How much does it cost to start a skincare business? – Part 2

Our Thoughts

20/01/2023 by The Red Tree

Our previous article detailed the pre-launch investment required to start a beauty brand. This article continues the analysis and moves on to pre-launch and post-launch considerations.

The main point we stress to clients is to plan ahead. Many brands focus too much on their initial launch and forget about their NPD, or New Product Development, pipeline. We have discussed launch timelines in our article here.

Sampling

We are great advocates of sampling activity at The Red Tree. It gets product into your customers’ hands and can be distributed carefully to ensure maximum ROI. It is also an expected investment with retailers, whether through checkout sampling with sachet sizes, or deluxe samples for use within GWPs (Gift with Purchases) or activations such as advent calendars. You can expect to pay around £1 for a deluxe size, typically 5 to 20ml depending on the SKU, and up to 50p for a sachet of 0.5 to 5ml. Usually, buying in bulk brings considerable savings. However, costs can escalate quickly. Therefore, we recommend initially focusing on sampling your hero SKUs. As a general guide, retailers can ask for GWP quantities ranging from 100 to 10,000 units, while advent calendars can require as many as 50,000 units!

Trade marketing and retail costs

If retailers form part of a brand’s distribution strategy, Trade Marketing, meaning investment spent partnering with retailers, could be the next biggest cost. These costs can vary enormously, from small scale activations such as an Instagram post on a retailer’s account (around £1,000 to £2,000) to full scale events, which could cost as much as £100,000. Bricks and mortar retail can also require additional costs such as training, staffing and commission payments, as well as in-store collateral like shelf talkers and tester units.

An agency such as The Red Tree can handle and negotiate all of this. We also have extensive experience securing brand listings in the first instance. As explained in our previous article, Country Management requires dedicated skills to successfully navigate the complexities of each retailer.

Download our Country Management Guide

Brand marketing

Brand marketing covers all the costs involved in promoting your brand. This includes physical materials such as bags, stickers, boxes and tissue paper, where an initial layout could cost anything from £500 to £5,000. It also includes POS material and content creation to generate assets. Photoshoots can vary significantly, especially if you need models. We usually budget £10,000 to £30,000 to generate pack shots and lifestyle shots for use on a brand’s website and social media during a launch campaign. PR retainers can range from £1,000 to £30,000 per month, plus expenses such as postage and mailers, which add £500 or more. Events can be highly effective for generating content and raising awareness, but costs can spiral out of control if you do not manage them correctly.

Digital marketing

Digital marketing begins the moment your brand’s design is finalised. Your website can be your most valuable asset, since you have full control over every aspect, and it can drive significant revenue for your brand. The company you choose for your website design and build will be crucial. They need to understand your brand and visualise it in a way that resonates with your consumer, encouraging them to convert. Websites can be costly, ranging from £15,000 to £100,000. On top of this, you should budget £500 to £1,000 per month for upkeep and maintenance. You will also pay merchant and transaction fees through your payment gateway, usually charged per transaction at 1 to 5%, depending on the provider.

SEO, or Search Engine Optimisation, is a specialist area. You should build it into your website from the start and maintain it as a constant part of your marketing efforts. Brands can expect to pay £1,000 or more per month.

We usually recommend outsourcing PPC, or Pay Per Click, advertising to keep your efforts focused and maximise ROI. Handling this incorrectly can lead to costly mistakes.

Content and social media

Inbound marketing, or content marketing, should form the bread and butter of your marketing plan. There is a reason the phrase “Content is King” exists. Copywriting takes time and expertise to ensure the tone aligns with your brand. However, your brand guidelines should make this easy to communicate. Blog posts typically cost around £500 per post.

Social media management is another consideration. You could initially handle this in-house if you have the expertise, or outsource it to an agency such as The Red Tree. Management can cost upwards of £1,000 per month, with advertising spend starting from £500 per month.

Email marketing, when done right, can become a substantial sales stream. However, it needs to fit seamlessly within your wider marketing plan. An agency can handle this from £500 per month.

Managing it all

All of the activity above needs confident direction and can feel overwhelming for a brand. On top of managing each third party involved, managing your customers can also be time-intensive and may require additional resources. You may want to consider employing an agency, an internal operations manager, or a customer service agent to handle day to day activity.

How much does it cost to start a skincare business? – Part 1

The Red Tree is the UK’s leading international beauty brand consultancy and a powerhouse of ideas, insight and inspiration. For an informal discussion on how we might help you, please contact us.