Friday, February 8, 2019

Need help from an investor to launch your perfume?

Here's how to manage the money men!
     Look at this situation. You have a well developed concept for a perfume, the scent, the packaging, and the market. You've researched it. You've put hours into the planning. Everything is ready to go -- but you don't have money. It's the typical starting point for many successful promotions.

    Because you have all the details worked out (all except for the money!) you think if you could just find a few people with money, the perfume could be produced and marketed and everyone would make money. Sometimes it does happen like this, on nothing more than a handshake.

    But not always. Issues arise. Who controls the accounting? How are the books kept? Who selects the vendors? Is anyone getting kickbacks for placing orders? Are legitimate profits being sucked out of the business by tricky invoices? Do you have the right and the power to see how your money men are managing the financial side of YOUR business? [I could go on and on about this -- through experience!]

    The sad result that (really!) can happen is that your perfume sells well but, due to some major ignorance on your part, in the end you are left bitter, broke, and sorry you ever got involved with these people. It doesn't have to be this way.

    Over the last week I've been giving these possibilities quite a bit of thought. My "entry point" for this meditation was a new look at a celebrity licensing contract I've been offering for sale for a number of years. My ad never attracted many buyers and I thought a little editing might spark up demand. The big question was, "who cares about what's in a celebrity licensing contract?" I doubt if I'll ever meet a celebrity much less work with one. If I don't expect to work with a celebrity, why should I think you might?

    Then it struck me. Remove the celebrity (referred to as "OWNER" in the contract as the celebrity "owns" the rights being licensed) and remove the marketer (referred to as "LICENSEE" in the contract) and the entire contract can be seen as a negotiated arrangement between a creator (like yourself!) and a marketer (like your potential investors!). Or, to spin it the opposite way, as you, the marketer, and your investors "the creators" (they create the possibility that your project will fly.)

    Now this contract becomes exciting! It's a battle of wits, each side trying to protect their interests while extracting as much as they can from the other side. If you bring investors into your project your negotiations with them will be similar. Consider just these few issues --

    - Who will have the final say over development of the fragrance, its production and packaging? You or the investors? (Get it in writing!)

    - Who will have the final say over advertising and marketing decisions? You or the investors? (Get it in writing!)

    - Who will select the vendors to be used? You or the investors? (Get it in writing!)

    - Who will keep the books and will you and YOUR accountant have full access to them? (Get it in writing!)

    - Who will own the trademark (the name of your perfume) after the promotion has run its course? (Get it in writing!)

    - Who will be responsible for any taxes owed? Any customer service problems? Any queries from government regulators? (Get it in writing!)

    - Will the venture purchase product liability insurance? Will it protect you? (Get it in writing!)

    The list goes on -- for 42 pages.

    In fact, this celebrity licensing contract is really about covering all that must be done right and all that could go wrong in a marketing venture between two parties operating at arms length. If you bring investors into your project be careful not to assume "we're all in it together."

    I know when you are starting out, getting attention from someone with money can be awe inspiring. It's easy not to want to rock the boat and just allow yourself to be led. But this celebrity marketing contract gives you a huge bank of knowledge you can use to guide your investors and protect your own interests! This is what got me excited when I re-read the contract. The celebrity's fame was forgotten.

    Hope I haven't said too much. I could go on and on on this topic.

    Thanks for reading another of my messages!

    -- Phil




 

Friday, January 25, 2019

"What will it cost me to produce my own perfume?"


"What will it cost me?" It's usually the first question on people's minds when they think of creating their own perfume and the question is important. But the really most important question that must be asked is "How much can you make with it?" If the potential for great profit is there, the real question is "How much can I spend per bottle to make the profit I envision?" Now the discussion begins to get realistic. If the potential is there, the question becomes, "Where can I find the money?" You might not have to look very far.

    Before having the success with perfume I've documented in Creating Your Own Perfume With A 1700 Percent Markup! I had two other encounters with perfume, one of which I would just as soon forget. The other, until recently, was almost forgotten.

    In the almost forgotten episode I was a new, inexperienced employee in a company that was making money selling perfume among the many other product of various natures they were marketing. The owners were promoters. Perfume was just another promotion. They made their money with perfume and then went on to something else -- towels, jewelry, electronics -- then sold the company and briefly retired.

