So let's talk about pricing ourcandles.
This is always such a hot topicbecause we get caught up so
often in what everyone else ispricing their candles for.
So you will often see othercandle makers say hey, this is a
(00:45):
eight ounce candle.
It costs me $5 to make it.
How much do I sell it for?
And then you'll get everyone'sopinion on that, and not that
any of those people arenecessarily wrong, but there's a
lot more that goes into what weshould be pricing our products
for than the cost of goods.
Because in the volume that wepurchase our candle supplies, at
(01:06):
the volume that you'repurchasing your candle supplies
at, and what Bath Body Works ispurchasing their products at and
some of that just startedyesterday we're all getting
different pricing on all ofthese goods.
But that doesn't mean that wecan sell our products at all
different prices.
We first have to understand andfigure out what niche that we
want to be in.
And then what is that targetcustomer that is going to be
(01:28):
buying our products?
And we really have to figureout who they are and how much
they are willing to spend oncandles so that we can provide
that product to them that givesthem the value that they're
looking for.
Some consumers will only buy acandle if it's more than $75.
They want a luxury candle.
There is a perceived value thatgoes along with it, where we
(01:52):
believe that if it costs Xamount of dollars it is going to
be of possibly higher qualityor the presentation of that
candle is going to be nicer intheir home.
Or sometimes it's just we buythings to impress people right,
to have things.
You know, whether it's ourclothes or our car or our home,
it also pertains to our candlestoo.
(02:13):
People will sometimes just notbuy.
I personally, like won't buy acandle at some of the discount
bargain stores.
The perceived value to me isit's probably not going to be a
soy candle, which is what Iprefer.
It may not be made with thesame ingredients, probably mass
produced.
It may not be supporting a.
It won't be supporting a smallbusiness Generally, if you're
buying it at a big spot, big box, discount, retailer, and those
(02:36):
are the kinds of candles that Ilike to buy, I like to buy
locally, you know, made or smallbusiness supporting them,
because we are one of those.
We are who our target customeris.
So figuring out who is it youwant to sell to.
Can't sell to everyone, that'sjust the reality.
We can't try to make everyonehappy.
So when you're first startingout, oftentimes you'll see
makers where they are going tohave a whole variety of sizes of
(02:59):
candles, and we tried it.
When we first started, we hadour 10 ounce jar, then we did a
five ounce, 10, and then we dida 14 or a 12 ounce ceramic.
That was more of our higher end, it was nicer.
So we had a wide range ofcandles.
When we first started, werealized that our customer is
not that higher in ceramic.
Um, so we we ended up having toget rid of those and end those,
(03:23):
and so, to this day though, westill have our classic glass,
10-ounce glass, and then we haveour 5-ounce tin candles, and
they do really well, and sothose are always going to be a
staple in our brand.
We do now do lines andcollections that are geared
towards that customer that wantsto spend more money.
We have a 12-ounce really nicevessel that we get from AXE and
(03:47):
those go for $52 in our storebut they come in a box.
The presentation is different.
But also, even through ourthree we have three store
locations.
Where those locations are aredifferent customers.
But you have to have your coreniche and your products really
dialed in and understand whatthey're going to do as far as
(04:07):
what they will spend.
Okay, so how do we figure outwhat our customers will spend on
candles?
Well, let's go to where ourcustomers are.
When you are building out yourcandle brand, you've got to have
an idea of who you want to beselling, to Go to where those
customers are currently buyingcandles and figure out what
they're spending.
(04:28):
So for us, our goal when westarted our businesses in our
house was we were just going togo down the route of wholesale.
We weren't necessarily thinkingbrick and mortar to where we
are right now, but we wanted tojust do wholesale because it is
easy to get into and you can doit while running a business at
home.
So our customer avatar, theniche that we wanted to be into.
We wanted to get our candlesinto women boutiques and in
(04:52):
downtown shopping areas thatwomen buy clothes, accessories,
home goods.
In these smaller boutiques theprices are going to be a little
higher.
They generally are going tohave more disposable income when
they're shopping there.
So we go into all of thesestores and see the candles and
they range.
In the stores that we shop theyrange from, you know, 24 to 32.
(05:16):
These aren't higher end luxury.
These are just kind of, youknow, the middle range shops in
a downtown, locally supportedshopping area, because that's
exactly where we wanted ourcandles.
So we thought, okay, our basecandle needs to be between 24
and $32.
We looked at the sizes of allof these candles to compare.
(05:36):
Okay, these candles are betweeneight and 12 ounces, so we're
not we're not pricing out thelarger ones or, you know,
smaller or smaller candles toget our baseline with.
So the average price was $24 to$32.
And then the sizing was between8 ounces and 12 ounces.
So we had a really goodbaseline of okay, if we want to
be in this store, we need tocreate a candle that's going to
(05:58):
fit these couple metrics.
We also need to look at what arethe candles that are in these
shops.
What are they made of?
Are they highly fragrant?
Are they made with essentialoils?
What kind of wax are they madewith?
So, diving into all that, wecan really understand our
customer more that we're tryingto build our business off of.
So a lot of the candles areleaning towards the more
(06:20):
eco-friendly if I'm going to usethat word of a soy versus a
paraffin, and I'm not one to getinto the science of both.
I am in the business of sellingcandles so I know these are
what are in these stores that Iwant my candles in.
So I need to replicate thosetype of candles.
So that's why we went down theroute of a soy candle to start.
Now with our brand, as we'veexpanded, we also have a coconut
(06:42):
soy candles that we do for acouple of lines.
But that's the reason why wewent down the road of soy,
because it's what our customersare going to want.
So we want to make a candlethat's going to fit into those
stores and we want to price itbased on that.
(07:05):
But we also want to stick out alittle bit from them.
What we realized when we wereshopping in all of these stores
is most of the candle labelswere white labels with very
minimalistic, like a cursivehandwriting or just a plain font
, right.
So it was a very minimalistcandle, which is fine.
But to stick out, we needsomething different.
That's why all of our candlelabels are bright, colorful.
They, they stick out and peopleall the time say I love your
(07:29):
branding.
I love your branding.
We have our lighthouse on there, we have our word mark
underneath our logo there, andall the labels are colorful.
