How, with so many perfumes crowding the market, can there be room for so many more?

This over saturated market practically DEMANDS your perfume!

The other day my wife commented that there seemed to be a lot of new perfumes out there and she had been without television or magazines for over two weeks. But she had been online. Internet was our sole reach into the wide world of international commerce from our vacation home in Canada, and we were on vacation. The thought struck me that, as long as I can remember, there was always talk of the perfume market being saturated — too many fragrances already being sold, no room for more. Too many new fragrances being launched, each cannibalizing the sales of the others. New launches stealing sales away from market leaders. This happened year after year.

And that's the point. We already have more than enough perfume for everybody, enough perfumes to choose from, and there seems to be no shortage of variety, but there is no end to these new launches. Every year dozens upon dozens of new fragrances make their way into the maerket. What gives?

Those who launch these new perfumes know exactly what gives. They know that perfume is a fashion business. Would any clothing designer say "I think I have enough of my stuff on the market. I don't see the need to create more."

The fact, like it or not (and some traditionalists do NOT like it!) is that every year designers must produce their spring collections and their fall collections, just as automakers must introduce new models each year. Fashion demands constant innovation, newness, change. Without this ongoing demand for something new, major industries would collapse.

So never fear. Not only is there room in the market for your new perfume, the market wants your new perfume. The market churns. Much goes in; much gets spit out. That's how it works. The trick is to get in, make your money (enough to make your project profitable) and then, when your fifteen minutes of fame have expired, quickly throttle back your promotional budget and go on to your next fragrance. That's how successful companies make their money.

Not every fragrance that says 'here I am" makes it off the launchpad.

There are some conditions that determine whether your perfume makes it into the churn. Have you ever watched rowers trying to launch a boat from a beach into a heavy surf? Their timing and execution has to be perfect, otherwise the surf will drive them back and perhaps capsize their boat. They have to get past those pounding waves at the shore and out into the deeper waters where they can begin to row. The perfume entrepreneur has to get past the launch, at which the project can be sunk, and out into the market where sales can be made.

Once your fragrance is accepted into this highly competitive, over saturated market, the question is, can you make money before people lose interest in your perfume and are drawn away by something newer?

There are guidelines that will improve your fragrance's market potential: be a little bit better, be a little bit different, have just a little better story to tell, and have just a little better graphic presentation. It seems obvious but is so often ignored.

The reality is you have to work at it. In each of these areas you have to innovate a little better, work a little harder, press on a little longer, both in preparing your fragrance for the launching pad and then, when you have gotten through that heavy surf at launch time, sustaining interest in your fragrance by sustaining your own interest in promoting it.

The market will always be crowded. The market will always look fully saturated. But wise heads know there is plenty of room for a new perfume — their perfume. And, if you do it right, there is room for yours too.

Something important got left out but maybe we can put it back in ... (the money machine!)

Yesterday I was reading about a political fund raising project. An unknown candidate with very little money raised more than $8 million in a very short time. How did she do it? She worked with outside experts and was overwhelmed by the sudden name recognition they achieved for her and the bundles of money that came in.

The story made me think I had left something out when I wrote How To Launch Your Own Perfume Company: A Simple Business Plan but now I'll give you my correction. The book outlines a practical, solid plan for launching your own perfume company with minimal capital. But I left out the part of the equation that put our political friend into the clover. Besides an experienced company that molded and shaped a political image for her, she had another firm that took what the first firm had done and ran the promotion everywhere they knew it could bring in money. Working with experts is what made the difference. Now here is what's missing from my story.

In How To Launch Your Own Perfume Company: A Simple Business Plan I describe a program whereby you can start your own perfume business by producing fragrances for marketers who will pay you up front. This relieves you of the need for substantial capital. If the fragrance sells well you continue to make money by providing the fragrance. For you this business is profitable right from the beginning, at least minimally so.

But for a big payday sales must really take off. How to achieve this was not part of the book but I think it should be a companion volume. What was missing was the introduction of a promotional team. This is what made the difference for our aspiring politician. One team created her advertising -- just as our book will help you do the "create perfume" portion of the business -- while another team took that advertising and placed it where it would do the most good, including in the hands of some very powerful influencers.

