Soap has all the makings of a promising business: Consumers use it every day, it’s easy to make at home, and the ingredients are inexpensive. The formulas are flexible, so soap makers can get creative and customize their products to stand out.
Isabella Lin, founder of the online soap company Fizzy Soaps, uses imaginative design and social media marketing to create a recognizable brand. She started selling soaps crafted to look like milkshakes and bubble tea in 2018. Her TikTok videos showing the soap-making process have earned her hundreds of thousands of followers. So much so, Isabella regularly sells out of products.
Learn how you can start your own online soap business, the costs of getting started, and how to market your brand to stand out.
How much does it cost to start a soap business?
The basic ingredients for homemade soap are inexpensive, so you should be able to launch your first product line for as little as $1,000. As the business grows, materials and labor costs will increase. These are some of the startup costs associated with a soap-making business:
- Ingredients. Most handmade soap is a combination of lye and fats or oils. Some soaps include additional ingredients like moisturizers, essential oils, or dye. The ingredients you choose will affect your start-up costs; high-end fats like olive oil and coconut oil are more expensive than mass-produced canola oil.
- Equipment. The most common methods for making soap at home are hot process and cold process. The hot process involves cooking the soap mixture, while the cold process relies on natural curing over time. Both use many of the same tools. To get started, you’ll need soap cutters, a regular or immersion blender, a microwave or slow cooker, lye-safe mixing containers, and soap molds.
- Marketing. Even if you intend to start small, you’ll want to budget for the cost of buying a domain name and creating a website. Marketing costs can vary greatly depending on if you create the website yourself or work with a designer. You may also consider hiring a photographer to take product photos for your ecommerce store.
- Shipping costs. At a minimum, shipping expenses will include postage and shipping materials.
- Business insurance. Depending on the type of business you launch, you may need to purchase different types of business insurance.
How to start a soap business in 9 steps
- Create a business plan
- Decide how to classify your business
- Differentiate your product
- Brand your business
- Source the ingredients and materials
- Make the soaps
- Price your soaps
- Get the right licensing and permits
- Market your soaps
Before you start creating, set aside time to focus on the financial and practical aspects of your homemade soap business. It’s not as fun as making soap, but these steps will give you a solid foundation for your business:
1. Create a business plan
A successful soap-making business starts with a solid business plan. Take the time to write down your business ideas, come up with a name you love, and get the necessary insurance. Calculate your material costs so you understand how much capital goes into each bar of soap. This will help you keep track of your profits later on.
Consider who will buy your product, how you will differentiate it, and where you will sell it. You can sell your handcrafted soaps online, in person, or both. In addition to setting up an online store, you can sell soap through online marketplaces like Etsy. In-person opportunities to sell soap include applying for a stand at a farmers market and reaching out to local store owners to see if they’re interested in carrying your products.
For funding, consider looking into small business loans in your area or searching for small business grants through the Small Business Administration (SBA) or other entities.
2. Decide how to classify your business
Choose how you’d like to classify your business for tax purposes. Many small businesses elect to start a limited liability corporation and file for incorporation. Establishing your business as an entity allows you to open a business bank account and apply for a business credit card. Keeping your business income and expenses separate from your personal finances can help save money and time when you file your taxes with the Internal Revenue Service (IRS).
3. Differentiate your product
There are a lot of commercial soaps on the market. Why should a customer choose to buy yours? Try to develop an angle that makes your product unique. This could be an element of the soap itself, such as a unique design or an unusual ingredient, or a marketing tactic, like including a handwritten love letter on the inside of the packaging.
Isabella Lin creates unique products, scents, and shapes to help Fizzy Soaps stand out from competitors, including soap cookies, body butters, and sugar scrubs. Products are categorized by scent, allowing customers to easily find their favorites.
4. Brand your business
Create a recognizable brand that communicates your values. Branding elements include website design, product names, and marketing language. Aim to establish a consistent aesthetic and tone that resonates with your target market.
Packaging is another opportunity to incorporate creativity and design into your product. Eye-catching packaging that is consistent with your brand’s aesthetic can attract potential customers and increase your product’s perceived value. For example, a company selling natural soaps may choose to use naturally dyed packaging and handwritten fonts, while a product designed for children might choose brighter colors and a graphic font.
