What's Your Cost for 1kg of Juice?

[jfrater]

We all talk a lot about the perfumes we make but far less often do we discuss the costs - beyond annoyance at inflated prices of oils such as vanilla absolute. I thought it might be interesting to discuss the per kg juice prices of some of our creations.

I'll start things off by saying that in general conversation with a truly great perfumer who is a household name in the industry, the average cost for true niche is 300–500 EUR for a luxury brand. Other brands, like Amouage spend no more than 150 EUR per kg and other brands like Tom Ford - far less (think down to double digits!)

In my range of twelve fragrances the lowest per kg (of juice) is 250 and the most expensive is 1,400 (Oud related). My average is probably around 650.

The bases I use in some of my perfumes (and sell to you!) range from $180 to $3,500 per KG with the historic ones being the most expensive due to the mysore sandalwood and other naturals.

What makes you determine the budget of a perfume when you are working on a new formula?

 

[David Ruskin]

When I was working, the most important consideration was raw material cost. Depending on the end product, so the batch size, we were given a cost to work to. A really expensive fine fragrance would have a raw material cost of between £70-£100. The usual RMC was about £50. What the client was charged was another matter decided by the account manager. The cost was for the fragrance concentrate, not the end product. We only supplied concentrate.

Costs depend on what people are prepared to pay.

 

[julian35]

What makes you determine the budget of a perfume when you are working on a new formula?

Great topic Jamie. It surely has to be what a commission/contract/brief will pay.... or in your case what you think public with pay since you are working for yourself. Any Net Profit expectation also has to play into that calculation for the self employed entrepreneur. If you simply want to "break even" after expenses then the RMC can be a lot higher and still be able to sell to your market. But I suspect I am not telling you anything you don't know. Luxury items like perfume seem to have there own crazy selling point that is all to do with brand and nothing to do with quality....

Assuming the RMC for 1kg is £650, at a 20% dilution you will get 50 bottles(+-). Sell each bottle for £100 and you have £5000 for bottles, marketing, paying yourself, etc. Am I missing anything?

I look forward to working with your bases.

 

[pkiler]

Cheapest cost/kg for a clients perfume was $120/kg for 5kg, compounded at a lab in New Jersey. When I compound here, costs are between $250-700/kg. One is more expensive because of oud.

 

[jfrater]

When I was working, the most important consideration was raw material cost. Depending on the end product, so the batch size, we were given a cost to work to. A really expensive fine fragrance would have a raw material cost of between £70-£100. The usual RMC was about £50. What the client was charged was another matter decided by the account manager. The cost was for the fragrance concentrate, not the end product. We only supplied concentrate.

Costs depend on what people are prepared to pay.

Yeah batch size makes a huge difference - I usually work to 1kg and I am obviously my own client - but if I were making 10kg of juice my raw materials cost would be much better due to bulk buying.

 

[jfrater]

Great topic Jamie. It surely has to be what a commission/contract/brief will pay.... or in your case what you think public with pay since you are working for yourself. Any Net Profit expectation also has to play into that calculation for the self employed entrepreneur. If you simply want to "break even" after expenses then the RMC can be a lot higher and still be able to sell to your market. But I suspect I am not telling you anything you don't know. Luxury items like perfume seem to have there own crazy selling point that is all to do with brand and nothing to do with quality....

Assuming the RMC for 1kg is £650, at a 20% dilution you will get 50 bottles(+-). Sell each bottle for £100 and you have £5000 for bottles, marketing, paying yourself, etc. Am I missing anything?

I look forward to working with your bases.

Basically yes - your maths is correct. With the 5,000 you have spent 650, leaving you 4,350. From that you also need to remove costs like spillage, giving away samples, etc. There is a lot in the brand overall beyond the liquid in the bottles. I should say that in my experience thus far, the cost of the packaging exceeds the cost of the fragrance, and then marketting is a whole other (horrifying) story. I am still trying to figure out the best approach with that.