So that is how we wanted todifferentiate ourselves from
what was already in those stores, so that those shop buyers that
are buying all the productsthat to fill their shop with
will say, oh, this is different,this is unique, this is let's
(07:49):
check this out.
And then you back that up witha really solid candle.
They're going to want it intheir store.
So getting off topic of pricinga little bit, but that's how we
figure out what shops we'regoing to go into and then how we
are going to make ourselvesstick out from what they're
currently carrying.
So staying up on the trends,seeing what everyone else is
doing.
It doesn't mean you have to dowhat they're doing.
(08:09):
A lot of times you actuallywant to be different, to make
yourself stick out, and sothat's what has done us very
well.
You can't just base yourpricing on going to weekend
markets Every time we do markets.
That's how we got started, andwe started getting a lot of
traffic was by doing markets onthe weekends.
We were always the mostexpensive candle, but our
(08:30):
candles are probably better thanothers as far as the
presentation would go.
Now, what's going into thecandle?
We're most likely all buyingour waxes, oils, wicks, vessels,
all these types of things fromthe same handful of suppliers.
So I would never say that mycandle is better than someone
else's.
But we did spend a little bitmore money on our branding and
our presentation and just thesetup of our booth to make it
(08:52):
feel where our customers want toshop.
So we are always the mostexpensive out of markets, but
that's not a bad thing, and somepeople, I do feel, get caught
up thinking, oh, I have to lowermy prices because of that, and
in reality you absolutely don't.
There are going to be peoplethat are going to come into our
booth and it has happened andthey see that it's a $26 candle
(09:14):
and they almost fall over, right.
So they like get out reallyquick because they're used to
spending, you know, $10, $15 ona candle.
They're not going to spend $26on a candle.
That's totally fine.
That's not my customer.
There's also going to be thepeople on the other side of the
spectrum where $26, they'rethinking, oh well, what's wrong
with this candle?
Why is it only $26?
Um, and they're not going towant to buy it because it's not
(09:36):
expensive enough for them, right?
So sometimes when we say we gocar shopping and it's hey, I
have $35,000 to spend, you know,that's what I can budget for
35,000.
Right, if I see a car on a lotand it's only $12,000, like, oh,
like it's, I'm not even goingto look at it.
(09:57):
You know that.
That's how we, that's how wethink a lot because it's like oh
, it's not going to have the,it's not going to have the
stereo, it's not going to havethe safety features, it's not
going to last long.
We have this perceived valuethat we attach to products.
On the other end, it's oh, I'mnot going to, I'm not even going
to look at a car that's over my$35,000 budget because I can't
(10:19):
afford it.
Okay, so now we know who we'remaking a candle for.
We know how much money thatthey will spend on that candle.
Now we have to see if the mathis going to work.
So we have to figure out ourcost of goods.
Cost of goods is all of thedifferent expenses that are
going to go into making thiscandle.
It's going to be the vessel,the label, the warning label on
the bottom, the wick sticker,the w.
(10:41):
It's going to be the vessel,the label, the warning label on
the bottom, the WIC sticker, theWIC, the oil, the wax, the box,
if you're going to usepackaging.
Every different expense that'sgoing to go into making that
candle is what's called the costof goods.
Now we use Inventora, we likeInventora.
I'll actually link them in theshow notes below.
That is how we keep track ofall of our cost of goods is
(11:04):
using them.
There's CraftyBase, there'sother options out there, so
certainly check around and seewhich ones make the most sense
for you.
The way those work is you putall of your products, your raw
supply products, into theirsystem and then you build out a
recipe.
So, for instance, this mahoganydriftwood candle, it's got like
three different oils in it.
(11:24):
Then it's got 10 ounces of wax,it's got an ounce of oil.
When you put all of that intoyour recipe and it pulls all of
those costs individually for youso that you know what your
total cost of good is.
So when you do all of that math, this candle for us, our 10
ounce candle, is going to costus between 475, 480 and like 550
(11:47):
.
The oil prices is really whatdictates the difference.
You know all of our labels aregoing to cost the same.
The wax is going to cost thesame.
All of that the oils is what'sgoing to be a different price
based on which oils we're usingis what's going to be a
different price based on whichoils we're using.
So, from that 475 to 550, evenup to the 575 range in some of
our oils, for our classic candle, we sell that candle for $26.
(12:09):
So we're doing 5X the cost ofgoods.
So if we were going to go off ofthe metrics that a lot of
people would use of the 3X or 4X, we just wouldn't be able to
sustain our business.
You have to think of the othercosts that are going to go into
your business.
Are you going to be able to dowholesale that way?
Are you going to be able toreinvest in your business?
(12:31):
Are you going to be able to runads for your business, are you
going to be able to hire people?
All of these things arefactored into your pricing and
so if I am making this candleand I am only getting a three X
return, I'm not going to be inbusiness.
That's just the reality of it.
I have to have a larger marginfor that.
So you have to start that.
You have to think ahead, notjust if you're making candles
(12:53):
now, but what direction do youwant to go Now?
If you are just making andselling candles on the weekends,
doing craft shows, markets,which is completely fine, that's
actually.
I sometimes envy that.
Sometimes I was back justworking my nine to five during
the week selling candles, youknow, periodically on the
weekend.
But we are all in with ourthree stores, our growing
(13:15):
wholesale accounts, that wewe're all in so that we're not
going back.
So we have to make sure ourpricing is right and doing
wholesale is one of the firstdirections that we went with our
candles.
In fact, we actually have amastering wholesale course where
we actually teach you how to doyour wholesale the way we do
ours, and one of the things thatpeople get caught up on is
(13:36):
their pricing.
Because if this candle costs me,say, $6, to make some people
believe that it's your wholesalepricing is based on what it
costs you to make the candle.
But that's backwards.
You have to discount the priceof retail to come up with that
wholesale price.
So for our $26 classic candleswe wholesale those for 13,.
(13:58):
That $13 is what they are goingto buy our candles from us for.
And so if this costs us $5.50to make, then there is a what is
that $7.50 profit there, right?
So we make the candle for $5.50.
We sell it for $13.
They're going to turn aroundand sell it to their customers
for $26.
