This is the Math You Need to
set up a Profitable Perfume Venture

The most important point to think about when you think about selling your own perfume is ... "How am I going to make money?"

Before you go to work developing you perfume itself, do a little math. Here are some calculations you'll want to make. Initially the numbers you will use are estimates but, for these calculations to be meaningful, your estimated numbers must be honest. They must be based on the size of the market you have identified and the likely selling price of your perfume.

Gross Sales

This is the total amount of money you receive from the sale of your perfume. It is found by multiplying the number of individual bottles you expect to sell by the price of each bottle. (For now we are assuming that all bottles will be sold at the same price.)

EXAMPLE: If you expect to sell 1,000 bottles and get $35 for each bottle sold:


Gross Sales = 1,000 x $35
=$35,000

Gross Profit

This is the money you are left with after paying for your perfume and the expenses involved in selling it.

To determine your Gross Profit, subtract your Product Cost (the total amount of money you spent to develop and package your perfume) and your Selling Expense (the money you spent to get buyers for your perfume) from your Gross Sales.

EXAMPLE:


If Gross Sales =$35,000
and Product Cost = $3,500
and Selling Expense = $3,500
Then
Gross Profit = Gross Sales - Product Cost - Selling Expense
=$35,000 - $3,500 - $3,500
=$28,000

Looking at these numbers puts reality into your project as you go forward. You now know (approximately) how much money you will take in if your promotion is successful. You now know how much money you can spend to create your perfume. You now know how much money you can spend to sell it.

If the numbers don't "work," you are in trouble. To make your perfume promotion profitable you may have to find a larger market, or reduce the amount of money you spend to create each bottle, or — and this can be tricky — raise your price.

Keep playing with these numbers — market size, order size, cost per bottle, selling expense and retail price — until the numbers "work" and you are looking at a practical chance to make the profit you desire.

If developing a new perfume is your interest, you will understand the process much better by reading Creating Your Own Perfume With A 1700 Percent Markup! But before you spend money developing a new fragrance, it is smart to give some thought to how you might be able to sell it. A little knowledge can make your venture considerably more profitable.


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Philip Goutell
Lightyears, Inc.


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