Also you need to decide how to deal with the development costs in accounting etc. A perfume that costs me $400 per KG may have taken 20 iterations to get right - at 10g per sample so you need to add up all those samples, pipettes, glass bottles, trash collection, labour etc to get the true cost of development.

 

[jfrater]

Cheapest cost/kg for a clients perfume was $120/kg for 5kg, compounded at a lab in New Jersey. When I compound here, costs are between $250-700/kg. One is more expensive because of oud.

The costs of self-compounding versus using an oil house are quite significant - you illustrate that well!

 

[jfrater]

I look forward to working with your bases.

I forgot to address that! You'll love the bases - and I'm still adding more to the site each day. I will be adding the famous Muguet des Bois today and a demo formula replicating Diorissimo (which was originally built on that very same base). Fragrance history is so enjoyable!

 

[julian35]

Basically yes - your maths is correct. With the 5,000 you have spent 650, leaving you 4,350. From that you also need to remove costs like spillage, giving away samples, etc. There is a lot in the brand overall beyond the liquid in the bottles. I should say that in my experience thus far, the cost of the packaging exceeds the cost of the fragrance, and then marketting is a whole other (horrifying) story. I am still trying to figure out the best approach with that.

Also you need to decide how to deal with the development costs in accounting etc. A perfume that costs me $400 per KG may have taken 20 iterations to get right - at 10g per sample so you need to add up all those samples, pipettes, glass bottles, trash collection, labour etc to get the true cost of development.

LOL.. I see a new Basenotes DIY excel production spreadsheet being developed even as we write... I bet there is a wealth of information in this forum on all the line items required to getting a brilliant fragrance creation out the door and onto the shelf...

 

[jfrater]

LOL.. I see a new Basenotes DIY excel production spreadsheet being developed even as we write... I bet there is a wealth of information in this forum on all the line items required to getting a brilliant fragrance creation out the door and onto the shelf...

I have so many spreadsheets I can't keep up! It is insane how many small costs go into a production perfume company. As for the bulk of the work (including calculating the "ingredients" list I need to put on my packaging, I have written some software to help with all that stuff - it does all my pricing, IFRA, inventory, contacts, etc. I am considering making it accessible for others to use also. Here's a redacted screenshot.

 

[sypherrr]

Cheapest one for our client was about 250$.
The most expensive is about 800$ per kilo because of huge amounts of absolutes (rose damascena, jasmin sambac, ylang ylang).

 

[jfrater]

Cheapest one for our client was about 250$.
The most expensive is about 800$ per kilo because of huge amounts of absolutes (rose damascena, jasmin sambac, ylang ylang).

When you are using absolutes like those, the price very quickly rockets.

 

[David Ruskin]

Yeah batch size makes a huge difference - I usually work to 1kg and I am obviously my own client - but if I were making 10kg of juice my raw materials cost would be much better due to bulk buying.

Surely those who buy your fragrances are your clients. Things cost what people are prepared to pay for them. If you are doing perfumery to earn a living you need to work out how much creating a fragrance costs you. Not just RMC, but time spent in the creative process, and time spent in compounding, diluting and filling.

How much did the fragrance concentrate cost you to make? What is the raw material cost, per bottle, of your finished product? How much profit do you want to make?

The more successful you become, the larger batch size you will be able to make. The greater size of ingredient you can buy, the cheaper it will be. You can then either lower your own prices or make more profit.

 

[julian35]

I am considering making it accessible for others to use also. Here's a redacted screenshot.

Looks like a great program that many might make good use of. It works in conjunction with Shopify? Jamie does it also capture other related production expenses we have been discussing ? Is there an “accounting “ side to the software ie: income statement(profit &loss). I smiled when I saw the shopping list item, there’s a dangerous line. Lol

 

[jfrater]

Surely those who buy your fragrances are your clients. Things cost what people are prepared to pay for them. If you are doing perfumery to earn a living you need to work out how much creating a fragrance costs you. Not just RMC, but time spent in the creative process, and time spent in compounding, diluting and filling.

