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  1. #1

    Default Question about making custom fragrances for companies/brands, not individuals

    So I've gotten a couple of inquiries from various brands/stores/designers that have come across fragrances I've made asking about whether I could spearhead their own custom fragrance for their store or brand. I've done custom scents before for private clients (and charge $100-$400 depending on how "custom" it is) but I know that doing it for a company will be way more labor intensive and require also a great deal more work on the sourcing/production end. Since I've never done it for a company before, I'm having a hard time estimating even how many hours it will take to finish the project when taking both fragrance composition and all the associated work into account. I don't want to undercharge and thereby mess up pricing for the perfuming community at large, but I also want it to be realistic - I don't want to rip anyone off. I respect all of you so much and I want to represent the perfumery community well in my own work. Have any of you ever made and helped produce a custom scent for a company?

  2. #2

    Default Re: Question about making custom fragrances for companies/brands, not individuals

    And So they want to buy your years of experience to help them out, plus compose a fragrance that they will then copy, which will take several months probably to compose....

    And you charge $400 for this service to regular folks...?

    And you're not an employee with benefits, and you don't make any profit from it once it leaves your hands and you get paid?

    And you have to pay your own overhead, and the cost of updating oils that go out of date, and do the research to stay within cosmetics laws and regulations, and buy the new materials that you'll need to perfect your job... Right? All of this is right?

    Whaddya think? $200/hr? $10,000 per fragrance? I think these prices are still cheap.

    Just what's rattling around my brain...
    Paul Kiler
    PK Perfumes
    http://www.PKPERFUMES.com
    Gold Medal for "Best Aroma"; Los Angeles Artisan Fragrance Salon

  3. #3

    Default Re: Question about making custom fragrances for companies/brands, not individuals

    From the business standpoint of various other product areas, with unfortunately no information specific to perfuming: If royalties (per unit, which may not be the case here) then for example 1% - 1.5% of MSRP is reasonable and typical. Much more, if any more than than this generally does not make sense. The company doesn't see MSRP themselves (At least ordinarily, and if they do then usually they have a lot of added costs to go with it), most of the sales success comes from their investment and marketing, and their own profit margin is not a gigantic percentage of MSRP.

    So for example, for a company doing 10,000 units at $100 MSRP, $10K or even somewhat more can be completely realistic providing they really want the formulation, as opposed to someone else's.

    If an upfront one-time payment, such a percentage of a reasonable estimate of a year's sales might be possible. It's harder to get paid as much total this way.

    If they're not in the business of ordering contract manufacturing at all for anything, it could be useful to look at how much value and services you can provide. Arranging manufacture is added value, and it would get you some measure of control. Each reorder could earn you the corresponding fee. Obviously though, if they routinely work with contract manufacturers, there would be strong tendency for them to want to do so themselves with their new perfume line as well. In this case it could be hard to get paid on reorders.

    At the really professional end, you would never give them the formulation and this would ensure being paid. But it might be that you are not at a level where you can demand such a scenario.

    Then there's the possibility that your price might have to compete with countless stock (already-existing) formulas that can readily be called "custom."

  4. #4

    Default Re: Question about making custom fragrances for companies/brands, not individuals

    First off, thank you to Bill and Paul. I think these two replies complement each other and also both sum up the two minds I'm in about this question. On one hand, perfumery is a very rare skill - if people understand how rare it is, then they will know its value and be willing to pay for it. (Plus, they might really want to be walked through and participate in a truly custom scent design process - since, of course, people find it very fun and alien at the same time). On the other, business owners don't always opt for the most refined option - they might be open to adding value to a new product through great design but it may not be at the top of their list of priorities.

    I've never contracted with a company with a royalties type deal. I'm trying to find a balance, in terms of a possible deal, between risk and reward (I mean, duh). I'm trying to work backwards through all the possible scenarios to come up with a number that will be the composition base minimum, minus manufacturing contracting and royalties, etc. Then I'm trying to figure out the range of additional possible payouts that depend on both the success of the product and the amount of my involvement they're doing to require when it comes to manufacturing, packaging, etc. Would it make sense to ask for both a low-ish flat "composition" fee in the beginning with the additional requirement of royalties or some sort of percentage later in the process? I'm new to business - it seems like an exciting world but I'm fairly young and inexperienced, to be sure.

  5. #5

    Default Re: Question about making custom fragrances for companies/brands, not individuals

    Doing just this forms a significant part of my business and I've found that it pays to be flexible about the business model. If you do some careful research it is possible to get a sense of the market price for a fully specified formula, supplied without restriction but that won't necessarily tell you whether your customer can afford such a price.

    The conventional industry approach to this is to do the design work free and then charge for the concentrate, never revealing the formula. That's fine for large companies with employee perfumers but less so for us small folk. It's also impractical when you are working across continents as it makes far more sense to supply a formula for the client to compound locally.

    Royalties are a way of risk-sharing with your client - before you undertake such an agreement you should consider how good the rest of your client's business is - how likely are they to sell successfully, can you trust them to pay even if they do, and so on.

    The question of stock formulas is a good one too - I keep a stock and charge much less for those than for designing to a brief - clients may prefer the lower cost, not only in cash terms but also in their own time spent in evaluation and communication, plus they may prefer the speed with which a fragrance can be finalised and brought to market.

    Lot's to think about here!
    Chris Bartlett
    Perfumes from the edge . . .

    www.perfumedesigner.co.uk
    Twitter: @PellWallPerfume

    If you are looking for a perfumery consultation Iím happy to quote: if you want free advice, thatís what these forums are for
    You can also join my blog if you wish to ask questions of me.

  6. #6

    Default Re: Question about making custom fragrances for companies/brands, not individuals

    Thank you, Chris. It's good to get your perspective on this too - charging for the concentrate seems like it combines the advantages of royalties (i.e., compensation proportional to production or success) without the complications - I suppose it is pretty risky, however, if you haven't signed anything in advance and don't receive any sort of down payment.

    Also, the stock formula concept seems to be a good middle ground for both perfumers who don't want to start a new complex commissioned concept and clients who want a good scent but either don't care about or can't afford to get something built from the ground up. Maybe it's time to assemble all the formulae I've written that I'm not planning to use immediately and put together some kind of portfolio?

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