The beauty and skincare industry is rapidly growing. According to market research company NPD Group, beauty and skincare products are one of the fastest-growing consumer areas, with an average 8% annual growth for the past 5 years.
So if you have ever been interested in launching your own brand of beauty products, there has never been a better time to start a skincare line.
The best part is that you do not need any special experience training to make a skincare line. All you need is some marketing smarts, a good product, and a little bit of luck. So we put together this comprehensive guide on how to start a skincare line from scratch.
How Much Does it Cost to Start a Beauty Line?
Pretty much everyone on the planet uses some kind of cosmetic product, whether it is makeup, skin lotion, soap, or toothpaste. So there is a massive market for beauty lines and skincare lines to tap into. Of course, that means there is a ton of competition in the sphere.
The cosmetic industry is also regulated by the FDA, so you have to make sure everything you sell is FDA-compliant.
There are three main costs you need to juggle when it comes to skincare lines and cosmetic products, each of which has different costs.
- Product Development – ~$3,000
- Marketing – ~$500
- Operating Expenses – ~$1,000-$2,000
As you can see, product development usually costs the most. Development here can refer to raw materials, packaging, labeling, manufacturing, and more. Cosmetics manufacturing usually charges on a per unit basis, so a large portion of your costs depends on how much product you want to move in the first place.
Getting a small-scale cosmetic operation with 3-4 products up and running should run you anywhere between $10,000-$20,000, potentially more depending on the kinds of products you are making. In general, overall costs are less if you make more products.
How to Start a Skincare Line
Step 1:Develop a Product
Obviously, the first thing you need to do is develop a product. “Skincare products” is a very broad term and can include makeup, lotions, restorative creams, facial cleansers, and more. The beauty market is also oversaturated with all kinds of products. So, if you want any chance of surviving in the competitive landscape, you need a product line that can stand out from the others.
For example, many beauty line companies make themselves stand out by using natural, organic ingredients. Other companies might focus specifically on the rejuvenation and skin restoring properties of their skincare products.
This is the part where competitor research helps a lot. You can look at potential competitors to see what kinds of product lines they are creating and what kinds of things they are doing to differentiate themselves.
Do Market Research
Additionally, market research can help you find what kinds of skincare products are in vogue right now. For example, many companies are creating beauty and skincare lines specifically for men and many companies have jumped on the natural ingredient train.
Once you pick a product, then you have to actually make it. Most of the time, you can build up from a starting formula. Starting formulas include basic instructions for making certain types of products.
You can find instructions for these formulas online, at websites like Happi.com or Chemidex.com. You can also look at US patents at USPTO.gov to find inspiration. Once you find a product type you want to make, be it lotion, makeup, or something else, take that starting formula and try to make it unique.
You could add a unique ingredient or find a way to make the product with naturally derived ingredients. You will need to experiment a lot to find something good, so put on your chemist hat and get to work.
Step 2:Find Contract Manufacturers and Packaging
Once you have created a formula for a product (or products) you like, then it’s time to ramp up production and manufacturing. Initially, you might be able to get away making everything in your kitchen at home, but if you want to experience any real growth, you will have to scale your manufacturing operations.
Most skincare line startups work with a contract manufacturer who you can outsource the production process to. Contract manufacturers will make your product based on the formula you provide. Working with a contract manufacturer is usually the best idea because you most likely won’t have the capital to throw down for manufacturing equipment costs, like raw materials, mixers, production flasks, etc.
Exact costs for contract manufacturing can differ depending on the type of product and quantity of ingredients. Cosmetics manufacturing can cost between $0.10 to $3 per pound but the average rate is around $1 per pound or product.
These estimated costs are based on bulk purchasing. If you want things to be cost-effective, then you will need to order around 500-1,000 units per batch. Any fewer than that and costs will likely be significantly higher.
You will also need to find a packaging company. Packaging and labeling are important parts of skincare products and can cost anywhere between $500-$2,000 per batch. It is in your best interest to work with a graphic designer who has worked with cosmetics when thinking up labels and packaging.
So overall, to develop, produce, and package a single product in quantities that can generate a profit, you will probably need about $5,000. These costs might be lower depending on the type of product you are working with. For example, something like skin lotion might be cheaper to make than makeup products.
Step 3:Make Sure Everything is FDA Compliant
Cosmetics and skincare products do not require FDA approval before being sold, but all products must adhere to FDA safety regulations during the manufacturing process and meet FDA packaging requirements. Substances considered “cosmetics” under the FDA include perfumes, moisturizers, makeups, polishes, shampoos, deodorants, and lipstick. Note that this definition does NOT include soap.
