What Does It Really Cost To Launch A Beauty Product Today?

In recent discussions with beauty brands, we’ve heard a lot about the soaring costs of product launches. To quantify those costs, for the latest edition of our ongoing series posing questions relevant to indie beauty, we asked 11 cosmetic chemists and manufacturing executives the following: What’s the realistic cost of an A-level product launch today? How much different is the cost now versus a few years ago? What’s responsible for the change? Do you believe costs will continue to rise?

Krupa Koestline Founder and Cosmetic Chemist, KKT Innovation Labs

For a hypothetical high-quality mass-market product launch today, a realistic budget can range from $500,000 to $1 million or more, depending on the scale of the brand and the market reach desired. The budget includes product development, packaging, regulatory compliance, marketing, influencer partnerships, retail placement and PR efforts. To emphasize, this range is just an estimate, and product launch costs vary depending on the kind of brand. A product launch from a small startup can be 10X less.

Two to five years ago, the cost for a comparable launch might have been around $200,000 to $500,000. The increase reflects several evolving dynamics in the beauty industry like customer acquisition costs, increasing raw material and packaging costs, which involve increases due to sustainable and high-quality material sourcing, PR costs, etc.

With digital advertising becoming more saturated, it takes more investment to achieve the same level of consumer engagement and brand awareness. Brands now need to spend more on social media, influencer partnerships and digital content to make an impact in a crowded market. The bar for visual content and campaign quality has also been raised, requiring higher production costs for photo and video shoots.

Retail expectations have changed as well. Securing shelf space in stores or prominent placement on e-commerce platforms often involves upfront fees or marketing commitments. Brands must support launches with education and in-store experiences to stand out, further elevating the budget requirements.

I do believe these costs will continue to rise, especially as sustainability efforts and regulatory compliance become even more essential. The investment required for consumer acquisition is also unlikely to decrease given the current competitive landscape.

Ananya Sharma Cosmetic Chemist, Next Step Laboratories

Launching an A-level beauty product has become significantly more costly in recent years. For a hypothetical product, expenses can range from $450,000 to $1.2 million. Product development alone might cost between $100,000 and $300,000, covering formulation, testing and regulatory compliance. Packaging design typically adds another $50,000 to $150,000, especially for unique and sustainable options.

Branding and marketing can be substantial as well, often reaching $200,000 to $500,000, including strategies, influencer partnerships and advertising. Production costs usually fall between $50,000 and $100,000, particularly when using premium ingredients, while distribution and logistics may add another $50,000 to $100,000. This rising investment reflects the complexities of today’s beauty market.

The cost of launching an A-level beauty product has risen significantly compared to that two to five years ago. Back then, a similar launch might have ranged from $250,000 to $800,000, with brands often leveraging social media and facing fewer regulatory hurdles. Today, several factors contribute to the increased costs.

High-quality and sustainable ingredients are more expensive due to rising demand and supply chain issues. Brands are also focusing on eco-friendly and ethically sourced materials, which adds to expenses. Stricter regulatory requirements and comprehensive testing have extended development timelines and costs.

Additionally, consumers now expect unique formulations and strong branding, leading to greater investments in marketing. The rise of influencer marketing and digital advertising has further increased budget needs.

Looking forward, costs are likely to keep rising, albeit at a slower pace. Continued consumer demand for quality and sustainability will drive brands to invest more in these areas. Innovations in formulation and technology will also require significant financial commitment, while economic factors like inflation and supply chain disruptions could further impact production costs.

I believe costs will continue to rise, albeit at a moderated pace. As consumers continue to prioritize quality and sustainability, brands will need to invest more in these areas to remain competitive. Fluctuations in the global economy, supply chain disruptions and inflation could further impact production costs.

While some brands may find efficiencies or alternative strategies to mitigate costs, the overarching trend is likely to be a gradual increase in the financial commitment required for successful product launches in the beauty industry.

