Creator of Huge Lips, Skinny Hips Lip Gloss (at Space NK, Scoop and b-glowing.com), Karen Robinovitz takes us through the trials and tribulations of creating a beauty brand from scratch.

Before I go on, note: Everything I'm blogging right now happened a while ago (at this time, the product is actually in stores, but I want to give you all the background to catch you up on how I got to today).

This week's topic: How much is this thing going to sell for? I needed to have a price before I could complete the press kit and what I didn't know then is that in the beauty world, the best way to create a profitable company is to have a cost of goods (COG) that is about 20% of the wholesale price.

For example, if a product is retailing at $20, it is typically sold to a retailer at $10, so the ideal COG would be $2. But you have to sell a whole lot of product to make real money because when you start production, the minimums are so high that you wind up shelling out a lot of dough on the inventory.

Our gloss is far more expensive than $2. To turn the best profit, we'd need to sell the product for $50. Who's buying a $50 gloss? I'm not and I'm the type of girl who can get suckered into buying anything!

I did some research. I created spreadsheets of what the best items on the market cost. Then, the economy tanked! Not the best time to start a company, but I was too far along to turn back. And it wasn't the time to launch a gloss in even the $30 or $40 range.

So, $20 seemed to be the magic number. And I made an executive decision to make less money now, build the image and the brand's identity, and find ways to get the cost of goods down later (without sacrificing quality, of course).

We had a high COG. Some of that is due to the fact that the formula is, at its core, expensive. It is loaded with high quality, premium ingredients and expensive essential oils at a very large percentage. For the record: I would never skimp on that part -- if the product isn't amazing, what's the point?

That's when Todd stepped in. While he doesn't have a background in beauty, he was a businessman and I needed one of those! He looked at where I was and thought he could help streamline a supply chain so that, in the future, when we have other products and need to increase our inventory, he could find ways to streamline the operation to make it more fiscally efficient.

It was kind of crazy to be thinking of these things when we didn't have an actual product on shelves yet. Come to think of it, we didn't have shelves yet or anything in a warehouse. It was still all on paper and in production!

So, we had the price point -- $20. We put it in the word document. And now we just needed someone to buy into our concept. Literally.

Next week, I'll go there ... and then get back to the press kit action!

Mwah!

Karen
Purple Lab Creatrix