So if you think about that, ifthis candle, that is $5.
(14:20):
550, if I'm doing just 3Xmarkup on this, say this is a $5
candle.
For easy math, let's say thiscandle cost me $5 to make, and
if we were going off of thephilosophy of 3X, that would be
a $15 candle, right?
And so when you wholesale thatcandle, instead of $15, any
retailer is going to want toonly pay half, so that $15 goes
(14:43):
to $7.50.
Well, that candle cost me $5 tomake.
Why would I sell it for $7.50?
I wouldn't.
I wouldn't only make $2.50 onthat candle.
That's not a sustainablebusiness.
So that's where you break down.
If you ever want to dowholesale, you can't go off at
3X, even 4X.
If this is a $5 candle, it costsme to make, and if I do 4X on
(15:05):
that, that's going to be $20.
Wholesale price on that's goingto be $10.
If it costs me $5, I'm sellingit for $10.
There's not a lot of room there.
It's great that I'm doublingwhat my cost of good is, but
I'm's, I'm not gonna be able topay my bills that way.
Right, I'm not gonna be able topay my overhead, I'm not gonna
be able to pay people to help me, and there's also your time is
going to be involved in that.
(15:26):
So, on a candle like this, wesell more 13.
I'm making sure that I'm makingat least like seven, 50 on that
, um $8 on that Cause I'mselling you profit on there.
And so, again, this is a $5candle.
In our retail stores we'reselling it for 26.
(15:46):
So we're selling this over 5X.
And it's because of thedifferent avenues of selling.
Of course we sell direct toconsumer.
That's where we're going tomake the most profit, but we
also do the wholesale as well.
Okay, so what I've explained nowthis far is that our pricing
strategy is putting our productsat 5X or 6X the cost of goods.
(16:07):
So the pricing strategy Irecommend is figure out what
your customers will spend forcandles and make those candles
at the same value for as leastcost as possible for you, and
try to get to at least 5X.
If you aren't getting to 5X,you may have problems if you
(16:30):
plan on scaling your business.
Now again, if you're justwanting to keep it small, keep
it local, sell direct toconsumer, that's totally fine.
Direct to consumer, that'stotally fine.
If you're wanting just to sellto people and not actually, if
you don't want to have some ofthe overhead costs that go into
wholesale, if you're not wantingto have a brick and mortar or
(16:50):
anything like that, you can thennot have quite as high of a
margin and you'll be okay.
But really think about ifyou're going to want to go
wholesale, because most peoplewant to go wholesale.
And another thing aboutwholesale is the price structure
that I broke down to you showswhere we're just making enough
that I'm happy with.
But if you're going to be likeon FAIR or those other platforms
(17:12):
that are going to take anadditional 15%, you're literally
not going to be making anymoney if you don't price your
candles correctly.
That is the biggest complaintabout those that are selling on
fair.
Our products are out on fairand we've gotten some fantastic
accounts through fair, but ourwholesale strategy is doing
outreach and getting thosecustomers ourselves.
(17:33):
That's what we teach in ourcourse and that's what's done us
really well.
On this date we have 140, 142wholesale accounts.
We've probably gotten 15 ofthose from fair.
The rest of those is all fromdirectly doing outreach to
stores, and then that's what weteach.
But those orders that comethrough fair and they take that
(17:55):
additional percentage, like Icringe every time I see those
orders come through, like I'mhappy to get the order, but then
I'm like, oh gosh, like they'retaking so much.
If you want to go down theroute of wholesale, you really
got to have your pricing dialedin.
So a couple of the reasons whywe don't like to follow the 3X
or 4X strategy, if I haven'tconvinced you already that that
is not going to work for you.
(18:16):
Long-term discounts Do you wantto run holiday promotions?
When it comes to doing BlackFriday, cyber Monday deals, you
have to have a deal.
People are looking for minimumof 25, 30% off.
You can't run just 10% off forBlack Friday or Cyber Monday
Like it's not going to bring youa business.
It's just not.
People are going to be lookingfor deals and you got to have
(18:39):
margins so that you're able todo those kinds of discounts.
So we'll do 30% off for BlackFriday and Cyber Monday.
That is what we've realized isour sweet spot over the last
three years is that is where wewill start to get sales.
Of course we hate losing 30% offull price, but the reality is
that's what you have to do tomake those sales and usually
those sales will end up beinglarger.
(18:59):
People will buy more becauseit's a deal.
Also, when we're out at markets,our number one pricing strategy
when we do markets is offeringbuy three, get one free.
So when we have our candles outthere on display, people like
one, they're shopping around,they're looking.
I always tell them hey, buythree, get one free.
(19:21):
That has raised our averageorder value up significantly.
Now you might think, oh, Ican't give away one of my free
products.
Essentially, what it is is it'sgiving 25% off of all of them
and if you're not able to dothat in your business, you're
not able to run deals thatpeople are going to want and
you're just not going to growyour business.
(19:41):
We have sold so many candlesdoing the buy three get one free
that that is what we do on ourwebsite and we have more orders
that people are buying fourcandles versus people that are
just buying one.
So it is encouraging customersto spend more money.
But you have to have yourmargins built that you can
(20:03):
sustain discounting.
Same thing with your.
If you're not wanting to do likebuy three get one free on your
candles, you can also think ofanother item to give away.
Recently people have not wantedto spend as much money when
they've been shopping.
There's just been someuncertainties in the economy
that people are holding a littletighter to their money.
(20:24):
So we have been testing out buytwo candles and get a free room
spray.
Our room sprays only cost uslike $2, two and a quarter to
make.
They're really nice and it's agreat incentive to get someone
to instead of buying just onecandle.
Now they're buying two candlesOur candles that are $26, they
are now spending $52.
And sure, we're giving away afree product, but what we're
(20:46):
giving them is a $ dollarproduct.
So in reality, the profit on.
Both of those candles are stillthere and we're just giving
away a two dollar product.
But it's definitely worthgiving that product away to get
them to buy another full pricecandle Because, again, this
candle, that is twenty sixdollars.
If it costs us five dollars tomake, we're making twenty one
dollars of profit on that candle.
(21:07):
So it's worth eating $2 worthof a room spray to to bring in
that more income.