How much did the fragrance concentrate cost you to make? What is the raw material cost, per bottle, of your finished product? How much profit do you want to make?

The more successful you become, the larger batch size you will be able to make. The greater size of ingredient you can buy, the cheaper it will be. You can then either lower your own prices or make more profit.

Within the company I am the surrogate client (Creative Director) setting the brief and budget for the perfumer (also myself). Obviously the person buying the finished perfume is also a client.

And your last sentence is what I was referring to about batch size. 1kg of benzyl acetate is $165 from Vigon, but if you buy 10kg it becomes $20 per kg.

 

[jfrater]

Looks like a great program that many might make good use of. It works in conjunction with Shopify? Jamie does it also capture other related production expenses we have been discussing ? Is there an “accounting “ side to the software ie: income statement(profit &loss). I smiled when I saw the shopping list item, there’s a dangerous line. Lol

Hey it is entirely for manufacture so no shopify link as yet. It is not tracking other expenses beyond the juice yet - I do that in spreadsheets for now. I really needed software that did what I wanted EXACTLY how I wanted it and according to how I work, so third party wasn't an option. I'll be building in IFRA and EU allergens data sheet production too very soon.

The shopping list is not as dangerous as it sounds! It let's you pick a product and tells you how much raw material you need to manufacture it based on inventory

 

[David Ruskin]

I have a somewhat unusual take on the cost of ingredients. I haven't needed to know the price of any raw material for over ten years ( no doubt prices have changed). The prices I do remember were for relatively large batches. I cannot believe the prices charged for small amounts of even the most common material. From memory benzyl acetate was about £2.00/Kg.; one of the cheaper ingredients we used. The cheapest, and the one we used most was DPG which was usually less than £1.00/Kg.

 

[jfrater]

I have a somewhat unusual take on the cost of ingredients. I haven't needed to know the price of any raw material for over ten years ( no doubt prices have changed). The prices I do remember were for relatively large batches. I cannot believe the prices charged for small amounts of even the most common material. From memory benzyl acetate was about £2.00/Kg.; one of the cheaper ingredients we used. The cheapest, and the one we used most was DPG which was usually less than £1.00/Kg.

2 pounds a kig? I dream of such prices! Vigon has DPG at $16 per kg if you buy 250 kilos! Perfumers Apprentice has it for $10 if you buy around 20kg.

 

[David Ruskin]

I have long had the feeling that these small scale suppliers are ripping you all off. There is no excuse to charge so much for DPG, which is made in the hundreds of tonnes. It is one of the most commonly used solvents in perfumery.

 

[ScentAle]

The cost I calculated for an expansive floral perfume made with large doses of absolutes was "about" 60dollars for 100g, so 600 for kg. So much!

 

[David Ruskin]

The cost I calculated for an expansive floral perfume made with large doses of absolutes was "about" 60dollars for 100g, so 600 for kg. So much!

But even at that high cost you could make a profit. $600/Kg, diluted to 20% (let's ignore the cost of ethanol) gives $600/5 Kg. How many 100ml. bottles of fragrance can you get from 5 Kg? Charge, say, $200 per bottle; profit.

 

[LaFou]

Basically yes - your maths is correct. With the 5,000 you have spent 650, leaving you 4,350. From that you also need to remove costs like spillage, giving away samples, etc. There is a lot in the brand overall beyond the liquid in the bottles. I should say that in my experience thus far, the cost of the packaging exceeds the cost of the fragrance, and then marketting is a whole other (horrifying) story. I am still trying to figure out the best approach with that.

Also you need to decide how to deal with the development costs in accounting etc. A perfume that costs me $400 per KG may have taken 20 iterations to get right - at 10g per sample so you need to add up all those samples, pipettes, glass bottles, trash collection, labour etc to get the true cost of development.