    My next encounter with perfume was something of an embarrassment. I was riding high on a string of successes with other products and someone suggested we do a perfume. "Okay," I said, "Put it together and let's see what happens." They put it together and I butchered the advertising -- horribly. I don't recall what we spent to produce the perfume but it was far less that then $15,000 I flushed down the toilet on advertising media and production -- without producing a single order. Why? Because I was arrogant, I thought I could walk on water but the truth was I didn't have a clue about perfume, the market, or the media. I thought it could all be just one big (expensive) ad. I thought it would be easy. A lesson was learned.

    But then, perfume again and this time success. For this adventure, documented in Creating Your Own Perfume With A 1700 Percent Markup!, our budget for the production of 1,000 bottles of a men's fragrance was $2,000. Our cost per bottle came in at under $1.50. We advertised the fragrance at $26.95 and sold out out entire production. Advertising expense was minimal as it only involved producing a page for our own catalog.

    If you asked me what it would cost you to produce a perfume today my answer would be "Anything from a thousand dollars or so up to ... the sky's the limit." But the real issue is your market. How much are you going to sell? If you can sell a lot you can spend a lot; if your market is small, to be profitable your perfume has to be produced on a budget that can make it profitable in that market.

    So here's my advice. If you want to be involved in perfume, study how it is made, what goes into. Then study your potential markets. Can you spot a marketing opportunity, and do you have a marketing strategy that will work with that market.

    Get your ideas together. Estimate how much perfume you will need to serve that market profitably. Then start to calculate how much you can spend per bottle to address that market profitably.

    Now the real fun. Developing a product -- your perfume -- that can be produced at an acceptable cost. The hard work, the planning, can be done without spending a penny. But it will involve some serious thought.

Wednesday, December 19, 2018

Matching your project size to your market size

   
    You don't have to sell a lot of a perfume to make money. You don't have to sell a lot of a perfume to develop a profitable business, one that in time might feed your family. What you do have to do it to sell your perfume profitably. This means matching the money you spend for development and marketing to the size of your market and the potential sales you can reasonably expect.

    This article was inspired in part by a book I just finished by Seymour Stein, founder of the Sire record label which was acquired by Warner but kept alive for many years with Stein at its head. The "Sire" lesson was that you could make good money signing artists that would never be superstars. How? By judging the artist's potential popularity and then investing just enough in that artist to let them fulfill their potential within their niche. Yes, Stein signed Madonna, the Ramones, K.D. Lang, and the Talking Heads. But he also made money on Echo and the Bunnymen, Flamin' Groovies, Killing Floor, the Climax Blues Band, and many, many (obscure) others. 

    So how does this relate to perfume? Your perfume? The lesson is simply that, as a marketer of perfume, everything depends on your ability to spot viable markets -- audiences -- for your perfume, judge with reasonable accuracy how much perfume you will be able to sell to each of these markets, and then produce just the amount of perfume each market is likely to require.

    It's not uncommon for someone who is new at perfume, even someone with a marketing background who should know better, to feel that if they are going to launch a perfume they must produce a certain minimum number of bottles because "that" quantity makes "economic sense," that is, "that" quantity produces a low cost per bottle and thus, runs the wisdom, you are buying cheap so you can make a greater profit on every bottle sold. Production is guided by cost, not market size.

    What is overlooked is the production cost of bottles that go unsold. How many would-be perfume entrepreneurs have produced 10,000 bottles of a new fragrance and then found buyers for less than 2,000? Each bottle you pay to produce but fail to sell reduces your profit by the cost of that unsold bottle. (Here's a link to the math of an example.)

    The real disasters come when lots of bottles go unsold. The best profits come when few or none of the bottles you produced go unsold.

    What makes this "matching the market" strategy work for the long run is your very necessary unending search (and perhaps seat of the pants analysis) for markets. This is what marketers do. They find and exploit markets. If you seriously want to develop a business selling perfume rather than just having a colorful and expensive frolic, forget about moon shots. Go for a steady drumbeat of undramatic but profitable promotions.

Tuesday, December 4, 2018

Here's One Way To Sell Perfume ... marketing strategies aren't always nice


    We put perfume in the "health and beauty" category, products that make you feel nice, look nice, and smell nice. But, like all other products in this category, perfume has be be sold. You can't be in the perfume business unless you can sell your perfume. If you want to develop a profitable perfume -- or any other -- business it helps to be aware of marketing strategies that have been used successfully by others, even ones a little rough around the edges.
   