So think about strategies thatyou can do to increase your
average order value.
Aov is what it's called in theretail space.
You want to incentivize yourcustomer to spend more money
because there's going to be mucheasier to sell to that customer
(21:28):
than to get a brand newcustomer.
If someone's on my websiteshopping around, I want them to
buy.
I don't want them to go awaybecause I'm running ads to get
people to come to my website.
I'm working on the SEO.
I'm doing all these things toget someone to my website.
Once they're there, I need toconvince them to buy a candle,
because I know that once myproduct is in their hands and
they're burning it, they'regoing to love it and they're
(21:49):
going to come back and buy more.
That is the ultimate goal.
It is so much less expensive todo marketing towards someone
that's already a customer ofyours than it is to go out and
acquire a new customer, so keepthat in mind.
So if someone's on my website,I am going to have my little
scrolling banner saying,whatever the promotion is,
whether I'm doing, buy twocandles, get a free room spray,
(22:10):
or buy three candles, get thefourth one for free.
Whatever I'm doing, I'm tryingto incentivize them to spend
with me.
Today we offer free shipping Ifthey spend over a hundred
dollars.
That incentivizes them and thelittle trick that we do.
We used to do it at $75.
It was buy three or it wasspend up spend $75 and get free
(22:30):
shipping.
But with our candles being buythree, get one free, they bought
three candles.
It was $78.
They got a fourth one for freeand, being $78, they also got
free shipping.
So we actually raised ourshipping um free deal to a
hundred dollars.
So now they've got four candlesin their cart, it's $78.
Cause one of those is free.
Um, now they are spending moremoney to get over a hundred
(22:53):
dollars for that free shipping.
So they're adding an additionalcandle or an additional product
from our website.
So that's worked really wellfor us.
But again, this all goes backto what your pricing is, because
you're not going to be able todo discounts to um incentivize
people to spend more, if it'snot built in on the front end
for you to be able to give awayyour products at a reduced price
(23:14):
.
Other things we're going to wantto do is reinvest.
We put a lot of money back intoour business.
We're trying to grow it.
We have three stores now.
We keep growing as far as ourwholesale and our team Our teams
are growing right.
We're hiring more people tohelp us run our business.
If your margins are too small,you're not going to be able to
do any of that, all right.
So I recommend that, if youhaven't already really dive into
(23:35):
who your customer is, who youreally want to sell candles for
and I totally get that we wantto sell candles to everyone but
you've got to have that dialedin, all right.
So hopefully this helps you outa little bit.
So let me just recap some.
We don't go off at 3X or 4X.
We go off of what is our idealcustomer going to spend for a
candle, and then we have to makea candle that matches that
(23:57):
value for as inexpensive aspossible.
So whether that's going to endup being 5X, 6x, 7x sometimes,
especially when it comes to roomsprays and other products.
Wax and Melts is another one ofthose.
In fact, our wax and meltscosts, like us, like about two
bucks.
We sell them for nine.
So that's showing you we'relike a four and a half X on
those.
So is your pricing matchingwhat your ideal customer is
(24:22):
going to spend?
One thing to keep in mind isright now you might not be able
to do 4X, 5x, 6x like I'msuggesting to do, because you're
buying in such small quantities.
If you're buying your wax bythe box instead of buying
several boxes at a time, yourshipping costs are going to be
(24:44):
higher.
If you're buying oil by, say,like eight ounces instead of a
pound of your oil, there's asignificantly difference in
prices there.
But at least when you'restarting out I realized you
might not have the margins of 4X5X that I'm saying that you
really need to have forlong-term growth.
But look at what you'll be ableto buy those products for if
(25:08):
you do end up ordering more at atime.
So go say, you only have $300to buy on supplies, so of course
you can't buy five boxes of wax, right, you're going to buy a
little of this, a little of that.
I totally get it.
So your cost of goods are goingto be really high compared to
your price point.
But also price it out to seewhat will it cost long-term for
(25:29):
this product.
If I am just buying, you know,eight ounces of oil and I'm
buying my wax by the box and I'monly buying a few wicks at a
time and all of that, thiscandle, that is generally
costing me $5.50, this isprobably going to cost me $7.50
or $8.
You know.
So I realized that at thatprice point $26 is going to be
almost three and a half four X.
(25:49):
But you got to look atlong-term.
As I grow, I'm going to be ableto buy all of these products in
bigger bulk.
What's it cost?
And go and create a cart onyour supplier's website?
What is it going to cost when Igo to the next level?
What is it going to cost when Ibuy that oil by the pound
versus by the eight ounces?
And what is it going to costwhen I'm buying three boxes of
(26:11):
wax at a time versus one,because the reality is is the
cost of wax might not go downmuch.
The shipping is going to godown dramatically.
So we got to understand that ourpricing for our products right
now might not be the same in sixmonths.
So look at both of those Again,also with your pricing.
Reevaluate in six months.
So look at both of those again,also with your pricing.
Re-evaluate every six months.
Say, hey, what's working,what's not working, what can I
(26:34):
possibly raise my prices up alittle bit?
And then what items aren'tselling at some of these price
points that I might need tolower my costs?
We do that all the time.
We're always re-evaluating ourcosts, um to see if it makes
sense and what people are buyingour candles for.
Right now, the economy is in atough spot.
We would like to raise ourprices up because our cost of
(26:55):
goods are going up, but we alsoknow that's going to cost us
some sales.
If my $26 candle goes up to $28, $29, $30, where ideally it
should be is that going to costme sales and is it going to
justify the difference?
So that's something that wehave to think about and we think
about it all the time.
So hopefully this has helpedyou.
Make sure you start with youraudience, understand what your
(27:18):
numbers are and price yourcandles for the future, not just
for today.
So thank you so much for tuningin.
Have a fantastic day.
If you want to check out somefree resources we have on our
website, you can do so in the sonotes below.
If you found this episodehelpful, we'd love it if you'd
leave us a rating and a review.
It really helps us reach moremakers like you.
We'll see you next week.
So if you've been pricing your candles using that
3x rule or worse, you've justbeen guessing you're probably
leaving money on the table.
In today's episode, I'mbreaking down what it really
takes to price your candles forprofit, growth and
sustainability.
