Tubes Win, Bottles Lose in Cosmetics

Tubes Win, Bottles Lose in Cosmetics

The Experiment

Last week we asked a great, domestic tube manufacturer and supplier for tube prices to compare with bottles. 

The results are in: You can have hand sanitizer in tubes with caps from a single supplier, in continuous supply, that also have a printed label, and come with applied metallic safety seal for significantly less than bottles with only 6 – 8 weeks lead-time.

Tube Prices

The prices we received were for tubes with pre-applied caps and metallic, induction, pre-applied, safety seals and 4-color print from a single supplier.  The prices we received are below:

 

Tube Vol.(fl.oz.

Dimensions

$ per 25K Ordered

$ per 100K Ordered

1

1″ x 3.5″

$.26

$.22

2

1 3/8″ x 3.75″

$.28

$.23

3

1 3/8″ x 5 1/16″

$.29

$.24

4

1.5″ x 5 7/16

$.30

$.25

6

2″ x 5.5″

$.33

$.28

8

2″ x 6 13/16″

$.35

$.30

Tube Specifications

The specifications on these tubes were the following:

 

Tube Type

Co-Ex

Tube Length

+/- 1/16″

Outer Layer Blend

MDPE

Outer Color

White

Head Color

White

Cap Style

Flip-Top

Cap Color

White

Decoration

4-Color Offset

Coating

Matte Coating

Safety Seal

Metallic

Bottle Pricing

We also purchased an 8 fl.oz. Boston round bottle in June and 4 fl.oz. sharp-shoulder with disk-top cap in March for some of our customers.  Note: the pricing for the bottles is at all volume purchases.  The pricing came in at:

 

8 oz. Clear Boston Round Bottle 24-410 $0.21991 4 oz. Sharp Shoulder LPDE Bottle 24-410 $0.19413
Bottle Shipping $0.02 Bottle Shipping $0.02
Black Saddle Pump Locking $0.245 White PP 24-410 Flip Cap $0.06
Pump Shipping $0.03 Cap Shipping $0.02
Labels $0.13538 Labels $0.12
Labels Shipping $0.01 Labels Shipping $0.01
Total per Unit: $0.6603 Total per Unit: $0.4241
The Comparison

The differences between bottles and tubes are stark:

 

8 fl.oz. Bottle 8 fl.oz. Tube 4 fl.oz Bottle 4 fl.oz. Tube
Suppliers: 3 1 3 1
Components: $.60029 $.35 $.37413 $.30
Shipping: $.06 $.03 $.05 $.03
Totals: $0.6603 $0.38 $0.42413 $0.33
Percent Difference: / -42% / -22.19%
Are you able to find better pricing?

Even if you are successfully finding better pricing for bottles, you are probably purchasing the cap or pump separately and you are having these bottles either screen-printed or you are paying a manufacturer to print sticky labels.  Only after all the packaging arrives, usually from separate suppliers, BPI Labs must setup a long line of machines to load bottles, fill them, apply a cap, maybe apply a label, apply a screen code, and then feed them onto a collection table where they are boxed.  Our tubing machine does all of this by itself, which significantly reduces your cost of manufacturing hand sanitizer.

If you can have all the packaging you’d want, from a single source, not including case or master pack, for the same price as bottles or for less, then why use bottles that come with the extra supply-chain hassle and manufacturing costs?  Bottles not only make less economic sense, but you can read here the many other reasons that tubes make more sense than bottles to fill with hand sanitizer.  Speaking of bottles, has anyone got a lead on some available sources for us?  Asking for a friend.

Size Availability

The tube sizes you can purchase include those in the table above, but given a large enough order and lead-time we could have custom parts purchased to fit many different size tubes into our new Norden tube filling machine. BPI Labs will have the first Norden tube machine customized with additional safety features to make hand sanitizer in tubes a safe and efficient process.

Updated Conclusion

While prices have changed since this article was written, which was during the height of the 2020 pandemic, tubes have been perennially cheaper to manufacture.  To manufacture your tubed product, BPI Labs sets up a single machine instead of a line of machines, and you’ll see this difference in your bottom line.  Working with a single supplier and using the simpler tube components means you can’t have manufactured product for less.  Hopefully, this article provides enough reason for you to contact us and find out if hand sanitizer in tubes makes sense for your market and brand.

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How To Get Personal Care Products at a Great Price

How To Get Personal Care Products at a Great Price

The first and best thing you can do

The first and best thing you can do to get a price you’ll love is to have a manufacturing price point in mind. BPI Labs will work to meet that price point so long as we know it at the outset. BPI Labs can then help you design your product to hit your optimal manufacturing price point.