    1975 gave birth to the "Perfect Pretenders" promotion. The company, Perfect Pretenders, Inc., was an offshoot of Canyon House, a long forgotten mail order company that, in its origins, was largely focused on the teen and pre-teen market, advertising products from its "Super Values" catalog in magazines such as Teen, Tiger Beat, Grit, and Boy's Life. The promotional emphasis was on groupings of products that seemed to offer a lot for a little -- "6 iron-on patches," "100 stick-on decals" -- always for $1.00 plus $0.35 postage and handling and a limit of two per person as larger orders could have invited refund requests. These and other products that Canyon House developed could be packed into inexpensive envelopes and mailed at bulk rate for pennies per order. The Perfect Pretender fragrances were born out of this "$1.00 plus $0.35 for shipping and handling" milieu.

    The thinking must have been simple. Young girls love fashion items, especially when they can be purchased for just one dollar. And certainly young girls must love perfume, especially when it can be purchased for just one dollar. The challenge was to develop a perfume product that could be sold profitably for $1.00 plus $0.35 for postage and handling and shipped in a cheap envelope in the same way as other Canyon House products were being shipped. The Perfect Pretenders filled the bill.

    What were these fragrances? Advertising left this largely to the buyer's imagination but to help the buyer's imagining the advertising showed ten full size bottles of famous fragrances and specified what each of these might cost per ounce -- Arpege at (approximately) $40 per ounce, Chanel No. 5 at (approximately) $40 per ounce, Joy at (approximately) $100 per ounce -- and so on. You can see one of their ads here.

    The Perfect Pretenders were ten glass "nips" packaged in a snap-top plastic box. To use them the consumer broke off both tips of the glass vial. The vials were color coded and a package insert identified which famous fragrances each was said to imitate. Each nip held approximately one drop of fragrance. You can see them here.

    The promotion for the Perfect Pretenders perfume nips was successful. Very successful and it provided a breakout for Canyon House and it's owners. While sales of "Super Values" catalog items had been respectable, available teen media had limited circulation. Sales of the Perfect Pretenders were dramatic, so much so that ads could be run profitably in general media including both full color pages in monthly magazines and large black & white ads in daily newspapers. Lots of perfume was sold, or rather lots of "nips."

    Like so many other over the edge mail order promotions of it's era, the Perfect Pretenders drew heat. Legal issues were addressed, marketing was halted, and the corporate registration for Perfect Pretenders, Inc. was forfeited. Little remains of the promotion but an occasional Perfect Pretenders collection found on EBay and offered for many times the original price.
   
    The concept was strong; the pitch was simple: get a large value for very little money. But the advertising crossed the line and ultimately killed the promotion. Could it have been "cleaned up"? Certainly. But then would it have been as successful? Not likely. But if your aim was to found a lasting perfume business, this concept could get you started ... if you could develop a very low cost product, sell it at a very low price, and deliver a package so nice that it left buyers wanting more. (Not easy to do!)

    Followup: The Perfect Pretenders disappeared and Canyon House was acquired by a publicly traded company.

Wednesday, November 14, 2018

Perfume is calling out for YOU. Find your natural place in this business.


    November 14, 2018 -- I've been distracted for the last two months preparing books for publication on Amazon, books that I formerly offered as pdf downloads from my website. In an effort to keep the file size manageable, I never bothered to prepare fancy cover art (perhaps a mistake?) but now, for Creating Your Own Perfume With A 1700 Percent Markup!, I was faced with the proposition, "what should the cover be?"

    At Amazon, just as in retail stores, presentation is all important and I'm not a brilliant graphic designer. Lack of a cover -- a requirement for Amazon -- was holding me up. Then, in a doctor's waiting room last week (eyes!), an idea came to me. It involved some photography and some Photoshop. You can see the results here.

    One thing leads to another. While fiddling with the requirements for Amazon and looking at what others have done I kept coming across books on perfume, really good books, and although even a single title can blow your budget real books give you inspiration, marketing insights, and greater knowledge of the perfume business. Today I want to focus on one book in particular, Jean-Claude Ellena's Perfume: The Alchemy of Scent.

    Were it not for Chandler Burr's fascinating article and book on Ellena's creation of Un Jardin sur le Nil ("Garden on the Nile") for Hermes, I might never have found a particular interest in Ellena. As it was, the book inspired me to purchase the perfume for my wife (brilliant as it was, it wasn't really her taste!) and learn a bit more about this French perfumer. Over the last week I have been absorbed in his book and I'd like to share a bit of it contents with you.