Whether you're just startingout or you've been selling for a
while, this might be thewake-up call that your pricing
(00:21):
strategy needs.
So let's talk about pricing ourcandles.
This is always such a hot topicbecause we get caught up so
often in what everyone else ispricing their candles for.
So you will often see othercandle makers say hey, this is a
(00:45):
eight ounce candle.
It costs me $5 to make it.
How much do I sell it for?
And then you'll get everyone'sopinion on that, and not that
any of those people arenecessarily wrong, but there's a
lot more that goes into what weshould be pricing our products
for than the cost of goods.
Because in the volume that wepurchase our candle supplies, at
(01:06):
the volume that you'repurchasing your candle supplies
at, and what Bath Body Works ispurchasing their products at and
some of that just startedyesterday we're all getting
different pricing on all ofthese goods.
But that doesn't mean that wecan sell our products at all
different prices.
We first have to understand andfigure out what niche that we
want to be in.
And then what is that targetcustomer that is going to be
(01:28):
buying our products?
And we really have to figureout who they are and how much
they are willing to spend oncandles so that we can provide
that product to them that givesthem the value that they're
looking for.
Some consumers will only buy acandle if it's more than $75.
They want a luxury candle.
There is a perceived value thatgoes along with it, where we
(01:52):
believe that if it costs Xamount of dollars it is going to
be of possibly higher qualityor the presentation of that
candle is going to be nicer intheir home.
Or sometimes it's just we buythings to impress people right,
to have things.
You know, whether it's ourclothes or our car or our home,
it also pertains to our candlestoo.
(02:13):
People will sometimes just notbuy.
I personally, like won't buy acandle at some of the discount
bargain stores.
The perceived value to me isit's probably not going to be a
soy candle, which is what Iprefer.
It may not be made with thesame ingredients, probably mass
produced.
It may not be supporting a.
It won't be supporting a smallbusiness Generally, if you're
buying it at a big spot, big box, discount, retailer, and those
(02:36):
are the kinds of candles that Ilike to buy, I like to buy
locally, you know, made or smallbusiness supporting them,
because we are one of those.
We are who our target customeris.
So figuring out who is it youwant to sell to.
Can't sell to everyone, that'sjust the reality.
We can't try to make everyonehappy.
So when you're first startingout, oftentimes you'll see
makers where they are going tohave a whole variety of sizes of
(02:59):
candles, and we tried it.
When we first started, we hadour 10 ounce jar, then we did a
five ounce, 10, and then we dida 14 or a 12 ounce ceramic.
That was more of our higher end, it was nicer.
So we had a wide range ofcandles.
When we first started, werealized that our customer is
not that higher in ceramic.
Um, so we we ended up having toget rid of those and end those,
(03:23):
and so, to this day though, westill have our classic glass,
10-ounce glass, and then we haveour 5-ounce tin candles, and
they do really well, and sothose are always going to be a
staple in our brand.
We do now do lines andcollections that are geared
towards that customer that wantsto spend more money.
We have a 12-ounce really nicevessel that we get from AXE and
(03:47):
those go for $52 in our storebut they come in a box.
The presentation is different.
But also, even through ourthree we have three store
locations.
Where those locations are aredifferent customers.
But you have to have your coreniche and your products really
dialed in and understand whatthey're going to do as far as
(04:07):
what they will spend.
Okay, so how do we figure outwhat our customers will spend on
candles?
Well, let's go to where ourcustomers are.
When you are building out yourcandle brand, you've got to have
an idea of who you want to beselling, to Go to where those
customers are currently buyingcandles and figure out what
they're spending.
(04:28):
So for us, our goal when westarted our businesses in our
house was we were just going togo down the route of wholesale.
We weren't necessarily thinkingbrick and mortar to where we
are right now, but we wanted tojust do wholesale because it is
easy to get into and you can doit while running a business at
home.
So our customer avatar, theniche that we wanted to be into.
We wanted to get our candlesinto women boutiques and in
(04:52):
downtown shopping areas thatwomen buy clothes, accessories,
home goods.
In these smaller boutiques theprices are going to be a little
higher.
They generally are going tohave more disposable income when
they're shopping there.
So we go into all of thesestores and see the candles and
they range.
In the stores that we shop theyrange from, you know, 24 to 32.
(05:16):
These aren't higher end luxury.
These are just kind of, youknow, the middle range shops in
a downtown, locally supportedshopping area, because that's
exactly where we wanted ourcandles.
So we thought, okay, our basecandle needs to be between 24
and $32.
We looked at the sizes of allof these candles to compare.
(05:36):
Okay, these candles are betweeneight and 12 ounces, so we're
not we're not pricing out thelarger ones or, you know,
smaller or smaller candles toget our baseline with.
So the average price was $24 to$32.
And then the sizing was between8 ounces and 12 ounces.
So we had a really goodbaseline of okay, if we want to
be in this store, we need tocreate a candle that's going to
(05:58):
fit these couple metrics.
We also need to look at what arethe candles that are in these
shops.
What are they made of?
Are they highly fragrant?
Are they made with essentialoils?
What kind of wax are they madewith?
So, diving into all that, wecan really understand our
customer more that we're tryingto build our business off of.
So a lot of the candles areleaning towards the more
(06:20):
eco-friendly if I'm going to usethat word of a soy versus a
paraffin, and I'm not one to getinto the science of both.
I am in the business of sellingcandles so I know these are
what are in these stores that Iwant my candles in.
So I need to replicate thosetype of candles.
So that's why we went down theroute of a soy candle to start.
Now with our brand, as we'veexpanded, we also have a coconut
(06:42):
soy candles that we do for acouple of lines.
But that's the reason why wewent down the road of soy,
because it's what our customersare going to want.
So we want to make a candlethat's going to fit into those
stores and we want to price itbased on that.
(07:05):
But we also want to stick out alittle bit from them.
What we realized when we wereshopping in all of these stores
is most of the candle labelswere white labels with very
minimalistic, like a cursivehandwriting or just a plain font
, right.
So it was a very minimalistcandle, which is fine.
But to stick out, we needsomething different.
That's why all of our candlelabels are bright, colorful.
