Production Methods 101

[Intro]

In this video course, I’ll guide you through the different production methods. We’ll break it down into three main types of producing cosmetics: Pre-manufac­tured, pre-formu­lated and custom formu­lated products. We’ll discuss the pros and cons of each manufac­turing method, as well as the minimum order quantities and unit prices, so you can choose the perfect one for your business. Keep in mind that these numbers can vary and there is not a unified definition for those production methods. This is just our under­standing of it and how we like to handle it with our clients.

[1. White Label]

First, pre-manufac­tured, or white label products.
They are ready-made and can be sold as is, with your logo attached. These products offer a quick and easy entry into the market, with low minimum order quantities and immediate availa­bility. It’s a great option if you’re looking to quickly launch a product line basically without any investment. The downside is, you can’t adjust the formu­lation or packaging, since the product is already on the shelf. You don’t have a lot of custo­mization options either (besides slapping your logo on a product using a “white” label).

This limitation exists because printing directly on the packaging requires machinery that isn’t feasible to operate for just a few units. These machines are designed for large runs, so the cost and logistics of setting them up for a small batch is not worth it.

Let’s visit a typical private label manufac­tu­rer’s website. Here, we can browse through a selection of ready-to-brand products. Once we find something we like, we can order as few or as many as we need.

As you might have noticed already, the prices per unit are pretty high. This is the price you have to pay for such small MOQs and short lead times. Obviously, we are kinda biased, but we recommend thinking twice before trying to start a business using such white label products. It’s not even the let’s say moderate quality level and lacking custo­mization, it’s because of the high unit prices, that hardly leaves room for any profit margin.

[2. Private Label]

Moving on to the second part: Pre-formu­lated Products. For those who want more control over the product’s final look and feel, this production method is for you. The manufac­turer got some formulas developed, and different packaging options selected, but they don’t keep a stock of products ready to ship.

The method typically starts with a higher MOQ of around 1000 units because the products are manufac­tured just for you. The MOQ makes sure, the fix costs are spread over a suffi­cient quantity to offer you a good price per unit.

Imagine a machine that prints on glass jars using a method called screen printing. This machine uses special screens to apply ink to the jars. Creating the screen with your individual design is expensive, and this cost is the same whether you print one jar or many. The same applies for setting up the machine for your specific jar dimen­sions.
The MOQ is there to spread the high setup costs over many jars, making each one cheaper to print.

This more custom approach means you won’t get your goods as quickly as with off-the-shelf products, but the upside is you get to change the packaging, print on it directly (instead of slapping a label on it) and sometimes even adjust the formula.

But why even care about the packaging?

In an industry that’s all about looks and beauty, you shouldn’t undere­stimate the power of packaging. Typically, customers cannot test a cosmetic product and therefore have to rely on what they see. Your product is perceived as high or low quality within seconds, regardless of what’s inside.

Especially for makeup, also known as colour cosmetics or decorative cosmetics, this manufac­turing method is the best option in our opinion. Even some of the best known makeup startups in the world utilize pre-formu­lated products for speed to market while saving thousands of dollars for develo­pment and testing.

[3. Custom Formu­lation]

Let’s have a look at the third and therefore last manufac­turing method: custom formu­lation. A survey found 72% of consumers want brands to explain what ingre­dients do, 42% feel they don’t get enough info about ingre­dient safety. With a custom formu­lation, you have full control over the ingre­dients used in your products. This way, you can better explain to your customers why you chose those ingre­dients and what they do.

Creating a successful cosmetic formu­lation is, a step-by-step process.

[Step 1: Project Briefing and Defining Important Key Metrics]

First and foremost, set up a detailed project brief is really important. Think of this as a blueprint for your vision. Together with the manufac­turer of your choice, write down your desired texture, color, moistu­rizing capacity, and any other essential attri­butes.

Be crystal clear about your expec­ta­tions for this product. Don’t leave anything to inter­pre­tation. And don’t forget to commu­nicate your target price, so the maximum unit price you are willing to pay. There’s another course on how to set your target price,

[Step 2: Drawing Inspi­ration from Successful Products]

Having an existing product as a blueprint often provides a good starting point for new formu­la­tions. It acts as a rough benchmark, or you reengineer it 1to1. Either way, you can then change it according to your liking.

[Step 3: Conception of Formu­lation]

Once the very first steps pave the way, formu­lators take over. They select and blend various ingre­dients like emollients, thickeners, preser­va­tives, fragrances, and colors. The goal is to precisely meet the project briefing’s outlined targets while maintaining quality and safety standards.

[Step 4: Creating the first Sample]

Now that your product has been formu­lated, the exciting stage of actually creating that first sample begins. There is typically only a limited number of free revisions set by the cosmetic manufac­turer, so you have to make them count. Once you’ve identified areas requiring impro­vement, commu­nicate these with your manufac­turer. Remember, vague feedback gets vague revisions, and that’s not something we can afford with a limited number of oppor­tu­nities to get it right.

