The Ultimate Cosmetics Manufac­turing Guide for Beginners (2024)

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In an era of celebrity makeup and skincare brands that grow into overnight successes, entering the world of cosmetics manufac­turing can be both exciting and intimi­dating.

The truth is that those “instant successes” didn’t happen by accident.

Best-selling cosmetic labels are the result of calcu­lated branding plans that include third-party cosmetic manufac­turing.

The good news is that even newer and smaller brands can get access to the same formu­lation experts and top-tier manufac­turing facilities as major labels.

In this guide, we’ll cover every­thing up-and-coming brands need to know about cosmetics manufac­turing.

Step 1

1. Identify Your Target Market

The first step for manufac­turing cosmetics is to decide if your cosmetic line will appeal to mass market, medium market, or high-end market shoppers.

It’s helpful to identify hallmark brands in each market as you try to decide where your lineup fits into the picture.

Identify your Target Market Illustration

You can use market positions of well-known brands to model with your own product lineup, pricing strategy, and brand messaging.

a) Cosmetic Manufac­turing for Mass Market

Nivea Logo
Loreal Logo
Maybelline New York Logo

In the cosmetic manufac­turing world, mass market is synonymous with “drugstore cosmetics.” Products in this tier are acces­sible, affordable, and highly recognizable.

Nivea, L’Oréal, Revlon, Maybelline, CoverGirl, and Neutrogena are some of the brands that both define and dominate in this space.

Mass Market encom­passes a variety of price points while staying relatively affordable in compa­rison to niche and luxury cosmetics.

While this can be a desirable space for a brand, it’s important to remember that your new cosmetic brand will be in direct compe­tition with estab­lished and trusted brands that are heavily marketed and distri­buted by the multi­na­tional corpo­ra­tions that own them.

When selling mass-market cosmetics, price is especially delicate. This is a very price-sensitive category where target customers will switch between brands in response to price increases.

In order to thrive in this compe­titive market, brands utilize bulk manufac­turing to drop the price per unit.

You can only match the price of your compe­tition if you manufacture extremely high quantities. Especially if you are just getting started, this could be too much of a risk.

b) Cosmetic Manufac­turing for Medium Market

Clinique Logo
Mac Cosmetics Logo
Kylie Cosmetics Logo

Medium-market cosmetic customers are willing to pay more for better quality, niche ingre­dients, and experi­ential packaging.

This category is occupied by “mall” makeup brands that include MAC, Clinique, Kylie­C­os­metics and Origins.

While products in this category aren’t viewed as full splurges by customers, there is a careful balance of quality and price that attracts mid-tier buyers who value quality.

Medium-market cosmetics also typically come with a unique selling propo­sition (USP) that acts as “justi­fi­cation” for the slightly higher price.

Potential USPs could include beautiful packaging, organic ingre­dients, or seasonal themes.

c) Cosmetic Manufac­turing for High-End Market

Estée Lauder Logo
Dior Logo
Chanel Logo

Prestige, exclu­sivity, and superior quality are the charac­te­ristics of cosmetics in the high-end market. This space is occupied by classic designer monikers.

Think Chanel, Estée Lauder, Lancôme, and La Mer. In this market, the sight of a branded bag elicits feelings of excitement!

There’s no question that stepping into the high-end market requires elite ingre­dients, quality formu­la­tions, and branding that reinforces exclu­sivity.

In this category, a higher price is actually a selling point instead of a deterrent. Customers are willing to pay premium prices for a chance to step into the prestige associated with these brands.

High-end market shoppers exclu­sively look for expensive brands because higher prices reinforce the luxuriousness and exclu­sivity they value in products.

Step 2

2. Select Your Category and Products

Once you’ve identified your brand’s place in the market, the next step is building a lineup.

This step is primarily about deter­mining which cosmetic products you want to start with.

Choose your Products Illustration

Here’s a blueprint for building your lineup by category:

Set Your Cosmetics Manufac­turing Budget

Before planning your cosmetic line, create a budget for how much you can pour into your first production batch.

While some brands invest in multiple products from the start, others find it more finan­cially advan­ta­geous to push a single product as a breakout product that will drive the rest of the line.

However, a multi-product line does create an oppor­tunity to scale up using higher average cart values.

Identify a Niche for Who You Manufacture Cosmetics

In the crowded beauty space, finding a niche that allows your brand to stand out can be a true “brand maker.”

To discover a profi­table niche, consider products that are missing from the current market.

You may even consider using surveys or your own personal experience to pinpoint under­served customers looking for specific solutions or fixes that can be added to their beauty routines.

Select Your Cosmetic Line’s Intro­ductory Products

In a world where makeup “kits” reign, it’s smart to do strategic releases of categories instead of skipping around with products.

Think of the demand for lip kits or eye kits.

Prioritize the coordi­nated release of lipstick, glosses, and lip liners instead of skipping between lipstick and mascara in the same release.

This gives your brand a chance to attract loyalty by showing off its strength in one category before expanding.

Step 3

3. Set the Price

Defining unit price is not a guessing game.

Once you’ve identified the products you want to develop and release first, use market research to determine what compe­titors are courting your same target market.

set the price illustration

For example, a new brand that wants to release bronzers in the medium market should establish an average price among compe­titors offering similar products.

If a brand is offering distinctive benefits and premium quality compared to compe­titors, there is room to be on the higher side of average.

