Do private label beauty products really make money: A profitability breakdown

The beauty industry is booming, and private label products offer an exciting opportunity for entrepreneurs to carve out their own space. 

In fact, nearly one in five consumer goods products in the United States is private label. And within private label beauty, the market size was valued at over USD 8 billion in 2023 and is projected to reach USD 14 billion by 2031.  

But even with all this growth, the big question remains: do private label beauty products really make money?

The short answer? Yes—if you have a smart strategy in place. Private label cosmetics profit margins are high, with low startup costs and flexible scalability. Let’s break down the costs and profits and explain how you can maximize private label beauty product profitability.

The costs of private label cosmetics manufacturing

Before diving into private label beauty product profitability, it’s important to understand the costs that go into starting your own brand. So let’s dive in: 

Branding your private label beauty brand 

Building a strong brand identity doesn’t have to be expensive. Depending on your budget and resources, a cosmetics ecommerce business can develop a compelling visual identity through DIY design tools, freelance professionals, or full-scale branding agencies.

Here are three budget-friendly options:

• Low-cost (or free): Use tools like Canva for DIY designs or hire a freelancer on Upwork or Fiverr. Within both these platforms, you can filter designers by their hourly rate to stay within budget. Note, the cheaper the hourly rate, the more likely you will work with a less experienced designer.
• Mid-range ($500+): Work with an experienced freelance designer for a more polished look and identity. Again, using the filters within tools like Upwork or Fiverr, you can find designers within your budget range. 
• High-end ($2000+): If you have a larger budget, partner with a branding agency for a full visual identity package. This can also be your agency on record, meaning you lean on them for design work throughout your beauty brand’s life. 

Market research 

Before pricing your private label products, analyze the competition. There are market research companies to support you in this step, but truthfully, if you have the time to give, you can cover a lot of the market research yourself with some helpful tools and Google searching. 

Areas that you’ll want to look at include:

• Popular beauty brands and their pricing models.
• Competitor websites and customer reviews.
• Industry trends and consumer preferences.
• How competitors sell their makeup products online. 

Product costs & sampling

Before committing to a supplier, order product samples to test quality. Sampling is a crucial step in private label cosmetics manufacturing, ensuring you’re selling high-quality products that align with customer expectations. 

While some suppliers charge premium fees for samples, platforms like Blanka offer low-cost, high-quality samples with fast shipping, making it easier to validate your selection without overspending.

Shipping costs

Shipping can eat into profits if not managed. 

To maximize margins and improve private label beauty product profitability, consider the following methods:

• Flat-rate shipping: Many platforms, including Blanka, offer flat-rate shipping options to simplify cost calculations and avoid unexpected expenses.
• Customer-paid shipping: Some brands pass shipping costs onto customers to maintain healthy profit margins.
• Bundling to reduce costs: Encourage larger orders by offering discounts on multiple-item purchases, helping to offset shipping fees while increasing order value. For example, it’s common to see “Free shipping with orders over $XXX amount”. 

Storage & warehousing

If you’re working with a traditional supplier, you may need to budget for warehousing and inventory management, which can cut into your profits. 

However, partners like Blanka provide free storage for private label beauty products, significantly cutting down costs and allowing you to focus on sales and marketing rather than getting lost in logistics.

How private label beauty brands make money

Once you've accounted for costs, the next step is unlocking your brand's full profit potential. 

Sales pricing strategy

Pricing your private label beauty products correctly is crucial for maintaining strong profit margins. 

Consider these key approaches before you set prices:

• Competitive pricing: Research competitors and price within the market range to stay attractive to potential buyers. 
• High margins: For private label beauty product profitability, you need high margins. This means you sell your products at a higher price than it costs to make them. On average, it’s common for Blanka merchants to sell their products for over 4x the product cost. 
• Bundling & upselling: Encourage customers to purchase complementary items to boost order value and maximize revenue. For example, maybe there’s a lip liner add-on if they purchase a gloss. 
• Target audience alignment: Luxury beauty brands can charge premium prices, while budget-conscious consumers are more likely to seek affordable options. Understanding your audience ensures that pricing strategies align with expectations. 

Profit margins: A real example

Let’s break down a common pricing scenario for a private label beauty product: 

• Wholesale cost (Blanka): $5.00 per lipstick
• Average retail price: $20.00 per lipstick
• Profit per unit: $15.00
• Markup: 300%
  

If you sell 500 lipsticks per month, that’s a $7,500 monthly profit—just from one product! 

Profit: $15 (profit per unit) x 500 (units sold) = $7,500

Now, imagine expanding your product line to include foundations, mascaras, or skincare items. With the right cosmetics ecommerce strategy, the potential earnings can grow exponentially. 

Maximizing private label beauty profits

Once your brand is up and running, the next step is scaling and increasing profits. The key to success isn’t just selling more products—it’s about optimizing your costs, increasing the value of each transaction, and using smart marketing strategies to bring in repeat customers. 

1. Lower costs without sacrificing quality

Keeping expenses in check allows you to increase profit margins while maintaining competitive prices. Here’s how to cut unnecessary costs:

• Use free branding tools: Platforms like Canva help create professional logos and packaging designs without hiring an expensive designer.
• Work with cost-efficient suppliers: Some private label manufacturers, like Blanka, offer flat-rate shipping and free storage, reducing fulfillment costs.
• Choose high-margin products: Focus on private label beauty products with low production costs but high perceived value, such as skincare serums.

2. Increase average order value (AOV)

The more customers spend per order, the more profitable your business becomes. Here are a few ways to maximize each sale:

• Offer product bundles: Create sets like a lip liner and lipstick duo or a skincare routine kit to encourage larger purchases.
• Implement tiered pricing: Reward bulk buyers with discounts on multi-item purchases.
• Create urgency with limited-time offers: Flash sales and time-sensitive discounts push customers to buy more in one transaction

3. Strengthen your marketing strategy

An effective marketing approach helps attract new customers and keeps existing ones engaged. Consider these tactics:

• SEO & content marketing: Optimize product pages and blog content to rank higher on Google, making it easier for customers to discover your brand.
• Influencer collaborations: Partner with beauty influencers to showcase your products, increasing brand awareness and credibility.
• Email campaigns: Use personalized email marketing to announce promotions, introduce new products, and drive repeat sales.

Final verdict: Is private label beauty profitable?

Absolutely. 

With low startup costs, flexible pricing strategies, and high profit margins, private label beauty is a lucrative business opportunity. By choosing the right supplier, setting competitive prices, and maximizing sales strategies, your brand can thrive in the booming beauty market.

Make huge profits with private label beauty products today!

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