    This book could be a textbook, required reading for anyone aspiring to a career in perfume. But calling it a textbook makes it seem analytical and boring (although parts, to some, will be!). Two particular chapters alone are worth the very modest price of the book. Ellena writes about methods and inspiration for perfume creation ... and then shares his own unique method of creation. And he writes about marketing and the distinction between the closed world of global giants and the open world of the niche perfumers, the world where you and I can make our stand profitably.

    But the "soul" of this book is in the creation of perfume with soul! -- "distinctiveness is more important that novelty" writes Ellena -- a real challenge for any perfume creator or entrepreneur. Ellena presses the argument that perfume is something special, that perfume is a work of art, and within the global cosmetics and fragrance business there is still excellence.

    If you are wondering where you might "fit" in the perfume business, this book can help you sort out your thoughts and give you some guidance.

    One final book note. If you have an interest in the chemistry behind perfumes, here's a professional level book that can help explain it. It's chemistry and, with a few pages of exception, a real but worthwhile slog for the non-chemist such as myself. But if you look on page 9 you'll find my name, as I was asked for a photograph to liven up the text.

-- Phil Goutell

Friday, September 14, 2018

Selling Perfume Online — Sampling


Scent is powerful. When we are exposed to a scent it reaches our brain so quickly we can only react; it doesn't give us time to think. It's the way our bodies are wired. Perfume is, of course, scent. It is fast acting, for better or for worse. We smell; we react. Then we may think about what we have just smelled, if the scent has elicited particular notice. A great fragrance can help "sell itself."

But what happens when you're selling your perfume online? There are many good reasons for taking an online approach to distributing your perfume. Arrangements with retailers can be difficult to negotiate. Perhaps the power of your perfume is enough to make an immediate sale, once someone has smelt it. But first you have to get some of it — a sample — to them so they can smell it. Here are three ways you to do this —

Method # 1 — Scented test blotters


This is a low key method and might seem a bit amateurish but if your following feels a strong personal relationship with you, the perfumer, it can be appropriate.

You simply spray or dab a unscented test blotter (for sources, visit the Perfume Projects Vendors listings ) with your fragrance, wrap the scented blotter in aluminum foil or plastic wrap and mail it in a business size (or even smaller) envelop along with details for ordering a full size bottle.

The virtue of this method is that your shipping cost will be minimal and you won't be running up against prohibitions on mailing "hazardous materials" — i.e., perfume.

If you are paying both product cost and shipping and if your requests for samples are modest in number and if your conversion rate (people who buy from you after receiving your sample) is acceptable, this can be an excellent way to distribute samples. A "one-person" or small company can prepare the sample packages by hand; a larger company could have sample packages professionally prepared by an outside vendor.

Method # 2 — Glass sampling vials


Small glass vials with a plastic dabber stopper are the classic way of distributing perfume samples. At one time when you bought an expensive perfume at a sales counter you would be given a gift bag of samplers, often in these glass vials. Glass vials are cheap and can be mounted on a card with your sales message. A vial might contain enough fragrance for two or three small applications.

I have used glass sampling vials myself, both the standard ones with the plastic dabber top and another type, just slightly larger, that had a snap-on spray closure. This was a class act among samples and could also be attached to a business card size card to present details about the fragrance along with ordering information.

There are some downsides to using glass vials, even glass vials with a spray. Glass can be broken. I once watched a woman drop one on the hard floor of a doughnut shop and, surprising to me, the glass shattered freeing the scent for all to enjoy, whether they wanted to or not. This could happen in the mail too unless the vial was protected by bubble wrap or a well padded mailing bag.

And this brings us to two issues: shipping cost and postal regulations. Using a padded bag for shipping is a good deal more expensive than using a business envelope. You, the perfumer, would not want to bear the cost so you will have to ask your prospect to pay something for shipping. This once again puts you in the position of having to "sell" your perfume before it has been smelled.

The second issue is postal regulations. Does your postal service allow you to send these sample vials through the mail? ship these sample vials? Although the volume in the vial is minimal, will you come up against an all-inclusive ban on shipping perfume? It will be up to you to be sure you are in compliance with postal regulations but my own experience suggests that you could inquire at six different post offices and get six different answers. Likely if you wing it and just do it, odds are you will never have a problem but if you suddenly have a problem, it could put a major kink in your sampling system.

There is one more strike against using glass vials to sample, particular those with the plastic dabber top: they tend to look cheap and unexciting. They have been around too long. People have seen too many of them and, unless someone is a real perfume enthusiast who will judge by the scent rather than the presentation, they don't have a "value" image. They look like throwaways. While you may find ways to use glass sampling vials effectively, in my mind their day has passed.

