Developing a skincare product can cost between $50k and $150k. This may sound like a lot, but compared to the amount of money most companies spend on advertising – $250K to over $1 million for a single TV ad – developing a skincare product can actually be quite cheap.
First, let’s talk about the initial costs involved in developing a product. Depending on how simple or complex your product is, these could be very minimal. If you already have a formula for an existing product like a cleanser or moisturizer, you may only have to involve a packaging or label designer.
These designers will generally charge anywhere from $0.50-$3.00 per unit of your product depending on their services and experience with packaging design. This initial cost will vary depending on the complexity of your packaging and label design but generally falls within this range.
If you are coming up with an entirely new idea for a skincare product, then you will need to hire a cosmetic chemist/formulator who will help develop your formula. This can cost anywhere from $4,500-10,000 (depending on the complexity of your formula), but if you already have an existing product that you want to reformulate, then it can be much cheaper to hire someone to fix it for you.
As far as manufacturing goes, this is one of the more costly parts of creating a new skincare product because manufacturers will want to ensure that they are able to safely produce your formula.
What makes up the cost of developing a skincare product?
The actual cost of developing a product depends upon the type of product. Naturally, if it is an innovative and breakthrough skincare product then the cost would be higher than a standard or a simple skincare product.
I know that most of you have been desiring to develop your own skincare products. But, if you are not aware of the exact cost, then it would be better to go for a standard or a simple skincare product as it would be easy for you to manage and you can also save some money.
The cost involved in developing a skincare product includes:
1) A list of ingredients with their quantities and the quantity of each ingredient supplied by the manufacturer.
2) Cost of the packaging material.
3) Cost of raw materials like water, oils, alcohols, wax, etc.
4) Cost incurred in developing the formula.
5) Cost incurred in procuring other supporting materials like gels, creams, etc.
6) Research and development fee for preparation of R & D report.
Things to bear in mind when starting to develop a skincare product
When you are starting to develop a new skincare product, there are some things you need to consider. Developing a skincare product is not easy.
But you can make it easier by following these steps:
1. Identify your target market and customers
Who will buy your product? What is their age group? What problems do they want to solve? Do they want to solve a problem now, or prevent one in the future? What makes them unique?
2. Define your benefits
What problem does your product solve? What are the benefits of using your product instead of competitors’ products?
3. Answer these questions
Why should someone pay for your product if they get the same solution with another brand for free? Why would they buy it again and again in the future?
4. Choose your suppliers/manufacturers carefully
Make sure at least one or two has been previously successful in developing similar products so that you can learn from their experience and avoid common mistakes.
5. Define your cost structure
How much does each component cost and can you find cheaper alternatives for sourcing them (e.g., raw materials)? Is there any risk involved in purchasing those raw materials from a supplier, especially if it is from overseas?
6. Formulation
First Make sure your product doesn’t just look good on paper; it has to work when it’s made too. Don’t rush into creating a formula unless you’re confident it will work in practice as well as theory. Always have a backup plan if your formulation turns out to be unsuitable or unstable (more about this later).
Final Thoughts
Undoubtedly, the budget will have a significant impact on the development of your skincare product. Investors and lenders aren’t throwing money at companies without a reliable projection for returns.
However, it will ultimately come down to what you need for the fulfillment of your project. If you’re hoping to tap into a pool of investors, you want to make sure that there are realistic expectations surrounding the costs associated with developing your skincare product.
The same goes for when seeking a loan—you’ll need to account for every expense as well as every route to revenue and profit (and plan around any variables along the way).