[Step 5: Compa­ti­bility- and Stability Testing]

The last step is to run two tests: compa­ti­bility- and stability test. During the compa­ti­bility test, we check how well the product’s ingre­dients work together under different condi­tions such as light, tempe­rature, and moisture. We look for issues like ingre­dient separation, color change, or unexpected texture. Stability testing ensures the product stays high-quality over time. It checks if the product keeps its key charac­te­ristics, like pH, thickness, smell, color, and preser­vative effec­ti­veness, no matter how it’s stored or used.

[Outro + Timespan + Costs]

There you go! That’s the simple 5 step process of creating your very own formu­lation. Depending on the product and the level of custo­mization, you should plan with a minimum of 2–3 moths and 500 — 4000 euros for a 100% new formula.

Unfort­u­nately, it is impos­sible to make a clear recom­men­dation as to which cosmetics production method is best for you. You should weigh the pros and cons according to your individual needs. Here are two examples to give you some guidance:

[Case Study 1 + MOQ & Price]

Emma is 24 Years old and would like to start her own Vegan Makeup Brand specia­lized on high quality products for lips and nails.

MOQ: She would like to start with low quantities to minimize financial risk.

Unit Price: The price per unit has to be good enough for her to sell the product at a compe­titive price while making a profit. But a few cents more or less is not critical for her.

Formu­lation: When it comes to formu­lation, she does not have any precise idea. The only thing she is for sure, the formu­lation must be vegan and feel high quality.

Design Services: She also attaches great importance to a beautiful, aesthetic design, both for the brand and for the products. This should set them apart from the compe­tition.

Legal Compliance: She read some articles on the internet, but still feels a bit overwhelmed, especially when it comes to inter­na­tional laws and regula­tions.

White label products might not be the perfect choice since it’s gonna be hard to find high quality vegan makeup products for lips and nails in the first place. Also the limited custo­mization and high unit price is a deal breaker for her. Paying around 8€ for a moderate quality lipstick with a label on it, is just in line with her high brand standards.

A custom formu­lation is too much of a financial risk, she likes to avoid. Also, she has no clue on how to specify what exactly she is looking for in terms of ingre­dients.

Starting with a high-quality vegan private label formu­lation might just make the cut between custo­mization and financial investment. When she reached out to us, we’ve offered her a pre-developed formu­lation she loved, and she picked out of 5 different presel­ected packaging options. With each packaging option, stability and compa­ti­bility tests were already conducted.

She ended up with a minimum order quantity of 1000 pieces and a unit price of around 3 euros.

[Case Study 2 + MOQ & Price]

Juliet, 32 Years old, is the founder of a Swedish skin care start-up for women.

MOQ: She plans to order at least 3000 units for her first order, since she is confident about demand and like to avoid being out of stock because of lead times.

Unit Price: Juliet has a precise target price that must not be exceeded, as she has calcu­lated her margins tightly.

Formu­lation: This is where she wants to really stand out from the compe­tition. She tested several different skin care products adver­tised for women, but was not happy with most of them. She self-studied skin care formu­la­tions to gain deeper knowledge about ingre­dient compo­si­tions and now she has a pretty precise idea of what her formu­lation should look like. She is pretty sure, there is not a single compa­rable product, that fulfils her needs, on the market right now.

Juliet contact us last year and since we had no ready-to-go formu­lation in our portfolio that matches all of her specific requi­re­ments, custom formu­lation was the only viable option.
Develo­pment costs vary from 500€ up to 4000€. Since we had a base formu­lation that already came pretty close to hers, we adjusted the already existing formu­lation by adding some ingre­dients and taking some away. It took only 500€ develo­pment cost and 1 month before we could start production.

For the packaging, she wanted a similar one to Chanel’s Sublimage Creme. With custom formu­lation and an order quantity of 3000 units, there’s hardly any packaging (which is made of glass) that we can’t do.

So she ended up with an MOQ of 3000 units and 6,50€ for a high-end skin care cream.

[Summary & Outro]

Let’s sum every­thing up.

If you want to start your own beauty brand, but don’t really have a marketing plan and quite unsure if every­thing will work out, white label might be the best choice for you. It minimizes your financial risk, since you can basically start with 1 unit. But keep in mind that the moderate quality, the high unit price and the lack of custo­mization also minimize your change for success.

Private label is the most common and preferable production method for most makeup brands because it balances MOQ, unit price and degree of custo­mization. Also, there’s typically no need for develo­pment & testing, what saves you time & money. Most products start at 1000–5000 units, but the price per unit is a faction of compa­rable white label products.

Custom formu­lation is the preferable option for many skin & hair care brands. There’s a one-time fee of around 500‑4000€ for develo­pment and testing, but for many brands that’s worth it. First, there are not as many white and private label product for skin & hair care, and second, it’s often highly indivi­dua­lized, depending on your target audience and their needs. While a skin or hair care product develo­pment often starts at 1000 MOQ, a makeup develo­pment requires up to 5000 MOQ.

So there you go. I really hope these short explana­tions and case studies helped you to make a more informed decision when it comes to choosing a production method for your business.

Hope to see you in the next course.