5. Source ingredients and materials
Compare prices between vendors before purchasing materials. You may be able to save money by buying supplies in bulk or purchasing multiple products from the same source.
Consider how often you may need to order or reorder supplies and give yourself lead time to make your soap. Suppliers may not always have what you need in stock, so it’s good to have a backup supplier. Having materials on hand means you don’t fall behind on orders or miss out on sales due to low inventory.
6. Make the soaps
Choose your favorite soap-making process and perfect your recipe. Experiment with different fat, fragrance oils, and decorating techniques until you’ve developed a product you love. Consider how much product you’d like to have on hand when you start accepting orders—you don’t need to stock a year’s supply at a time, but it’s a good idea to have some inventory available to ship immediately.
To learn which types of soap are most popular with your customers, consider making various smaller batches and see how each one sells. Then adjust your production based on the highest sellers.
7. Price your soaps
When determining a price for your products, start by calculating the cost and time it takes you to manufacture them. Conduct market research to understand competitor prices, and then select the price that feels right to you. Even if the ingredient costs are low, handcrafted soaps take time and care to make—remember to compensate yourself for your work.
Don’t forget about packaging and shipping costs when pricing your soaps. You may want to offer free shipping to customers who meet a purchasing threshold, or incorporate shipping into your pricing.
If you sell in a local store, retailers may ask you for a wholesale price, which will be lower than the retail price. Ensure your wholesale price includes your ingredient costs and time, so you’re making a profit from retail sales.
8. Get the right licensing and permits
The licensing requirements and regulatory body for soap depend on the intended use. Pure soap, defined as a combination of lye and fatty acids intended for cleansing, is regulated by the Consumer Product Safety Commission but does not require a license to sell.
Soap companies that make health or beauty claims are classified as cosmetics or drugs and are regulated by the Food and Drug Administration (FDA). The Small Business Administration has resources and business advice to help you understand the regulations and licensing requirements in your region.
This is also a good time to look up any business licenses you need to sell to different states. As an ecommerce business, you may be required to get a license and charge online sales tax if you sell to customers outside of your state.
9. Market your soaps
It’s time to tell the world about your beautiful soaps. Many small business owners choose to start marketing via their website, social media accounts, and an email list. Ensure your website describes your products thoroughly and accurately for search engine optimization (SEO). Be specific—it would be difficult to rank in search for the term “soap,” but you could reach the top result for “blueberry-scented soap shaped like a tuba.”
Social media marketing can also be a valuable tool for small business owners. Creating content about your soap-making process for social media is a way to reach potential customers organically. Using social media platforms to raise brand awareness can help your product stand out and build a loyal customer base.
FIzzy Soaps has found a successful organic strategy to reach new customers through its TikTok videos. With more than 700,000 followers, the videos focus on the soap-making process, giving fans a chance to learn about how their favorite products are made.
FIzzy Soaps also answer questions from viewers and explain the tools it uses as part of production.
Consider what type of content will engage customers and encourage them to share it with their audience.
Starting a soap business FAQ
Can you sell soap without a label?
You do not need to provide an ingredients label if your soap is marketed purely as soap and you do not claim it will provide any health or beauty benefits.
Do you need FDA approval to sell soap?
It depends on your product’s intended use. Products that meet the regulatory definition of soap and are marketed purely for cleansing do not require FDA approval. Soaps that are marketed as moisturizing or having other benefits are classified as cosmetic products and are subject to FDA approval.
Can I start a soap business with a small budget?
The basic ingredients for soap are inexpensive. If you start with small batches, it’s possible to launch a soap business with a low budget.
Is it necessary to have a physical store to sell soap products?
You don’t need a brick-and-mortar store to begin selling soap products. In addition to setting up an ecommerce store or selling through an online marketplace, soap makers can sell their products at pop-up locations like farmers markets and street fairs.
Do I need prior experience in soap making to start a soap business?
If you have a passion for soap, you don’t need professional experience to start your own soap-making business. Anyone can learn the basics of soap making online and use creative marketing to help their product stand out.