Want to start your own makeup line? If so, there’s no better time than now! The makeup industry is experiencing a bit of a renaissance at the moment.
The best part? It’s not just beauty conglomerates taking a piece of the pie. Small private companies and indie brands are responsible for much of the industry’s growth.
So, how much does it cost to start a makeup line?
The answer to this question isn’t so cut and dry. Countless factors can impact your total startup costs. To get a better understanding of what it takes to start a makeup line, we have to look at how you want to run your business and where those costs come from.
What Costs Are Involved?
When you start any business, startup costs can get pretty steep! But, the unique thing about the makeup industry is that you don’t need millions of dollars to get up and running.
We live in an age of beauty influencers and self-marketing. Thanks to the Internet, up and coming entrepreneurs have a lot of tools to do the work themselves! This helps to bring down costs dramatically. More on that later.
So all that said, how much will you realistically spend?
Let’s look at a few universal costs that you have to consider.
Product Development Costs
First things first, you need a product! Here is where things get fun!
At any point, you probably have a ton of great ideas swirling in your head. But, do you know what it’s going to take to make that product a reality? Do you have any experience with product formulas or ingredients? What about packaging?
To figure all of this out, you’re going to have to pay for some product development services. Whether you’re making some standout lippies or a killer eyeshadow palette, it takes time and money to get bring your product to fruition.
During the product development stage, you’re going to look into different formulas and do a lot of experimentation. Unless you moonlight as a chemist, this is not something you can do alone! Formulators can charge anywhere from a few hundred bucks up to $25,000 on a single product!
On average, the cost to develop a single product is about $5,000.
Generally, the development cycle will also include things like packaging, color swatching, and more
Product development is not a quick process, either. At the very least, it will take about 18 weeks from your first meeting to having a ready-made product for your customers. But in some cases, it can take well over a year!
It all depends on the complexity of the product you’re looking to create.
Once you have your product ready to go, you’ll need to pay for production.
Makeup is not a made-to-order kind of product. Beauty brands have to manufacture large batches ahead of time and hope that they make sales before the makeup expires! It may only cost a few dollars to produce each piece. But, no manufacturing facility is going to let you order only a small batch.
To make it worth their time, facilities require you to pay for a certain amount upfront. This could be anywhere between a few hundred to a few thousand.
Whatever the case may be, production is a significant cost. Expect to pay around $5,000 for a minimum order. Of course, there’s a lot of variation here. Makeup that uses cheaper raw ingredients and fillers may cost you less. Meanwhile, premium products will cost a pretty penny!
Even if you run your makeup line out of your home, you’re going to have a lot of business expenses to account for.
This is, perhaps, one of the hardest costs to factor in. There are just so many costs involved with the business side of things alone! While there are certainly many areas where you can save, don’t skimp on the important stuff!
One of the most important expenses to plan for is registering your company and getting all of the appropriate permits. Running your business under your own name comes with many risks that you want to avoid. It’s best to register an LLC and invest in liability insurance.
A lawsuit, disagreement with suppliers or vendors, and other potential legal issues will shut your business down in an instant. Covering your bases will protect you and the brand you’re working so hard to build.
Those are just the basics! As your makeup line grows and expands, so will your business expenses. As a startup, plan for at least $2,000 in upfront expenses. Again, this can vary based on your business plan, so it’s always good to have some extra on hand just in case!
How do you expect to make sales without any marketing!
Marketing is a big piece of the puzzle with makeup lines. You need to get your new brand seen by as many makeup lovers as possible!
That said, you can do a lot of marketing yourself. Many beauty influencers have started multi-million dollar brands with nothing but their name attached to it! All you need is a loyal audience who’s willing to invest in your dream.
Take a look at Kylie Jenner or Jeffree Star! Both moguls started with no professional experience in the business. But, they leveraged their following to create some of the most successful private brands in the industry!
You can save a ton of money by taking care of marketing yourself. Use the tools that are available to you to make the most impact. Harness the power of social media! Take to Instagram, Twitter, and YouTube to reach your target audience and appeal to those who would buy your product.
The days of relying solely on billboards and TV spots are over. You can see a lot of success by working on your digital presence and social media marketing.
Factors That Could Impact Your Startup Costs
The figures we went over earlier cover the basics. But, many other factors come into play. There are plenty of ways to save money during your first run of products. In the same token, you could run into tons of hidden expenses.
Here are some factors that could influence the true capital you will need to start your makeup line.
E-Commerce Vs. Brick-And-Mortar
In the past, your only option to start a business was to have a physical location your customers could visit to buy products. Luckily, things are a lot different now.
For the 2019 year, about 14 percent of all retail sales happened over the Internet. That represents about $602 billion in sales! Thanks to e-commerce platforms like Shopify, Squarespace, WooCommerce, and more, it’s easier than ever to start a shop without a ton of money.