Pricing is multifaceted

There are three phases to pricing your cosmetic product

Pricing at BPI Labs is a multi-phase approach that occurs during the development or on-boarding of a custom product. The costing phases begin with the formula and its ingredients.  Then there’s a phase where we consider the packaging and filling cost for your formula.  The final phase has us considering additional bill of materials requirements and manufacturing agreements such as warehousing agreements, product certifications, turnkey manufacturing, non-standard testing such as assay testing, and other specifics your brand and company desire.

There are three primary variables in pricing your cosmetic product

Variables that affect the cost of your product include the cost of ingredients used in your formulation, the difficulty of obtaining and using packaging to fill your product, and the volume discounts we can apply to your orders. Read on to learn how to use these variables to your advantage and get a personal care product manufactured at a price point you love.

The variables that matter

Materials Used in Your Formulation

There is significant flexibility in pricing in the formulation of your product. Generally, the greater percentage of water present in a formulation the cheaper the materials costs will be for manufacturing. Water is one of the cheapest ingredients that can be used in a formulation, and it is certainly an essential ingredient for personal care products in most cases. Our customers, who compete on price, run into difficulty when they would like to include in their formula expensive ingredients at greater quantities than competing products. Examples of expensive ingredients include: fragrances, essential oils, OTC drugs, rare ingredients from limited sources, and premium ingredients, like materials with advertised anti-aging properties.

Our customers, who compete on price, run into difficulty when they would like to include in their formula expensive ingredients at greater quantities than competing products.

The materials price does not need to come as a shock, however, since BPI Labs can create a formulation and price it simultaneously. Your first price is a budgetary, bulk material price and it is the cost involved in just the material acquisition and compounding. If you do not like this price then we will iterate on the formulation until you have satisfactory price or until we don’t believe the formulation can be feasibly altered any further for cost savings.

Packaging and Direct Labor

There are two important considerations when it comes to packaging. First, how would you like to have your packaging purchased and shipped? BPI Labs can provide a turnkey service where we will source, purchase, and store packaging for your orders. This comes with a 20% additional cost on the packaging after it has arrived at BPI Labs. However, our customers tell us it is worth the cost if they don’t need to arrange logistics, arrange tracking, and tie up their cash in packaging. Alternatively, our customers can source, purchase, and ship packaging to our location. However, many jobs over the years have been delayed because a customer forgot to purchase and have shipped an essential packaging component.

See our post on turnkey manufacturing here to read about the options.

Second, packaging that can’t be used on automated machinery will create bottlenecks that slow production speed. Special stickers, brochures, or any hand-applied packaging components increases the amount of time to complete a job. This, in turn, increases the amount of direct labor required to finish your job. The metric we use to determine direct labor is pieces-per-minute (PPM). This metric is the number of finished goods we complete every minute, and the higher this number the faster we’re completing the job. Using packaging that works on automatic machinery improves the PPM and decreases the cost of your job.

Volume Discounts

Volume discounts have a cascading affect, and they’re most important to consider with smaller orders. Shipping, materials, and fixed costs all dramatically decrease on a per unit (finished good) basis as your order size increases. BPI Labs’ volume discounts also increase to our customer; but by how much? In 2018 we did a small study of how the cost-per-piece of finished goods goes down with every increase of a thousand units ordered. We looked at over 150 products we priced over the last couple of years. The results suggest that you’ll see dramatically increasing cost savings up to 20,000 units. (These prices don’t reflect the shipping cost.)

Graph Above: The horizontal X-axis shows the number of units ordered. The vertical Y-axis shows the decrease in percent on average for all products we produce from an initial order of 1000 units on a per unit (finished good) basis. I.E. A shampoo at 1000 units could have a 75% decrease in per unit cost at 20,000 units.

It is important to interpret the graph accurately. Every point on the graph is an average price paid for all products, which means individual product categories might vary significantly in price at different order volumes. When looking at specific product categories, such as lotions or creams, there is a significantly greater degree of variance than there might be for salts or powders. The fact remains that our customers can choose to have either a premium or cost-effective product made at BPI Labs. The graph shows that your cost savings per unit purchased are most significant up to about 20 – 40 thousand units purchased.

Conclusion

The most important and best thing you can do to get a price you love is to have a manufacturing price point in mind at the outset of any project.  Beyond that, there are three primary phases and variables influencing your product’s price. The variables include the cost of materials, obtaining and using packaging, and order volumes. BPI Labs only recoups its costs when its customers are successful in the market. Consequently, we’re highly motivated to manufacture a product for you that has market staying power and has a profit margin you love.

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