Making cosmetics on a budget: A definitive guide

By Julia Wray | Published: 13-Feb-2023

Raw materials, energy and freight costs are dearer than ever, so how can cosmetics brands with a squeezed budget get more bang for their buck?

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January is only just in our rearview mirror, but already the beauty industry is stacking up casualties in 2023.

Last month, make-up brand Morphe’s parent company Forma Brands initiated voluntary Chapter 11 proceedings and announced its assets would be acquired by lenders, including Jefferies and Cerberus Capital Management.

Meanwhile, Deciem’s brand The Ordinary discontinued its concealer in January, with its foundations – Serum Foundation and Coverage Foundation – poised to stop selling in June.

Upon its announcement in December 2022, The Ordinary said: “The production process for colours is complex and requires heavy input from many of our team.

“The accessible pricing that we felt was sensible to charge for the formulas would only cover our production costs if the volume that we sold was high.”

If the likes of Morphe and The Ordinary are struggling, then the current climate is bleak indeed for indies.  

Lydia Roscoe is a beauty industry veteran of more than 25 years and founder of A Beautiful Life, a digital beauty and wellness retailer that champions British brands, some of which fall into the indie category.   

“[Indie brands] have got challenges in terms of sourcing ingredients – with climate change for instance – and the cost of ingredients, which is upping their products’ prices.

“But they know they can’t increase the cost for the customer, because it’s tough enough [for consumers] as it is.

“So they’re either like ‘we take a huge cut in our profits, because we have to, or we put the price up, and we’re potentially going to lose lots of sales’.”

Roscoe notes that a lot of indie brands tend to err on the premium side anyway, so by raising prices “you’re literally limiting your customer base to a small amount of people”.

So, from formulation to marketing, what ‘hacks’ exist to help brands weather the cost of living crisis without leaving their fans to foot the bill?

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