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    1. tim007's Avatar
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      Cosmetics Profit Margins - How much can I make selling cosmetic

      Iím honestly pretty new in business in general, and am looking into getting started in cosmetics. Ideally, Iíd do this myself, working from home to make natural cosmetics-- kitchen and garden-type ingredients. Any idea how profitable this market is? Oh, Iím also curious as to what my options would be for when demand gets too high for me to produce the stuff myself. Should I go for employees, or are there manufacturers out there I can use?
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      Youíre actually looking at a pretty good market, but there is a lot of competition out there as well. If youíre going the online route, your overhead is going to be a domain, supplies, labeling, packaging, software, and shipping/handling. Youíre really only looking at maybe $3k start up, probably closer to $5000. Pretty cozy, considering those supplies are in your kitchen or garden. Natural cosmetics are a booming business these days. Youíve got a per-unit cost of 10Ę to $3, and those easily mark-up to $8-$15 or more. That is really a pretty tidy margin for not a lot of investment. If you go with selling on eBay (or the like), your costs are actually going to be lower.

      Time investment is pretty minimal next to a lot of other markets. For a few hours a day, you can belt out a good bit of product. Thatís if youíre doing it yourself. Thereís also the option of private label manufacturers, which honestly does not add that much to your start up costs. Theyíll relieve you of the need to produce your product, and give you a tidy, professional looking package to sell. This means you can charge more for each unit.

      Itís entirely up to what youíre looking to do. You should be able to easily get started in your kitchen, possibly move to a manufacturer when your demand gets more than you can handle. Of course, you can start with a manufacturer, or even dropship. Either way, youíre looking at around 40% or so in profit, which is great if you can shift a lot of product. Initially you should reinvest a lot of your income back into your business, but once you get established you should be able to sustain production pretty easily.

      You could go with employees, but youíre looking at a pretty big investment for wages. In many countries employers liability insurance is a compulsory legal requirement. In the USA it is dependent upon a combination of federal law and local state laws. In the majority of the states in the USA, an employer that employs W2 employees is required to have Workers' Compensation Insurance that pays the disability and medical expenses of their employees in the case of injuries or illnesses suffered at work.

      As far as promotion is concerned, if youíre up to it, Iíd recommend getting a booth at a local market. I know here in Atlanta weíve got several that pop up for spring and summer. One day a week, youíd set out your best stuff, get folks on your email list, and get some free samples out. Booths run between $50 and $125 a day, which you would ideally balance out with sales at the market. Iíve known several businesses here locally that still rake in a good profit at the East Atlanta Village and East Lake markets. Again, youíre looking at a pretty significant investment of time here, but you should be able to pull out a decent living once you get yourself established. Best of luck to you!
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