To create perfumes as a hobby or An artistic approach is something, and to run it as a business is an entirely different thing! Especially with end user products with allergens! nightmare!

I wish you all the luck, running several business I know how hard managing one can be, but if you may allow me to say something that might help you or might not, depending on the specifics of your situation you can only assess,

if your planing to make a brand, and establish a client base and market share, you have to think in 3 to 5 years of no profit, only cost covering and re-investing back!
so you might take the cost of the lab rent, electricity, storage, ingredients, disposables, employees, and you as formulation (you can make ur self a salary) and calculate at 1 year or 3 years if you were able to sign long terms lease and ingredients supply contract at better rate!

once you have those cost laid out properly, you take additional cost of each creation you make, meaning bottles, packaging and delivery! You can process your fixed costs against your creation by creation cost and build around it the profit range you need!

there will be many surprises that will come along the way, that’s for sure, but In general you will have a set target!

then you have to invest from that profit margin, to participate at forums and exhibitions, building relationships with the key figures in the industry, endorsements by influencEd’s or celebrities, interviews and articles! social media! this is where the business is built! That’s it! Especially in this sort of line of business (fashion and cosmetics)

you might want to invest little with strong copy writer to create the main story behind the brand from your words! and how it will connect with people or clients! this can be very helpful!

last, among many more to say, but in general, you need to automate all your administrative work, there’s many platforms that offers this for new business and these platforms are scalable, if you grow as company the same platform can grow with you easily!
some are from Amazon, Google or Microsoft

I use the Microsoft azure one, it’s amazing, you can edit and customize how the platform will work for you! and build as you like without any programming or programers !
you can create as well complex automated perfume inventory system at ease!

And at the end, I sincerely wish you all the best and hopefully we will see your brand in the next years bigger than the biggest now!

if you need any support, just msg away ✌️

Cheers

 

[jfrater]

if your planing to make a brand, and establish a client base and market share, you have to think in 3 to 5 years of no profit, only cost covering and re-investing back!
so you might take the cost of the lab rent, electricity, storage, ingredients, disposables, employees, and you as formulation (you can make ur self a salary) and calculate at 1 year or 3 years if you were able to sign long terms lease and ingredients supply contract at better rate!

Oh I am definitely no stranger to zero profit! That doesn't mean zero income. I was fortunate in having my brand launch directly into the biggest nationwide luxury perfume retailer in this country but the profits from that are turned right back around into marketting and controlled growth.

 

[LaFou]

Oh I am definitely no stranger to zero profit! That doesn't mean zero income. I was fortunate in having my brand launch directly into the biggest nationwide luxury perfume retailer in this country but the profits from that are turned right back around into marketting and controlled growth.

Awesome, thats a wonderful start.. I’m sure you will have many more ahead!!
yes distributors and retailers are majooooor factor.. very nice 👍

best of luck on your journey ⭐️
ill make sure to check your site and products, im always interested buying new perfumes and materials!

 

[LaFou]

Oh I am definitely no stranger to zero profit! That doesn't mean zero income. I was fortunate in having my brand launch directly into the biggest nationwide luxury perfume retailer in this country but the profits from that are turned right back around into marketting and controlled growth.

So I checked your site, man do you have some interesting materials, the fruit collection is tricky to find, not displayed on drop down menu, I found it by site suggestion! Any way, it seems that I’ll order all the materials you have 😅👍 47 checked at the cart!
if you have any rare materials or captives I would love to buy some too, small quantities 25 to 50 ml ✌️

 

[jfrater]

So I checked your site, man do you have some interesting materials, the fruit collection is tricky to find, not displayed on drop down menu, I found it by site suggestion! Any way, it seems that I’ll order all the materials you have 😅👍 47 checked at the cart!
if you have any rare materials or captives I would love to buy some too, small quantities 25 to 50 ml ✌️

Oh thank you for pointing out the fruit collection - I'll make some tweaks to the menu to get it on there now.