Is skin care business profitable? It’s a question on many budding entrepreneur’s lips. More and more skin care brands are popping up on the regular – a clear sign that getting into the skin care industry is in general, a smart, profitable move. But just how profitable is it? And how can you ensure profitability for your own skin care business?
Is Skin Care Business Profitable? Check the Stats!
A Growing Market
The skin care industry as a whole is a growing, profitable industry. Recent stats and research has shown that the global skincare industry is set to grow by over 5% per year. The biggest reason for this growth could be due to the simple fact that more and more people – both male and female – are getting into skin care.
A new shift towards natural products and science-based skincare, as well as the wealth of information about skincare ingredients has also expanded the scope of skincare products and services.
High Profit Levels
Skincare’s growing market has also resulted in high profit margins for skincare products. In fact, the average gross profit margin for skincare products is 53%! To add on to that stat, companies that undertake proper marketing and advertising, and ensure high quality ingredients can potentially achieve profit margins up to 80%.
As an entrepreneur these stats are mouth-watering. However, it’s important to understand that you can’t simply rush into creating your own skincare brand. Going in without a plan and strategy can negatively impact your up and coming business. So what can you do to make sure your small business is profitable?
How to Make Your Small Business Profitable
Manage Your Startup Costs
Simply starting up your business can take a major chunk out of your budget. One of the best ways to manage startup costs is to take an eCommerce route instead of a brick and mortar store. Setting up an online store is cheaper and easier.
Also, working with distributors can take up to 80% of your gross profit margin, thus making eCommerce an even more attractive option for your skincare startup.
Another way to save money on your startup costs is to work with private labellers. Private label companies still give you full control over your business without the egregious costs of doing research and development.
Don’t Compete on Price
One of the biggest mistakes that skincare startups make is trying to compete on price. Unsuccessful attempts at undercutting competitors on price can result in large losses of market share and profits. Also, continually engaging in price wars often leave consumers with fewer choices for products, causing the market as a whole to suffer – a result that might change the answer to ‘is skin care business profitable?’ to ‘no’.
Instead, try to compete based on your product. Highlight its unique selling points such as ingredients of effectiveness, and market your skincare product as top of the line.
Should You Start Your Own Skincare Brand?
So is skin care business profitable? Yes. But you still need to put in work to make sure your brand survives the teething pains that come with starting a new business. H&H Australia can help you successfully start your business! We can help you formulate, manufacture and market your skincare product. Contact us today to get your skincare brand up and running!