We have had a couple of people complain about the cost of the Hand Rub/Sanitizer we produce. One individual has accused us of ripping off the public. I thought it would be neat to determine what costs were involved in producing a 2-ounce bottle of Mesa Lavender Farms® hand sanitizer.
For those of you who don’t want to learn the complete process and miscellaneous expenses involved, the following provides a snapshot of the costs and time involved to mail a 2-ounce bottle of MLF hand sanitizer:
Cost of product, bottles and caps $2.39 to $3.00
Labor to formulate, fill, cap, label $0.1739
Cost of label $0.40
Cost of box to ship $1.20
Tissue paper $0.05
Minimum mailing cost $3.51
MLFs cost $7.72 to 8.33
What we charge $7.50
We start with isopropyl alcohol with an alcohol content of 99% USP alcohol. The cost for our first drum was $1,256.00, including shipping. The highest content alcohol locally available is typically 91% and then only in small lots.
We blend the alcohol with 3% Hydrogen peroxide, 99.5% USP Glycerin, and cold boiled water to create a product with an alcohol percentage of 75%. Mesa Lavender Farms® follows the FDA/World Health Organization approved formulation. The hydrogen peroxide we start with is 34%. We dilute it with cold boiled water to achieve the required 3%. We measure each component out to the milliliter (ml) to ensure compliance with FDA’s requirement. We typically formulate 10,000 to 30,000 ml of base product for a day’s bottling process.
Even with our high capacity $15,000 matrix bottle filler, it takes time to fill bottles. (note: the depreciation cost of this machine is not included in our retail price). The 30-unit trays need to be filled with the appropriate bottles and the machine activated. The machine will fill these bottles in just a few minutes. The tray then needs to be removed from the machine and caps screwed on. The speed of the machine is based on the length of time it takes to install the caps and refill the tray. The main reservoir of formulation for the matrix bottle filler continually needs to be refilled during this process. After the bottles are filled and the proper caps added, labels need to be applied one at a time, and by hand.
While our matrix filler can fill up to 700 bottles in an hour, this speed depends on the number of staff available to cap bottles that are filled, fill trays, and return them to the machine. Without this machine, our associated employee time and associated cost would be measured in hours.
On April 22nd, we kept track of the total time required to formulate the base product, fill the matrix filler, apply caps, and put on labels. The total time to produce 330 bottles was 210 minutes. The time required for each 2-ounce bottle was 38.16 seconds with an associated cost of $0.17.
Miscellaneous overhead costs:
The labels had to be designed in accordance with FDA requirements and sent to a professional printer. Employee time to design and order labels are not included in the final costs. As with other MLF products, a UPC (bar code) has been added to the label. This bar code is generated and held in a national database, which allows our associated retailers to scan our products. Registration with the UPC company is an additional cost. Labels are $0.40 each. The cost of the bottles and caps, if we can locate them, is an additional cost. The mist sprayers can cost up to $1 each. We have had to source these from Amazon, and eBay, when they were not available from our normal suppliers just to ensure we have products available. Some of the required bottles and caps have been back-ordered for as long as 3 months.
Once we have the bottles of hand sanitizer filled and labeled, they need to be sold. With orders needing to be mailed, the product is put in a box with tissue paper and an information sheet. Boxes, tissue paper, and handouts are an additional cost. When we ship products contained in glass such as our CBD tinctures and roll-on products, we package in a bubble pouch at additional cost to us. Shipping is processed through Stamps.com, an additional cost with the least expensive shipping cost of $3.51.
Additional costs not included in the above computation include:
- The initial cost of the alcoholmeter, 10-liter carboys, and measuring cuts required for the formulation
- Time to develop and print handout material and publicity to advertise the product
- UPC registration fee
- Labor to box, label, and ship
- Cost of paper and ink to print the shipping label and product literature
- Building rent and utilities
- Web site maintenance
- Equipment depreciation
- And the list goes on
When you purchase one bottle of hand sanitizer and we shipped it to you we are losing money. In-store purchases and website orders for more than one bottle are the only way we can afford to produce this product. We understand the need to work together to overcome this pandemic and are glad we can help with this.
A Few Final Words:
Our registered business name is Mesa Lavender Farms® but not all our products contain lavender. The FDA formulation we are authorized to produce prohibits the use of gels, lavender essential oil, or any other additive. Research has shown these items reduce the effectiveness of this formulation of hand sanitizer.
For those of you who want to produce your own product, go for it. There are recipes on-line you can easily follow. Keep in mind many of these have been found to provide inadequate protection. Here is an interesting article on home-made hand sanitizers you might find of interest: https://www.menshealth.com/health/a31228344/homemade-hand-sanitizer/.