According to FDA rules, cosmetic products cannot be adulterated or misbranded. Adulterated products refer to products made with harmful or deleterious substances, stored in unsanitary conditions, or are packaged in harmful materials. Misbranded products mean that the product is inaccurately labeled, is falsely labeled, or if ingredient information is “not adequately prominent and conspicuous.”
You do not have to seek out any kind of FDA certification before you start selling products, but if you violate FDA requirements and they find out, you can get in big trouble.
If you are found selling products that are not FDA-compliant, then the FDA can petition the federal court system to pull your products from stores, impose harsh civil fines, and even impose criminal penalties, depending on the nature and severity of the violation.
In other words, it is in your best interest to make sure that absolutely everything you sell is FDA compliant. If you do not, it can come back to bite you later and you may get harsh financial and criminal penalties.
Step 4:Set Up a Storefront
Once you have production and packaging all figured out, it’s time to set up a storefront. There are a lot of options here. You can either try to sell your skincare products in local, physical retails spots or online. Some good physical locations to start selling include farmer’s markets, local department stores, and other local craft outlets.
It will be difficult to get your products in large chain department stores at first, so you will most likely want to stick to local spots for physical retail. Make sure that you read any fine print for deals so you can be sure that you are getting the best deal possible.
For example, make sure that the cut the store takes for hosting your product is not so much that you cannot cover operations and manufacturing costs for repeat batches.
We recommend setting up a digital storefront for the majority of your sales. Setting up a digital store is much more cost-efficient and there are several outlets for selling products that can help reduce infrastructure costs and scale operations.
Some of the better options for creating a storefront include:
- Amazon Seller Account
These platforms will allow you to create a digital storefront, complete with product listings, payment portals, shipping options, Keep in mind that most of these platforms require a monthly subscription to use, and you may need to pay for additional plugin functions to make a fully functional storefront complete with payment options and shipping options.
Step 5:Market Your Products
Once you have a working storefront, it’s time to market, market, market. Like we said earlier, the skincare and cosmetics game is incredibly competitive and there are literally thousands of products trying to break into the market every day.
When it comes to marketing skincare and beauty products, social media is one of your best friends. In particular, Instagram is an excellent place to sell cosmetics. Some of the top skincare brands use Instagram to sell products.
The highly visual nature of the platform makes it a good choice as you can post pictures of your skincare products and results from using them. When it comes to Instagram, some of the most followed brands are cosmetics and beauty brands, so there is a massive audience of potential customers to tap into.
Develop Robust Instagram account
We would highly recommend trying marketing on Instagram. In order to do that, you will need to create an Instagram business account. If you already have an Instagram account, you can easily convert it into a business account, or you can create a brand new one just for products.
Creating a separate business account is ideal so you can get real-time insights into your marketing activity. Instagram also recently added features that let you put a shopping cart on your profile so people can buy things directly from your feed. If you do not want to sell things through Instagram, you can use your page primarily to draw people to your digital storefront.
Schedule Trade Shows
Another potential avenue for marketing is trade shows. Trade shows are basically industry events where vendors and individuals can show off their products. Nearly every major city has some trade shows during the year.
You can contact your local Chamber of Commerce location to discover any upcoming trade shows in your area. You can also call convention centers to see if there are any recent trade shows scheduled.
Step 6:Put Together a Long Term Plan
By now, you should have a functioning sustainable skin care product business. The next thing to do is think about future expansion. You need to ask yourself: Where do you see your company in 5 years? 10 years?
Do you want to keep selling products online or do you want to branch out into more physical brick-and-mortar retail spots? How do you want to add to and expand your product selection? Are there any big-name vendors you want to sell to in particular? These kinds of questions will determine the future trajectory of your business.
One important thing to keep in mind when thinking about expanding is laying out a budget for scaling. You need to figure out how much product you need to manufacture to keep things cost-effective and how much-increased marketing efforts will cost. We would recommend making a plan for the next 5 years in the future.
Skincare products are a fast-growing industry and there has really never been a better time to make your own business. Skincare products are an incredibly competitive niche to get into so you will need to work hard to find a way to differentiate your products from everyone else.
But, creating a skincare line does not require any special skills or education, just some business smarts, a good eye for beauty, and a bit of luck for good measure. You can have a functioning skincare business up and running in just 6 months to a year.
Ruben has been doing online marketing for the last 4 years. Prior to that, he spent 15 years managing different brick-and-mortar businesses, in the home improvement and logistics industries. Overall, he has 20 years of business experience under his belt. Recently, he added SEO, affiliate marketing, and link building to his business skills.