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I am curious what others do in regards to product development for a private label customer. During development to find the right ratio of fragrance and the desire look by the private label customer do you charge the same price for the supplies you had to use to make the samples for them to try and test?
So for example if you are going to charge them wholesale $2 per item do you charge them the same for what is created during the development stages? Or do you charge less or do your charge more? and why?
I am looking forward to getting some feedback.
I'm not sure I understand the question. It seems to me that you want to build in a fee to cover the costs not only of the supplies, but also for the service. In other words, with private label, if you have to customize the product (as opposed to fill something you already make), then you need to charge for both the service and the finished product. What if you send them a test and they want it tweaked? (And may people will ...) You have to be able to charge something for the tweaking.
I think this is very important because in order to do private label right, you have to invest your time to learn about the customer, their business, their brand, etc. If you didn't do that, they might as well just buy an unscented base off the shelf -- there are plenty of those to go around.
So I suggest charging a fee for the service, and include what they get for that fee. Then have other things they can buy, including an order of however many they want. I would definitely have a contract so everything is spelled out. PL deals can be dicey with misunderstandings and that's frustrating for everyone.
Does this help?
Hi La Shonda,
This is Melody with Sarati Private label. What we do is the following and this is from lots of misunderstanding and frustrations.
1. Have them sign a R&D sample contract if possible that outlines the process. Usually this process includes an agreed upon development fee that includes up to x amount of samples. For us, we do $150.00 an hour and that usually is enough to create 3 samples. Often times there are a few changes but we try to send out as close as possible to spec sample.
2. Before the contract is sign we do the following:
1. talk with the client to see what they are looking for
2. Ask them to identify a product prototype that they like in terms of viscosity, smell, etc.
3. Agree upon the hour amount
4. Agree upon the sample quantities. In our case it's 3 samples per $150.00. And then we allow them to buy extra at $2.00 a unit.
5. Offer free shipping in our case as most of our clients are out of the area.
Hope that helps! An R&D contract is the best way to protect your time and products.
Oh, we also waive the $150.00 if they place a private label order! forgot that part.
Another thing- be sure to specify that you still own the formula, mixing instructions, etc and that they are private labeling it....that comes up a lot!
hope that helps!
Thanks dM and Melody for your awesome input. I am working on a project where I will make the soap and they will provide the fragrance. But to determine the fragrance strength I need to provide samples of finished product. This sheds a great deal of light on where to begin and how to approach it.
Melody in regards to the $150 fee do you get that upfront before you start development or after? and if you get it before and they place an order I guess you deduct the $150 from their order total?
Hi La Shonda,
We actually get the money upfront. It helps to see the customer's level of commitment. If you want, send me a message and I will send you a copy of our R&D contract that you can modify or work with to give you some ideas!
Thanks! Please accept my friend request so I can send you a message.
Love this question, La Shonda!
I was just asked to do a Private Label for an existing client and I have never done it before. Except for a few candles or special lotions for x-mas for wholesale clients.
This would actually be my first Private Label job and I avoided answering them until today. I came up with questions to ask them with the help of a friend and we have had a dialog going back and forth between us today.
The questions were something like:
1. How many units would you need?
2. Would we use our base for your products? What fragrance??
3. What kind of packaging are you thinking? What kind of products??
4. Will you label or will we?
Those seemed to start a conversation! I was scared to approach situation because I didn't know how to do it. Of course I didn't, I'd never done it before.
So thank you for the question and the responses, so far! Great topic!!
Glad I stopped by to read this. I think its an area that is confusing for many of us. I think you need to get a feel for how committed the customer is and how much tweaking it takes. I sometimes charge a rather negligible amount for scent samples if I know the customer is serious an going to place an order because I figure I'll recoup my investment once they order. I like Melody's idea of charging $150 up front but deducting that from their purchase. I've been doing things like this without a contract which I know is a bad idea. I'd love to see what you use Melody. I'll email you.
A Shonda - I am so happy you asked this question!
Melody - you have given us great advice. I will also love a copy of what you use for the
R&D contract. I just completed two private label programs and have some one else interested
and wasn't sure if I was on the right track or not...um, no - not really!
I friended you and hope to hear back...thank you!
I just saw this discussion and very and very appropriate as I am in the process alreay of working with a spa. Melody I just friend requested you and would greatly appreicate it if you would foward a copy of your contract when you have a chance. Have a great day!
Great discussion! I would love a copy of the contract as well!