In this day and age, e-commerce is the way to go if you want to save money.
Renting a brick-and-mortar store can cost you thousands of dollars a year in additional capital. Not only do you have to cover your lease agreement, but there are many additional costs, too. You’d have to cover wages for your employees, utilizes, decor, furniture, POS systems, and more.
With an e-commerce site, your startup costs drop significantly. A professionally built website can cost you between $5,000 and $10,000. But if you’re comfortable enough building it yourself, you could spend as little as $200! With an additional $50 or so for hosting and maintenance, e-commerce starts to look a lot more appealing from a cost standpoint!
Private Label Vs Custom Manufacturing
Earlier, we talked a bit about product development. Well, there are two different routes you can go with this. You can turn to a custom manufacturer or you can use private label services.
Private labels are the easiest and most economical choice. Essentially, private label makeup companies are those that already have everything to facilitate your brand. They have their own formulas, manufacturing facilities, and packaging departments.
However, they put your name on the products for you to sell!
Working with private labels has a lot of perks. The biggest is lower costs. Because these companies have their own formulations ready to go, there’s not much to do in terms of development. In most cases, creating your products is as simple as choosing colors, finishes, and packages. Most private labels also offer fast turnarounds and lower minimums.
Now, this does come at a sacrifice of control. Private labels work with many different brands. So, you could end up seeing the same formula as your own on a store shelf with a different logo on it!
The only way to create a truly innovative product would be to work with a custom manufacturer. This comes at a higher cost, but you’re given more control over every aspect of your makeup line from formulation to packaging design.
There’s no right or wrong choice here. It all depends on your goal and vision. But if you want to save money on your startup costs, private labels are the easiest way to hit the ground running with your makeup line.
Size And Type Of Makeup Line
The average cost to develop a single makeup product is about $5,000. But, it can go up or down based on the types of cosmetics you offer and the size of your line.
Most makeup brands do not start with a single product. Unless you have a truly innovative idea, you’ll likely need a couple of different products or shades to garner attention. That alone will increase your startup costs. Plan to spend an additional $5,000 for every product you add to your line.
Then, you have to factor in the cost to develop different types of products. For example, the costs of producing a basic lip gloss are going to be much less than a complex eyeshadow palette! That’s because lip glosses contain limited ingredients and relatively basic packaging.
There’s a fine balance between figuring out how much you’re willing to spend on products and fulfilling your customer’s needs. The makeup industry follows trends that are constantly changing!
In 2018, the market for eye makeup hit $14.62 billion. Meanwhile, the market for lippies was about $8.2 billion.
It may be more lucrative to develop a premium product over a cheap one. But do you have the startup capital to do that?
Testing Laws And Regulations
If you’re developing a custom formula, be prepared to cover the costs of testing. The FDA requires cosmetics companies to provide a litany of information regarding the safety of any products it plans to sell to consumers. In the EU, products also have to undergo physical, chemical, and antimicrobial testing.
Then, there are unique testing requirements for different countries around the world. China, for example, is one of only a handful of countries that still requires animal testing.
As a brand owner, it’s your responsibility to cover those costs. You must hire testers and third-party labs to gather all the information you need to bring your product to market.
These costs can add a hefty chunk of change to your budget. Microbial testing runs about $350 per product. Stability testing varies based on the length of the trial. Then, there’s safety testing, which could cost you several thousand dollars!
On average, testing will set you back about $8,000 per product. Now, that only applies to custom formulas. If you work with a private label company or use a formulation that’s already tried and true, you won’t have to worry about testing.
Here’s a factor that many up-and-coming makeup moguls fail to think about.
What sector of the market are you trying to break into? Are you looking to create affordable products that are accessible to everyone? Or, are you interested in creating a premium brand?
The cost differences to produce cheap and premium makeup products are staggering!
High-end makeup generally contains more ingredients. Not only that, but the ingredients are typically purer and more difficult to source. That’s why you see all those luxury brands selling simple lipsticks and foundations for hundreds of dollars!
It takes longer to develop luxury products, too. Manufacturers have to test the efficiency of raw ingredients to justify high price tags. All of that extra time and effort will cost you.
The same goes for specialty lines. For example, vegan and organic makeup almost always costs more to produce. Forgoing chemical-based ingredients for cruelty-free formulas is not cheap. You’ll have to deal with those costs upfront before you even make a sale.
As you can see, determining the costs involved to start a makeup line is no easy task! It all depends on what kinds of products you want to offer and how you plan on running your business.
On the lower end, expect to spend between $10,000 and $25,000. But even with that chunk of change, you’ll need to do a lot of work yourself to keep costs low.
Do you have any questions? Feel free to leave them in the comments below!
Starting a makeup line can be a costly endeavor. But luckily, there are plenty of ways to manage your costs and stay within a budget.