Alexis Forbes-Moorehead Lead Formulation Chemist, Divinity Cosmetic Labs

I’ve definitely observed the cost of product launches rising significantly in recent years. For an A-level product launch today, depending on the complexity of the product, marketing and distribution strategy, you’re realistically looking at a budget ranging from $100,000 to $1 million.

This estimate includes R&D, clinical testing, regulatory approvals, packaging design, manufacturing and a robust marketing campaign. A few years ago, the cost could have been lower, in the range of $50,000 to $250,000, but several factors have driven these costs up.

One of the key contributors is increased consumer demand for high-quality, clean and sustainable products. Brands now need to invest more in sourcing premium ingredients, verifying the sustainability of their supply chains and conducting rigorous testing, particularly for claims around safety and efficacy. Additionally, there are now higher expectations for clinical validation, especially as consumers are becoming more informed and scrutinizing products for their performance and safety.

Another major cost driver is marketing and brand differentiation. The beauty market has become highly saturated, so standing out requires significant investment in influencer partnerships, digital advertising and content creation. The shift toward personalized marketing and experiential product launches, along with the high cost of social media platforms, has pushed up budgets further.

Regulatory requirements have also become stricter in recent years, especially for brands that market globally. Compliance with varying standards such as EU regulations on clean beauty or U.S. FDA regulations for specific claims has become more demanding, adding both time and cost to product development.

I do believe that costs will continue to rise, driven by ongoing innovation in formulation, sustainability efforts and the need for more advanced marketing strategies. Additionally, the rising costs of raw materials and packaging, particularly due to supply chain disruptions, will further impact the total investment required for a product launch. Brands will need to invest wisely in differentiating their products and providing value to consumers while managing these escalating costs.

Anthony Standifer Founding Partner and Chief Brand Architect, mSEED Group

Back in 2018 to 2019, I worked with a brand founder who brought a single product to market with just 500 units and a modest $8,000 budget, including production costs. It was a scrappy, lean launch that allowed the founder to test the market and validate their ability to sell.

While I believe the budget for launching a beauty brand has increased since then, I don’t subscribe to the notion that you need $50,000 to $100,000 to get started. That kind of capital creates a barrier for many self-funded, underserved entrepreneurs who are eager to break into the beauty industry.

For those launching with less than $20,000, it's crucial to have realistic expectations about revenue and scaling. There are no shortcuts or repeatable hacks to turning a $20,000 investment into $500,000 in annual sales within the first year.

Instead, I advise founders to view their first year with limited funding as a validation phase. Focus on building the infrastructure to effectively market, sell and convert your first 500 customers.

If you can nurture those initial buyers to spend $200 annually, you’re looking at a $100,000 brand, a solid foundation for anyone starting from scratch. This approach is strategic, realistic and gives brand owners a clear path to growth without overwhelming financial risk.

Megan Cox Founder, Genie Supply

A truly A-level product launch will cost a minimum of $60,000 (+/- 20%) in today's market for the development, packaging and manufacturing. This does not include marketing, branding or advertising. I would have said half of that in 2019.

The truth is that costs across the board are much higher than they were five years ago. Packaging is up to 50% more expensive, ingredients 30% more expensive on average, and labor, which manufacturers depend heavily on, is up to 100% more expensive than it was in 2019.

If a beauty product is marked up 10X from COGs, then a small change in COGs will heavily impact the MSRP. Every 10-cent increase in COGs means $1 more to an end consumer. Just the packaging and ingredient changes alone without labor already have you at nearly 2X COGs compared to 5 years ago, MSRPs are increasing because something has to give.

On the marketing side, digital ads are much more expensive and less effective than five or 10 years ago. Retailers still want hefty margins, maybe even more so than before.

In my opinion, costs will continue to rise because this is the new normal. Additionally, we've still not reached an equilibrium on the manufacturing side yet, but we're close.

Kyle LaFond Founder, Natural Contract Manufacturing and American Provenance

Unfortunately, the beauty industry is not immune from inflation. Production costs have had to increase as the costs of raw materials, labeling, packaging, shipping, equipment and labor have all risen in recent years. Quality comes with a price, and consumers have to realize that you get what you pay for.