They, they stick out and peopleall the time say I love your
(07:29):
branding.
I love your branding.
We have our lighthouse on there, we have our word mark
underneath our logo there, andall the labels are colorful.
So that is how we wanted todifferentiate ourselves from
what was already in those stores, so that those shop buyers that
are buying all the productsthat to fill their shop with
will say, oh, this is different,this is unique, this is let's
(07:49):
check this out.
And then you back that up witha really solid candle.
They're going to want it intheir store.
So getting off topic of pricinga little bit, but that's how we
figure out what shops we'regoing to go into and then how we
are going to make ourselvesstick out from what they're
currently carrying.
So staying up on the trends,seeing what everyone else is
doing.
It doesn't mean you have to dowhat they're doing.
(08:09):
A lot of times you actuallywant to be different, to make
yourself stick out, and sothat's what has done us very
well.
You can't just base yourpricing on going to weekend
markets Every time we do markets.
That's how we got started, andwe started getting a lot of
traffic was by doing markets onthe weekends.
We were always the mostexpensive candle, but our
(08:30):
candles are probably better thanothers as far as the
presentation would go.
Now, what's going into thecandle?
We're most likely all buyingour waxes, oils, wicks, vessels,
all these types of things fromthe same handful of suppliers.
So I would never say that mycandle is better than someone
else's.
But we did spend a little bitmore money on our branding and
our presentation and just thesetup of our booth to make it
(08:52):
feel where our customers want toshop.
So we are always the mostexpensive out of markets, but
that's not a bad thing, and somepeople, I do feel, get caught
up thinking, oh, I have to lowermy prices because of that, and
in reality you absolutely don't.
There are going to be peoplethat are going to come into our
booth and it has happened andthey see that it's a $26 candle
(09:14):
and they almost fall over, right.
So they like get out reallyquick because they're used to
spending, you know, $10, $15 ona candle.
They're not going to spend $26on a candle.
That's totally fine.
That's not my customer.
There's also going to be thepeople on the other side of the
spectrum where $26, they'rethinking, oh well, what's wrong
with this candle?
Why is it only $26?
Um, and they're not going towant to buy it because it's not
(09:36):
expensive enough for them, right?
So sometimes when we say we gocar shopping and it's hey, I
have $35,000 to spend, you know,that's what I can budget for
35,000.
Right, if I see a car on a lotand it's only $12,000, like, oh,
like it's, I'm not even goingto look at it.
(09:57):
You know that.
That's how we, that's how wethink a lot because it's like oh
, it's not going to have the,it's not going to have the
stereo, it's not going to havethe safety features, it's not
going to last long.
We have this perceived valuethat we attach to products.
On the other end, it's oh, I'mnot going to, I'm not even going
to look at a car that's over my$35,000 budget because I can't
(10:19):
afford it.
Okay, so now we know who we'remaking a candle for.
We know how much money thatthey will spend on that candle.
Now we have to see if the mathis going to work.
So we have to figure out ourcost of goods.
Cost of goods is all of thedifferent expenses that are
going to go into making thiscandle.
It's going to be the vessel,the label, the warning label on
the bottom, the wick sticker,the w.
(10:41):
It's going to be the vessel,the label, the warning label on
the bottom, the WIC sticker, theWIC, the oil, the wax, the box,
if you're going to usepackaging.
Every different expense that'sgoing to go into making that
candle is what's called the costof goods.
Now we use Inventora, we likeInventora.
I'll actually link them in theshow notes below.
That is how we keep track ofall of our cost of goods is
(11:04):
using them.
There's CraftyBase, there'sother options out there, so
certainly check around and seewhich ones make the most sense
for you.
The way those work is you putall of your products, your raw
supply products, into theirsystem and then you build out a
recipe.
So, for instance, this mahoganydriftwood candle, it's got like
three different oils in it.
(11:24):
Then it's got 10 ounces of wax,it's got an ounce of oil.
When you put all of that intoyour recipe and it pulls all of
those costs individually for youso that you know what your
total cost of good is.
So when you do all of that math, this candle for us, our 10
ounce candle, is going to costus between 475, 480 and like 550
(11:47):
.
The oil prices is really whatdictates the difference.
You know all of our labels aregoing to cost the same.
The wax is going to cost thesame.
All of that the oils is what'sgoing to be a different price
based on which oils we're usingis what's going to be a
different price based on whichoils we're using.
So, from that 475 to 550, evenup to the 575 range in some of
our oils, for our classic candle, we sell that candle for $26.
(12:09):
So we're doing 5X the cost ofgoods.
So if we were going to go off ofthe metrics that a lot of
people would use of the 3X or 4X, we just wouldn't be able to
sustain our business.
You have to think of the othercosts that are going to go into
your business.
Are you going to be able to dowholesale that way?
Are you going to be able toreinvest in your business?
(12:31):
Are you going to be able to runads for your business, are you
going to be able to hire people?
All of these things arefactored into your pricing and
so if I am making this candleand I am only getting a three X
return, I'm not going to be inbusiness.
That's just the reality of it.
I have to have a larger marginfor that.
So you have to start that.
You have to think ahead, notjust if you're making candles
(12:53):
now, but what direction do youwant to go Now?
If you are just making andselling candles on the weekends,
doing craft shows, markets,which is completely fine, that's
actually.
I sometimes envy that.
Sometimes I was back justworking my nine to five during
the week selling candles, youknow, periodically on the
weekend.
But we are all in with ourthree stores, our growing
(13:15):
wholesale accounts, that wewe're all in so that we're not
going back.
So we have to make sure ourpricing is right and doing
wholesale is one of the firstdirections that we went with our
candles.
In fact, we actually have amastering wholesale course where
we actually teach you how to doyour wholesale the way we do
ours, and one of the things thatpeople get caught up on is
(13:36):
their pricing.
Because if this candle costs me,say, $6, to make some people
believe that it's your wholesalepricing is based on what it
costs you to make the candle.
But that's backwards.
You have to discount the priceof retail to come up with that
wholesale price.
So for our $26 classic candleswe wholesale those for 13,.
(13:58):
That $13 is what they are goingto buy our candles from us for.
