To start a soap business, decide first what you'll claim, because that decides who regulates you: a bar sold only as soap is a consumer product, while one that promises to moisturize is a cosmetic and one that promises to treat a skin condition is a drug. Then learn to make it safely, settle a few recipes and cure them, cost a bar honestly, label it for the category you chose, give every batch a code, and start selling at markets before shops. The first year can start small: in the example below, $3,860 buys the molds, oils, labels, a market tent and working cash, a bar costs $3.85 to make, and it sells for $10 at a market and $6 wholesale. Below are the eight steps, with the numbers.
The short version
- Decide what you'll claim: "soap" alone, a cosmetic claim, or no drug claims at all.
- Learn lye safety and use a lye calculator for every recipe.
- Settle a few recipes, test them, and plan for weeks of curing before a bar can be sold.
- Cost a bar with your time in it; your hours are usually the biggest line.
- Label for the category you chose; cosmetics have their own label rules.
- Give every batch a code and keep a batch record.
- TaroStack costs every batch, keeps curing bars apart from what's ready, and codes every lot. More below.
Step 1: soap, cosmetic or drug
FDA treats a product as soap only when most of it is an alkali salt of fatty acids, its cleaning action comes from those compounds, and it's labeled, sold and represented only as soap (21 CFR 701.20). Soap that meets that definition is regulated by the Consumer Product Safety Commission, not FDA, and FDA directs questions about its safety and labeling to CPSC (FDA).
| What you say about the bar | What it is | Who regulates it |
|---|---|---|
| "Soap", and nothing about what it does to skin | Soap, if it meets the definition | CPSC |
| "Moisturizing", "deodorizing", "with shea butter for soft skin" | A cosmetic | FDA |
| "Treats acne", "relieves eczema", "antibacterial" | A drug, or a cosmetic and a drug | FDA, with drug rules |
| A synthetic detergent bar | A cosmetic, even if it's called soap | FDA |
A cosmetic bar must state its weight in pounds and ounces, prominently, on the label (21 CFR 701.20), and cosmetics carry other label and safety duties too. What a cosmetic label needs is in cosmetic labeling requirements, and what the federal cosmetics law asks of a small business is in MoCRA for small businesses. This is general information, not legal advice.
Step 2: learn to make it safely
Cold process soap is made with sodium hydroxide, lye, which burns skin and eyes. Learn from a class or a good book before selling, wear goggles and gloves, keep the lye away from children and pets, and run every recipe through a lye calculator, so the lye is fully used by the oils. Write down every recipe exactly, including the superfat, and don't change it without testing again.
Step 3: settle the recipes and cure them
Start with three or four recipes and make them until they come out the same every time. Cold process bars cure for weeks before they're ready to sell, so the first market is a month or more after the first batch, and at full speed there are always weeks of bars on the curing racks. That's stock you've paid for and can't sell yet; how a soap business plans around it is in soap business plan.
Step 4: cost a bar and set a price
The full working is in soap making cost calculator. For a 5 oz bar:
| Per bar | Cost |
|---|---|
| Oils and lye, a batch of 19 bars | $1.34 |
| Box and label | $0.40 |
| Your time, 2 hours a batch at $20 an hour | $2.11 |
| Before overhead | $3.85 |
| Where it sells | Price | Left per bar |
|---|---|---|
| A market or your website, after a 3% card fee | $10.00 | $5.85 |
| Wholesale to a shop | $6.00 | $2.15 |
Your time is the biggest line, so bigger batches are the quickest way to a better margin. Wholesale leaves little at these numbers, which is why markets and your own website come first. How margins compare across a range is in soap business profit margin.
Step 5: labels
What goes on the label follows from Step 1. A cosmetic bar needs the cosmetic label: identity, net weight in pounds and ounces (a metric figure may appear too), ingredients, and your name and place of business, among other things in cosmetic labeling requirements. For true soap, ask CPSC what applies. Either way, put a batch code on every bar or box, and keep claims to what the label category allows.
Step 6: batch codes and records
Give every batch a code that goes on the label, and keep a batch record: the recipe and version, the oils' and lye's lots, weights, temperatures, the date made and the date it's ready. If a customer reacts to a bar, or a supplier recalls an oil, the code is how you find the batch and every bar from it. A code format that works for soap is in how to create batch numbers for soap, and a full record is in cosmetic batch record template.
Step 7: the startup budget
| Item | Example |
|---|---|
| Molds and a cutter | $250 |
| Scale and stick blender | $150 |
| Goggles, gloves, apron | $60 |
| First oils and lye | $400 |
| Boxes and labels | $300 |
| Label design | $300 |
| Business license | $150 |
| Curing racks | $150 |
| Market tent and table | $300 |
| Website | $300 |
| Working cash | $1,500 |
| Total to start | $3,860 |
Step 8: where to sell
Start at markets: you learn which scents sell, customers tell you what they think, and a bar leaves $5.85 instead of $2.15. Add your own website for repeat customers. Approach shops once you know your bestsellers and can make enough of them; what a shop expects when it orders is in wholesale order form template.
Where this stops working
The first year runs on a notebook: recipes, a list of batches, a rough cost per bar. By the second year there are eight scents, three batches curing at once, oils bought in three sizes from two suppliers, and a market table that keeps running out of the scent that sells while the racks fill with the one that doesn't. Which batch used the new olive oil, which bars are cured, and what a lavender bar costs now are all questions the notebook can't answer.
How TaroStack does it
TaroStack costs every batch, keeps curing bars apart from what's ready to sell, and codes every lot.
Every recipe, every batch, costed. Each soap is a recipe with versions, with units converted: buy oils by the gallon, use them by the gram. Recording a batch takes oils, lye and fragrance off stock from the lots used, at what you paid, divides by the bars that came out good, and puts them into a lot with its own code. Batch record forms carry your own fields, like weights and temperatures.
Curing, kept apart. A batch that's curing can sit on hold, apart from what's available to sell, and be released when it's ready, so the market's pick list only offers cured bars. Stock is picked first-expired-first-out.
And what sells, visible. Margins are reported by product and by customer, and stock that isn't moving shows how long since it last went out, so the scent to make more of, and the one to stop, are both clear. Connect your Shopify store or Square, and we set it up with you.
| The question | Notebook | In TaroStack |
|---|---|---|
| What does a bar cost now? | Worked out once | Every batch, at what you paid |
| Which bars are cured? | Check the racks | Curing lots on hold until released |
| Which batch used the new oil? | Unknown | The oil's lot, on the batch |
| Which scents sell? | A feeling | Margins by product |
Recipes, batches, lots, holds and margins are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.