As to the sprayer vials, they are very hard to find. Mine came form a closeout and although I was able to purchase a large quantity, I haven't found them anywhere since.

Method # 3 — Small bottles


If your regular size bottle is anything from one to two ounces, a 1/4 ounce bottle makes a good sampler. Historically major fragrance marketers made use of miniature bottles, bottles that looked like their full size bottles but were more like doll house size, containing just a small amount of fragrance.

These miniatures were effective because they previewed not only the perfume but also the packaging and packaging, like it or not, plays a major role in the sale of perfume.

Today to sample with small bottles you are unlikely to find any that reflect the design of your standard size but you can create a "family" effect through use of a sticker similar in design to the sticker used on your regular bottles. Because 1/4 ounce is a more generous quantity than the contents of a glass vial, your customer now has a chance to "live" with your perfume, to let it grow on him or her, and (hopefully) fall in love with it.

There are some difficulties with this approach. First, the cost of packaging and delivery again requires a payment from the customer to cover your costs, so again you must sell what cannot be smelled, but at least the sale to be made will be for a much smaller amount than the price of a regular bottle.

Postal regulations again can intrude and now you are shipping a bottle that really looks like perfume. Then there is another issue, perhaps more serious than the others. Suppose even if your customer falls in love with it, 1/4 ounces of your fragrance is enough to keep him or her satisfied for the time being ... and hence no desire or need to order a full size bottle! With this in mind it is worth making an effort to make the sale of even your small bottle profitable, whether the customer converts to the full size bottle or not.

Discussion


One powerful lesson jumps out of this look at methods to distributed samples of your fragrance. Before you can send out samples you have to do some selling. Even if you were to offer your samples absolutely free, without any charge at all, you would still have to sell prospects on the value of what you were sending them and your sales pitch would have to be strong enough to motivate them to take the steps necessary to request your samples — i.e., fill out a form, send you an email, give you their names and a shipping addresses, etc.

No matter how you slice it, selling perfume involves selling ... right from the start.

Friday, August 24, 2018

Three ways to mess up a good marketing opportunity for perfume


Sometimes we come across marketing opportunities for perfume that should be wildly profitable. The people are there, they want your perfume, they are eager to pay your price. What can go wrong? There are three simple ways you can mess up this opportunity and earn only dimes when you could have earned dollars.

Mess up # 1 - Addressing a mirage and missing the real market

 

What's the real size of your market? Not everybody who matches a particular demographic is your market. Your real market is concentrated - people who will respond to you and your perfume, people who are enthusiasts for you and for your perfume, people who have enough mad money on hand to buy it. (read more)

Mess up # 2 - Too much production

 

Marketing opportunities come in different sizes. You have an opportunity to sell 5,000 bottles but you produce 10,000. Look what happens:

Say your cost to produce a bottle of your perfume is $4.50. You wholesale it at $17.50 and it sells - successfully - at retail for $35. But "successful" relates only to the 5,000 people who want your perfume. That's all who want it. That's the size of your market. But you produced 10,000 bottles. You're left with 5,000 bottles you paid $4.50 each to produce but can't sell. Let's look at the math: (read more)


Mess up # 3 - You paid too much for your perfume, even when you knew what its highest possible retail price could be

 

This is the classic cause of marketing failure in almost any field - the opportunity is hot but you pay too much to obtain your product (in this case a perfume) even though you know what its highest possible retail price can be.

Say your perfume will retail for $35 and you will wholesale it for $17.50 and correctly expect to sell 5,000 bottles. Your gross receipts will be $87,500 but now you have to deduct the cost of those 5,000 bottles.

Say your cost per bottle was $4.50. That's a total cost of $22,500 giving you a gross profit of $65,000. (read more)

Discussion

 

The most profitable marketing opportunities come in fixed sizes. You maximize profit by understanding (judging correctly) the size of your opportunity. You produce just enough perfume to meet the anticipated demand. You don't fret over the handful of people who say they want to buy your perfume but waited until your supply was sold out. You don't produce another 5,000 bottles of perfume because a dozen people failed to buy it while it was available. (read more)

Footnote

 

-- As the article was a bit long, I've given you links to the original, which has all the numbers for comparison. Again, thanks for reading this message. And, on another topic, our four most popular books are now available at Amazon. They are listed in a link at the bottom of this full article.

-- Phil