And so if this costs us $5.50to make, then there is a what is
that $7.50 profit there, right?
So we make the candle for $5.50.
We sell it for $13.
They're going to turn aroundand sell it to their customers
for $26.
So if you think about that, ifthis candle, that is $5.
(14:20):
550, if I'm doing just 3Xmarkup on this, say this is a $5
candle.
For easy math, let's say thiscandle cost me $5 to make, and
if we were going off of thephilosophy of 3X, that would be
a $15 candle, right?
And so when you wholesale thatcandle, instead of $15, any
retailer is going to want toonly pay half, so that $15 goes
(14:43):
to $7.50.
Well, that candle cost me $5 tomake.
Why would I sell it for $7.50?
I wouldn't.
I wouldn't only make $2.50 onthat candle.
That's not a sustainablebusiness.
So that's where you break down.
If you ever want to dowholesale, you can't go off at
3X, even 4X.
If this is a $5 candle, it costsme to make, and if I do 4X on
(15:05):
that, that's going to be $20.
Wholesale price on that's goingto be $10.
If it costs me $5, I'm sellingit for $10.
There's not a lot of room there.
It's great that I'm doublingwhat my cost of good is, but
I'm's, I'm not gonna be able topay my bills that way.
Right, I'm not gonna be able topay my overhead, I'm not gonna
be able to pay people to help me, and there's also your time is
going to be involved in that.
(15:26):
So, on a candle like this, wesell more 13.
I'm making sure that I'm makingat least like seven, 50 on that
, um $8 on that Cause I'mselling you profit on there.
And so, again, this is a $5candle.
In our retail stores we'reselling it for 26.
(15:46):
So we're selling this over 5X.
And it's because of thedifferent avenues of selling.
Of course we sell direct toconsumer.
That's where we're going tomake the most profit, but we
also do the wholesale as well.
Okay, so what I've explained nowthis far is that our pricing
strategy is putting our productsat 5X or 6X the cost of goods.
(16:07):
So the pricing strategy Irecommend is figure out what
your customers will spend forcandles and make those candles
at the same value for as leastcost as possible for you, and
try to get to at least 5X.
If you aren't getting to 5X,you may have problems if you
(16:30):
plan on scaling your business.
Now again, if you're justwanting to keep it small, keep
it local, sell direct toconsumer, that's totally fine.
Direct to consumer, that'stotally fine.
If you're wanting just to sellto people and not actually, if
you don't want to have some ofthe overhead costs that go into
wholesale, if you're not wantingto have a brick and mortar or
(16:50):
anything like that, you can thennot have quite as high of a
margin and you'll be okay.
But really think about ifyou're going to want to go
wholesale, because most peoplewant to go wholesale.
And another thing aboutwholesale is the price structure
that I broke down to you showswhere we're just making enough
that I'm happy with.
But if you're going to be likeon FAIR or those other platforms
(17:12):
that are going to take anadditional 15%, you're literally
not going to be making anymoney if you don't price your
candles correctly.
That is the biggest complaintabout those that are selling on
fair.
Our products are out on fairand we've gotten some fantastic
accounts through fair, but ourwholesale strategy is doing
outreach and getting thosecustomers ourselves.
(17:33):
That's what we teach in ourcourse and that's what's done us
really well.
On this date we have 140, 142wholesale accounts.
We've probably gotten 15 ofthose from fair.
The rest of those is all fromdirectly doing outreach to
stores, and then that's what weteach.
But those orders that comethrough fair and they take that
(17:55):
additional percentage, like Icringe every time I see those
orders come through, like I'mhappy to get the order, but then
I'm like, oh gosh, like they'retaking so much.
If you want to go down theroute of wholesale, you really
got to have your pricing dialedin.
So a couple of the reasons whywe don't like to follow the 3X
or 4X strategy, if I haven'tconvinced you already that that
is not going to work for you.
(18:16):
Long-term discounts Do you wantto run holiday promotions?
When it comes to doing BlackFriday, cyber Monday deals, you
have to have a deal.
People are looking for minimumof 25, 30% off.
You can't run just 10% off forBlack Friday or Cyber Monday
Like it's not going to bring youa business.
It's just not.
People are going to be lookingfor deals and you got to have
(18:39):
margins so that you're able todo those kinds of discounts.
So we'll do 30% off for BlackFriday and Cyber Monday.
That is what we've realized isour sweet spot over the last
three years is that is where wewill start to get sales.
Of course we hate losing 30% offull price, but the reality is
that's what you have to do tomake those sales and usually
those sales will end up beinglarger.
(18:59):
People will buy more becauseit's a deal.
Also, when we're out at markets,our number one pricing strategy
when we do markets is offeringbuy three, get one free.
So when we have our candles outthere on display, people like
one, they're shopping around,they're looking.
I always tell them hey, buythree, get one free.
(19:21):
That has raised our averageorder value up significantly.
Now you might think, oh, Ican't give away one of my free
products.
Essentially, what it is is it'sgiving 25% off of all of them
and if you're not able to dothat in your business, you're
not able to run deals thatpeople are going to want and
you're just not going to growyour business.
(19:41):
We have sold so many candlesdoing the buy three get one free
that that is what we do on ourwebsite and we have more orders
that people are buying fourcandles versus people that are
just buying one.
So it is encouraging customersto spend more money.
But you have to have yourmargins built that you can
(20:03):
sustain discounting.
Same thing with your.
If you're not wanting to do likebuy three get one free on your
candles, you can also think ofanother item to give away.
Recently people have not wantedto spend as much money when
they've been shopping.
There's just been someuncertainties in the economy
that people are holding a littletighter to their money.
(20:24):
So we have been testing out buytwo candles and get a free room
spray.
Our room sprays only cost uslike $2, two and a quarter to
make.
They're really nice and it's agreat incentive to get someone
to instead of buying just onecandle.
Now they're buying two candlesOur candles that are $26, they
are now spending $52.
And sure, we're giving away afree product, but what we're
(20:46):
giving them is a $ dollarproduct.
So in reality, the profit on.
Both of those candles are stillthere and we're just giving
away a two dollar product.
But it's definitely worthgiving that product away to get
them to buy another full pricecandle Because, again, this
candle, that is twenty sixdollars.
