With a business idea in hand, it was time to create the product. We started with recipe research to keep costs manageable.
Shopping for Ingredients
Brooklyn and I shopped at Michaels for shea butter and containers, discussing pricing implications along the way. At HEB, we compared coconut oil packages and learned about bulk purchasing benefits. Every purchase decision became a lesson in cost management.
Finding Product-Market Fit
Testing revealed critical lessons. Melt ingredients too quickly and at too high a temperature and the recipe is bound to fail. The first attempt was too hard. The second was too oily. After adjustments, we achieved product-market fit.
Finding product-market fit is one of the hardest things an entrepreneur will do. Better to learn the lesson now, than one day down the road, when there is much more on the line.
Understanding the Numbers
Brooklyn created a profit-and-loss spreadsheet to understand per-unit costs, revenue versus profit, and pricing strategy. This was her first exposure to the financial side of business – understanding that revenue is not the same as profit.
Setting the Price
Considering ingredient costs and retail comparisons, we settled on $10 per 4oz jar of all-natural salt scrub. At that price point, she would need to sell 15 jars to reach her $100 goal.
The pricing exercise taught an important lesson: price too low and you can’t sustain the business; price too high and customers won’t buy. Finding the sweet spot requires understanding both your costs and your market.
Next up: sales forecasting and customer acquisition strategies.