Pricing My Candles

I’ve been making candles as a hobbyist for twenty years. As I’ve honed my craft and experienced both success and failures, I think I’ve gotten better at what I do. Pictured above are candles that I made between 2003 and 2010. Pictured below are some of the candles that I made in 2021.

Candles that I’ve made in 2021

As I transition from being a candle making hobbyist to becoming a hobbyist with a part-time seasonal food themed novelty candle making business, one of the things that I’ve had to consider is how to price my candles.

hot dog candle

As a chef I know that in the food service industry, menu prices are determined by production costs with up to a 40% markup. Using production costing techniques, I know that it costs me $4.45 to produce a hot dog candle. This includes the cost of candle dye, fragrances, soy wax, candle gel, and wicks. It does not include the cost of packaging or shipping.

If this was a food product, a 40% markup would price this at $6.23 (exclusive of packaging). It would likely be rounded to the nearest 5 cents (to facilitate making change) and would be priced at $6.25. In the food service industry, it wouldn’t take much time to boil or grill a hot dog. Hot dogs are actually cooked at the processing plant prior to shipping. To prepare a hot dog at home or in a restaurant kitchen or food stall, all you really need to do is to warm the sausage.

If I sold a candle hot dog for $6.23, I’d be earning $1.78 for the hour and fifteen minutes that it took to create this product. To make this candle, I had to melt wax, color it, scent it, and pour it into molds. After the wax was set, it took an hour to unmold and to assemble and to hand paint the candle. I also had to add the wicks.

In the art community, there are two considerations for pricing art work.

  1. An artist prices his or her work based upon production cost and the time that was needed to produce a given piece of art. How does one price an hourly wage? The U.S. Department of Labor says that the average artist earns $24.58 per hour.
  2. An artist should also consider his or her competition. What are similar pieces of art selling for?

In one of my earlier posts, I ran a check on the competition. I found that while there are candlemakers who make cupcake candles and beverage candles, only a few made burger slider candles. The candles in question were poorly made. Picture below are two products made by other candle makers. The one on the left is priced for an astounding $35.00. The one on the right sells three for $15.00. Neither of them look realistic. The burgers look dry. The buns have no texture. The cheese isn’t partially melted. Neither burger has ketchup or mustard.

burger candles made by the competition

I think that my candles are much better looking. Pictured below right is one of my sliders. I also produce full sized burger candles.

If I conservatively valued my time at $40 per hour, the hour and 15 minutes needed to assemble the hot dog candle would earn me $50. With a production cost of $4.45, the hot dog could be priced for $54.45. With packaging, this would likely be priced at $55.00.

While I could literally calculate the production costs for every single candle I make, I’ve been thinking that for ease of pricing if I simply calculated the cost per ounce using the hot dog candle as a base unit, the production cost for a food candle would run 64 cents per ounce.

Since the hamburger candle above weighs 15.1 ounces, the production cost could be calculated by multiplying 15.1 times .64 cents per ounce. This would give me a production cost of $9.66 for the burger and $2.62 for the slider.

Since the burger took an hour to produce and assemble (not counting the time needed for the wax to cool and set), the burger candle could be priced at $49.66 (rounded to $50.00). Since the slider took about 45 minutes to produce and assemble, $30 (work time) + $2.62 (production cost) would price the slider at $32.62. The $32.62 slider would cost less than the $35.00 made by one of my competitors. My slider also looks much more realistic.

If I applied this formula to my garlic bread candles, a production cost of $3.12 + the fifteen minutes needed to produce and assemble each candle (after popping it out of the mold) would price this product at $13.12. Since these candles are relatively easy to make, I could likely sell them for $13.99 each. (Garlic oil candle fragrance costs $46.95 per ounce, so a moderate increase to the formula I used to determine pricing would offset the cost of this fragrance without cutting into my hourly income.)

garlic bread candles

There are some obvious drawbacks to selling candles by weight and time. One of the drawbacks is that some candle fragrance oils are much more expensive than others. On the brighter side, I don’t have much in the way of competition. In some areas like the production of lasagna, steak, macaroni and cheese, curried chicken, and beef with broccoli candles; I have no competition at all.

grilled ribeye steak candle with fried mushrooms and bacon

In the end the public will decide whether my candles or worthy or purchase or not. Having invested nearly $5,500 in candle supplies, packaging materials, labels, and storage units, having my store go live before the end of the year will at least allow me to offset business costs against my income tax for 2021.

In terms of going operational, I still need to file a DBA (doing business as) form with Clark County. To do this, I need to first find a notary to witness my signature on the appropriate county form. Once I have a county DBA, I can go to a bank to set up a business account. Once I have a business account, I can set up an auto pay system like PayPal for direct electronic payments.

Since it’s still far too hot to sell candles since shipping them could cause them to melt, I’m not in any particular rush to get my county DBA or to open a business bank account. So long as I’m able to do this before the end of the year, I’ll be able to deduct all of my business expenses on my 2021 tax return.

In order to continue to legally function as a business, the IRS says that I have to show a profit for 3 years out of 5. Given how I won’t be operational until late October along with the cost of this start-up, I’m prepared to write 2021 off as a loss.

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