If it costs us five dollars tomake, we're making twenty one
dollars of profit on that candle.
(21:07):
So it's worth eating $2 worthof a room spray to to bring in
that more income.
So think about strategies thatyou can do to increase your
average order value.
Aov is what it's called in theretail space.
You want to incentivize yourcustomer to spend more money
because there's going to be mucheasier to sell to that customer
(21:28):
than to get a brand newcustomer.
If someone's on my websiteshopping around, I want them to
buy.
I don't want them to go awaybecause I'm running ads to get
people to come to my website.
I'm working on the SEO.
I'm doing all these things toget someone to my website.
Once they're there, I need toconvince them to buy a candle,
because I know that once myproduct is in their hands and
they're burning it, they'regoing to love it and they're
(21:49):
going to come back and buy more.
That is the ultimate goal.
It is so much less expensive todo marketing towards someone
that's already a customer ofyours than it is to go out and
acquire a new customer, so keepthat in mind.
So if someone's on my website,I am going to have my little
scrolling banner saying,whatever the promotion is,
whether I'm doing, buy twocandles, get a free room spray,
(22:10):
or buy three candles, get thefourth one for free.
Whatever I'm doing, I'm tryingto incentivize them to spend
with me.
Today we offer free shipping Ifthey spend over a hundred
dollars.
That incentivizes them and thelittle trick that we do.
We used to do it at $75.
It was buy three or it wasspend up spend $75 and get free
(22:30):
shipping.
But with our candles being buythree, get one free, they bought
three candles.
It was $78.
They got a fourth one for freeand, being $78, they also got
free shipping.
So we actually raised ourshipping um free deal to a
hundred dollars.
So now they've got four candlesin their cart, it's $78.
Cause one of those is free.
Um, now they are spending moremoney to get over a hundred
(22:53):
dollars for that free shipping.
So they're adding an additionalcandle or an additional product
from our website.
So that's worked really wellfor us.
But again, this all goes backto what your pricing is, because
you're not going to be able todo discounts to um incentivize
people to spend more, if it'snot built in on the front end
for you to be able to give awayyour products at a reduced price
(23:14):
.
Other things we're going to wantto do is reinvest.
We put a lot of money back intoour business.
We're trying to grow it.
We have three stores now.
We keep growing as far as ourwholesale and our team Our teams
are growing right.
We're hiring more people tohelp us run our business.
If your margins are too small,you're not going to be able to
do any of that, all right.
So I recommend that, if youhaven't already really dive into
(23:35):
who your customer is, who youreally want to sell candles for
and I totally get that we wantto sell candles to everyone but
you've got to have that dialedin, all right.
So hopefully this helps you outa little bit.
So let me just recap some.
We don't go off at 3X or 4X.
We go off of what is our idealcustomer going to spend for a
candle, and then we have to makea candle that matches that
(23:57):
value for as inexpensive aspossible.
So whether that's going to endup being 5X, 6x, 7x sometimes,
especially when it comes to roomsprays and other products.
Wax and Melts is another one ofthose.
In fact, our wax and meltscosts, like us, like about two
bucks.
We sell them for nine.
So that's showing you we'relike a four and a half X on
those.
So is your pricing matchingwhat your ideal customer is
(24:22):
going to spend?
One thing to keep in mind isright now you might not be able
to do 4X, 5x, 6x like I'msuggesting to do, because you're
buying in such small quantities.
If you're buying your wax bythe box instead of buying
several boxes at a time, yourshipping costs are going to be
(24:44):
higher.
If you're buying oil by, say,like eight ounces instead of a
pound of your oil, there's asignificantly difference in
prices there.
But at least when you'restarting out I realized you
might not have the margins of 4X5X that I'm saying that you
really need to have forlong-term growth.
But look at what you'll be ableto buy those products for if
(25:08):
you do end up ordering more at atime.
So go say, you only have $300to buy on supplies, so of course
you can't buy five boxes of wax, right, you're going to buy a
little of this, a little of that.
I totally get it.
So your cost of goods are goingto be really high compared to
your price point.
But also price it out to seewhat will it cost long-term for
(25:29):
this product.
If I am just buying, you know,eight ounces of oil and I'm
buying my wax by the box and I'monly buying a few wicks at a
time and all of that, thiscandle, that is generally
costing me $5.50, this isprobably going to cost me $7.50
or $8.
You know.
So I realized that at thatprice point $26 is going to be
almost three and a half four X.
(25:49):
But you got to look atlong-term.
As I grow, I'm going to be ableto buy all of these products in
bigger bulk.
What's it cost?
And go and create a cart onyour supplier's website?
What is it going to cost when Igo to the next level?
What is it going to cost when Ibuy that oil by the pound
versus by the eight ounces?
And what is it going to costwhen I'm buying three boxes of
(26:11):
wax at a time versus one,because the reality is is the
cost of wax might not go downmuch.
The shipping is going to godown dramatically.
So we got to understand that ourpricing for our products right
now might not be the same in sixmonths.
So look at both of those Again,also with your pricing.
Reevaluate in six months.
So look at both of those again,also with your pricing.
Re-evaluate every six months.
Say, hey, what's working,what's not working, what can I
(26:34):
possibly raise my prices up alittle bit?
And then what items aren'tselling at some of these price
points that I might need tolower my costs?
We do that all the time.
We're always re-evaluating ourcosts, um to see if it makes
sense and what people are buyingour candles for.
Right now, the economy is in atough spot.
We would like to raise ourprices up because our cost of
(26:55):
goods are going up, but we alsoknow that's going to cost us
some sales.
If my $26 candle goes up to $28, $29, $30, where ideally it
should be is that going to costme sales and is it going to
justify the difference?
So that's something that wehave to think about and we think
about it all the time.
So hopefully this has helpedyou.
Make sure you start with youraudience, understand what your
(27:18):
numbers are and price yourcandles for the future, not just
for today.
So thank you so much for tuningin.
Have a fantastic day.
If you want to check out somefree resources we have on our
website, you can do so in the sonotes below.
If you found this episodehelpful, we'd love it if you'd
leave us a rating and a review.
It really helps us reach moremakers like you.
We'll see you next week.
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