We've tried our very best to work with all of our vendors and clients to control costs. In some instances, we've been able to hold the line with only modest price increases. In other cases, we've had to raise prices significantly.

It's tough to give a good range based on so many variables. However, we've been able to do some launches for as little as $5,000 to $10,000. This is nowhere near the $25,000 to $200,000 that I've heard from others about different manufacturers. We're definitely a great option for founders or brands looking to launch a new product.

I do think that the price increases that we've seen over the last several years will level out as inflation cools with continued rate cuts.

Rachel Johnson Founder and Cosmetic Chemist, The Charismatic Chemist

To launch a singular 1 fl. oz.-product today may cost upwards of $50,000 all inclusive. Three years ago, it would cost about $25,000.

Higher cost on raw materials manifest into high cost formulas. More research, regulatory compliance and strategic marketing also contributes to the higher costs for product launches.

I predict a decrease in costs on raw materials and third-party services over the next one to two years as we move into a less political climate and the market adjusts as brands shutter.

Laura Horne VP of Sales and Marketing, FP Labs

[The cost of a product] really depends on if a brand is interested in using a stock formula or if they are looking to develop something proprietary to the brand. Cost is also not just about the financial aspect of an investment for a brand, it is also about time, speed to market and points of difference versus the rest of the market.

Stock formulas are a great way to reduce cost, increase speed and still be able to get points of difference in the market through unique ingredients and fragrances.  Custom formula development time can be anywhere from 9 months to two years depending on the complexity of the formula and if it has an active ingredient.

Consumers are ever evolving in their expectations of brands both in what ingredients are included in products as well as how those products are marketed. They will no longer accept ingredients on face value or claims that are misleading. As a result, many brands complete more testing, use higher-quality ingredients and substantiate claims more rigorously. All of this increases the cost associated with a product launch.

One trend we are seeing is brands that are spending time, money and effort on reformulating products to remove specific active ingredients that are harmful to the environment or packaging that cannot be recycled. It is important for everyone involved in the development of products to be aware of these market sentiments and to help ensure products that are put on the market meet current and future consumer needs.

The goal is not to continue to see costs rise, but have more effective products that meet consumer demands, at comparable pricing. This is where continued research within organizations on ingredients and trends as well as cutting-edge formulation laboratories are critical.

Andrea Buratovich Brand Consultant, Indigo Private Label

At Indigo Private Label, we make it as affordable as possible to develop a new product. What people entering the market need to realize though is it’s not just making the product, they need to plan for extended marketing costs.

We charge a formulation fee of less than $1,000 and that basically covers the cost ordering ingredients and our time in the lab developing a sample. Once that sample is approved, we can cost out the formula. We do everything we can to source economically to get this cost as low as possible.

Then, there’s packaging, product shots, PR, launch events and product seeding, not to mention paid advertising. Shipping alone can add hundreds or thousands of dollars. While the cost of producing a product is steadily rising, what’s rising the fastest is the marketing cost.

Mary Ershadi VP of Marketing, AMR Laboratories

We have noticed a rise in material costs. Most came about with COVID and supply chain issues. Vendors could not provide materials as needed and costs went up. It’s been getting better in the past year, but we still see a 20% increase in our basic costs.

Megan Poling AVP of Product Development, International Products Group

Costs have increased for product launches over the last few years. The typical cost of a product launch today is $250,000 compared to $100,000 before COVID-19, and that’s for a single product. It adds up quickly when you account for product costs, packaging costs, manufacturing and labor costs, fulfillment, shipping and digital brand marketing.

$250,000 is low, depending on how much you want to put into your digital marketing and ad spend. This number could very quickly be quadrupled to ensure a successful brand launch.

If you have a question you’d like Beauty Independent to ask cosmetic chemists and manufacturing executives, please send it to editor@beautyindependent.com.