So my amended program would be this: set up your business as I describe in How To Launch Your Own Perfume Company: A Simple Business Plan. But find that special business partner who, in a relationship with you, will promote the sales of the fragrances you have developed for your clients. This business partner will be paid some costs but also a motivating commission on sales. And, as those sales come in, you will be making more and more money through your sales of the fragrances to the marketers.

Once you find good promotional people to work with hang onto them. As a team you will be able to take on one marketer after another as a client and both you and your promotional team will flourish.

Rules to follow when setting a price for your perfume

In brief --

#1 The price of a perfume depends on the environment in which it is sold.

#2 The price must cover all costs and leave you with a profit.

#3 Working backward, you discover what you can afford to pay to produce your perfume -- and if you can't produce it for this cost or less, profit becomes impossible.

    There is a formula for setting a retail price for your perfume. This formula won't give you an exact retail price but it will give you a tight range within which to set your price. To work this formula you first must gather up some data.

Lesson # 1 -- The retail price you can set for your perfume is limited by the environment in which is will be sold

    This means you have to look at where your perfume will be sold and what fragrances are being sold in that same retailing environment. If your perfume is being developed for high end boutiques, you have to look at how others are pricing their fragrances in this market. Your price should fall somewhere in the range of what others are charging. Why? Because this is what buyers expect.
    If you're selling in a middle market or a bargain shopper market, again you must look at what others are charging. This tells you the price range buyers find acceptable. Pricing your fragrance higher or lower puzzles buyers. They start feeling you're doing something wrong, that you don't understand what you're doing, and they become suspicious. This hurts sales.

Lesson # 2 -- Selling environment is just the starting point

    From your planned retailing environment you can make an estimate of how your perfume should be priced. But this is only an estimate. Now you have to work backwards from that estimate to establish the most you can afford to pay to produce a bottle of your perfume.
    To get this number you start with your anticipated retail price. Then you subtract the portion of that price that you will not receive, the discount that will be given to retailers, which should range from 40 to 60 percent, depending on the relationship you are able to develop with stores. Don't count on everyone paying you the same price. You may want certain stores to take your fragrance for the prestige. In other cases you'll just offer a "standard" discount and hope that you can get it. Now for distributors.
    If you plan to distribute your fragrance widely, you will use various distributors and jobbers. Now you must allow for the discounts they will want. Then -- take a deep breath -- you'll want to allow yourself some money for advertising, administrative costs, and returns. After these considerations you must still allow for the cost of producing your perfume -- and your profit.
    As you take each of these costs into consideration, you begin to understand just how important your production cost has become. Now looking at these obligations, you begin to ask yourself, "Can I do it? Is it even possible for me to make a profit?"

Lesson #3 -- Eliminate all non-essential production costs

    Some of the lessons: alcohol costs less than perfume oil. Don’t go overboard using oil when you could be using alcohol (In most cases this will please your buyers. They don't really want a heavy fragrance!) Water is less costly than alcohol. Don't use pure alcohol when you can use a pleasant alcohol/water blend. Don't aspire to a custom bottle when so many good stock designs are available. Women will prefer a spray pump over a splash bottle. For men, splash is a good choice and a cap is a good deal cheaper than a spray pump (although a sprinkler neck bottle may cost you a few pennies extra.)
    And the fragrance itself. "All natural" is good but presents some challenges. Some natural ingredients are cheap but the really lovely ones are quite expensive. That is why the industry has struggled to develop excellent synthetic substitutes. That may sound like heresy to you but, unless you're marketing your fragrance to a very aware, picky audience of people who will pay more, avoid those beautiful expensive naturals or blend just a tiny bit with your synthetics to give them more character.
    When you've finally got it together and whittled your cost down to something reasonable, look at where you stand on potential profit. After you've covered the cost to produce your fragrance and all the costs mentioned above, how much profit are you going to squeeze out of every bottle you sell? That's the number you have to look at when you decide whether or not to go ahead with your project.
    If you want to read more about trimming costs and producing your fragrance at a cost that will give you a good markup, read Creating Your Own Perfume With A 1700 Percent Markup! It's available as an instant pdf download and, as a photo-illustrated softcover at Amazon.