Pricing should also be tailored to match the values and buying habits of your intended market category.

And at the same time, brands still need to set a target price per unit that allows them to be profi­table.

Therefore, your target price should fulfill these three goals:

  • Cover production, marketing & overhead costs
  • Create profi­ta­bility on every unit sold (most brands aim for a 30% profit margin to obtain sustaina­bility)
  • Match the price point of your target market

Step 4

4. Choose a Cosmetics Manufac­turing Method

How will you bring your cosmetic products to life?

In the cosmetic industry today, very few brands are making their products in-house.

White label versus private label Illustration

The industry standard is to utilize white label manufac­turing and private label manufac­turing.

Let’s discuss the pros and cons.

White Label Cosmetics Manufac­turing

White label cosmetics manufac­turing refers to the practice of purchasing premade products that can be branded under your own label.

Some brands choose this route because the financial investment of badging products that have already been developed and tested is low.

Order minimums can start as low as 50 units.

However, brands that choose this option do not sell exclusive products. They are essen­tially resellers selling under their own labels.

Custo­mization is off the table. Other brands also have access to the same product.

Private Label Cosmetics Manufac­turing

Private label cosmetics are cosmetic products made by one company but sold under another brand’s name.

In simple terms, if a cosmetics brand doesn’t make its products on its own, it’s using private label cosmetics.

You can choose to start with a proven formu­lation and adjust it to your prefe­rences, or develop an entirely new formula (this is often done by cosmetic contract manufac­turers).

Custo­mization of an existing product can include:

  • Packaging
  • Colors
  • Scents
  • Textures

Going with private label manufac­turing requires a deeper investment, since minimum order requi­re­ments typically start at 1,000 units.

However, the finished products are compa­rable to products offered by well-known medium market or even high-end brands.

You also avoid the risk of consumers finding an identical product from another brand.

Step 5

5. Choose & Adjust or Develop your Formu­lation

If the goal is to bring a product to life from scratch, this step can take a while.

On the other hand, if you go for white label or private label cosmetics manufac­turing, it’s a piece of cake.

Choose your Formulation Illustration

But don’t think you have to settle for a standard formu­lation when choosing private label cosmetics manufac­turing.

You can also use private label to create unique cosmetics that meet your individual requi­re­ments. However, you don’t have to worry about the specific ingre­dients and chemical details.

You tell the cosmetics manufac­turer what you are looking for, what speci­fi­ca­tions the formu­lation should meet.

They will either already have a suitable formu­lation in their range or will develop a new one.

Step 6

6. Select and Design Your Primary and Secondary Packaging

When it comes to cosmetics, the way products are packaged is almost as important as the products themselves.

There are two layers of packaging to consider:

Select and design your Packaging Illustration

Primary Packaging

The primary packaging is what directly holds your product, such as a lipstick tube or face cream jar.

This is the part a customer will directly handle and thus, needs to be both functional and aesthe­ti­cally pleasing.

Remember, you can only choose a packaging if you opt for private label cosmetics manufac­turing. With white label manufac­turing the primary packaging can not be changed.

Secondary Packaging

Secondary packaging is an additional layer like a box or carton that the product is sold in.

Although not mandatory, secondary packaging serves as an excellent oppor­tunity for brands to stand out with creative designs and to clearly display product infor­mation without cluttering the primary container.

It’s an aspect many brands leverage for enhanced appeal and branding.

Step 7

7. Craft a Sales Plan

How will you sell your new products?

Many new brands are using direct-to-consumer sales using retail websites.

Craft a Sales Plan Illustration

In fact, many billion-dollar companies got their start with simple Shopify stores. While launching online is the standard, brands don’t need to give up the dream of getting into major retailers.

Once your lineup has been created, you can pitch to Sephora, Ulta, Target, and other popular retailers.

While major distri­bution can lead to high-paying deals, moving away from the indepen­dence of online sales will require you to enter a profit-sharing contract.

Step 8

8. Pay Attention to Compliance

The cosmetics industry is tightly regulated. Creating safe products isn’t just about satis­fying legal standards.

Safety and trans­pa­rency are becoming incre­asingly important to consumers, especially when it comes to products that are applied to the skin.

Cosmetic regulations funnel Illustration

Any brand that wants to manufacture color cosmetics to comply with the following:

  • State, federal, and inter­na­tional safety regula­tions that safeguard customers from hazards.
  • Manufac­turing regula­tions for sourcing, formu­lation, and production. If you’re working with a trusted third-party manufac­turer, these regula­tions will be handled for you.
  • Labeling regula­tions that ensure accurate ingre­dient lists and safety warnings.
  • Marketing regula­tions that protect consumers from deceptive claims.

No brand wants to risk tarnishing its reputation with a major lawsuit.

Because it is beyond the scope of this article, we compiled a guide with the most important cosmetics regula­tions for the US and European market.

You can work with your private label manufac­turer like us to verify that all regula­tions are being followed.

Contact us

Start Cosmetics Manufac­turing with Ease

Launching a cosmetics line independently doesn’t have to mean launching a cosmetics line alone!

As a leading cosmetics manufac­turer specia­lizing in private label cosmetics, we are here to help you make your entrance in the beauty and skincare market.

We’re the hidden name behind many best-selling cosmetic lines sold around the world.

Contact us today to learn how we can help bring your brand to life!

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