How To Start a Soap Business in 9 Steps (+ Tips)

Soap makes an excellent product for your new business. Your customers use it daily, you can make it at home with affordable ingredients, and flexible formulas let you create unique products that stand out from competitors.

Take Isabella Lin, founder of Fizzy Soaps. She turned her creative soap designs into a thriving online business by crafting soaps to look like milkshakes and bubble tea. After launching in 2018, Isabella built a following of hundreds of thousands of followers on TikTok by sharing her soap-making process. Her unique designs are so popular that her products regularly sell out.

How much does it cost to start a soap business?

Soap is inexpensive to make and sell. The basic ingredients for your first product line can cost as little as $1,000, though the cost will increase as your business grows. Here’s what you’ll need to budget for:

• Ingredients: Most handmade soap combines lye with fats or oils. You can add moisturizers, essential oils, or dyes to create unique products. Your ingredient choices affect your startup costs—premium options like olive oil and coconut oil cost more than standard options like canola oil.
• Equipment: You can make soap using either hot or cold processes. The hot process involves cooking the mixture, while the cold process lets it cure naturally. Both methods use similar tools: soap cutters, a regular or immersion blender, a microwave or slow cooker, lye-safe mixing containers, and soap molds.
• Marketing: Plan to invest in a domain name and website. Your marketing budget depends on whether you build the site yourself or work with a designer. You might also want professional product photos for your online store.
• Shipping and insurance: Set aside money for shipping materials and postage. You’ll also likely need business insurance—the type depends on how you structure your business.

How to start a soap business in 9 steps

1. Create a business plan
2. Choose your business structure
3. Make your product unique
4. Build your brand
5. Find your suppliers
6. Perfect your products
7. Set your prices
8. Research permits and licensing
9. Share your story

Before diving into soap making, focus on building a strong business foundation. Here’s your step-by-step guide:

1. Create a business plan 

Your soap business starts with a solid business plan. Write down your business ideas, choose your company name, and research insurance options. Calculate your material costs for each soap bar to track your future profits.

Think about:

• Who will buy your products
• What makes your soaps different
• Where you’ll will sell them (online store, Etsy, farmers markets, or local shops) 

Looking for funding? Check out small business loans in your area and search for small business grants through the Small Business Administration (SBA).

2. Choose your business structure

Pick a business structure that works for your tax needs. Many small businesses start as limited liability corporations (LLCs). Setting up your business as a separate entity lets you:

• Open a business bank account
• Apply for a business credit card
• Keep personal and business finances separate
• Simplify tax filing

3. Make your product unique

With so many soaps available, you need to stand out in your target market. Create something special—whether it’s an unusual design, a unique ingredient, or creative packaging like including handwritten notes.

Take Fizzy Soaps’ approach: Isabella crafts soaps that look like cookies, along with body butters and sugar scrubs. She organizes products by scent, making it easy for customers to find their favorites.

4. Build your brand

Your branding shows customers what you value. Create a consistent look and feel across your:

• Website design
• Product names
• Marketing messages
• Packaging

Your packaging can boost your product’s value. If you sell natural soaps, try earth-toned packaging with handwritten fonts. For kids’ products, use bright colors and playful graphics.

5. Find your suppliers

Shop around for the best prices on materials. You can often save money by buying supplies in bulk or ordering multiple items from one supplier. Suppliers may not always have what you need in stock, so it’s good to have a backup supplier as well.

Plan your inventory carefully. Keep enough materials on hand to avoid running out during busy periods.

6. Perfect your products

Choose your favorite soap-making method and refine your recipes. Test different oils and fragrances, and try various decorating techniques until you’ve developed a product you love. 

Consider how much product to have on hand when you start accepting orders. You don’t need to stock a large supply, but it’s good to have inventory available to ship immediately.

Make different batches to see what sells best, then adjust your production based on what customers love.

7. Set your prices

Calculate your costs before setting prices. Include your materials and ingredients, the time spent making each product, packaging supplies, and shipping costs. 

Conduct market research to understand competitors’ prices, but don’t be afraid to select a price that feels right to you. Remember that handcrafted soaps deserve premium pricing—your time and expertise are valuable.

Consider offering free shipping above a certain purchase amount or build shipping into your prices.

Planning to sell wholesale? Make sure your wholesale prices leave room for profit after covering all your ingredient costs and time.

8. Research permits and licensing

The rules for selling soap depend on how you market it. Pure soap made from lye and fatty acids is regulated by the Consumer Product Safety Commission. However, soaps marketed with health or beauty claims count as cosmetics and need FDA approval. 

Check with the Small Business Administration to learn about regulations in your area. If you’re selling online to other states, you might need additional licenses and may have to charge online sales tax.

9. Share your story

Now it’s time to tell people about your soaps. Start with a well-designed website, active social media accounts, and an email list to reach customers. 

Write detailed product descriptions that help customers find you through search engines. Be specific—instead of trying to rank for “soap,” target phrases like “blueberry-scented soap shaped like a tuba.”

Social media can help you build a loyal following. Share your soap-making process to connect with potential customers. Fizzy Soaps does this well on TikTok, where they’ve built a community of over 700,000 followers by showing how they make their products and answering customer questions.

Tips for growing your soap business

Before you begin making soap, think about strategies for lasting success. These tips help you handle the finer points of running your business:

• Start small with product variations: Begin with a few core products you can make consistently well. You can expand your line once you understand what your customers love and can manage production efficiently.
• Engage with customers directly: Build relationships with your audience through social media. Answer questions about your ingredients and process, and show the personality behind your brand.
• Collect feedback early on: Ask your first customers for honest feedback about your products. Their insights help you improve your soaps and understand what makes them choose your brand.
• Network within your niche: Meet other soap makers through online communities and local markets. You’ll learn valuable tips about the industry and stay updated on trends.
• Stay updated on industry regulations: Keep track of soap-making rules and standards around ingredients and labeling. This is especially important when you’re adding new ingredients or scents to your product line.

Mistakes to avoid when starting a soap business

While soap making seems straightforward, your business can struggle without the right systems. Here are seven common mistakes and how to avoid them:

1. Neglecting legal compliance

Soaps must follow the Federal Hazardous Substances Act (FHSA) and Consumer Product Safety Act (CPSA) in the US. These regulations cover ingredient labeling, safety testing, and certifications. Breaking them can lead to fines, legal action, or closure.

To protect your business, research soap regulations in your area, including licenses, permits, and health guidelines. Talk to a legal expert early to understand these requirements.

2. Overlooking product quality testing

Test your products thoroughly before launching. Many new soap makers rush to market without proper testing, risking customer dissatisfaction or health issues.

Run regular tests for pH levels, ingredient stability, and potential allergens to keep your products safe and effective. Consistent quality control protects your customers and builds your reputation.

3. Failing to properly price products

This can happen for two reasons:

1. Underestimating production costs: Look beyond basic ingredient costs like oils and lye. Account for packaging materials, equipment maintenance, utility bills, and your time crafting each batch. Missing these costs means setting prices that don’t cover your total expenses, leaving little room to reinvest in quality ingredients, marketing, or growth.

1. Ignoring market research: The soap market varies by niche. Whether you make luxury soaps, bath bombs, or fun, colorful kids’ soaps, understand what your audience will pay. Research competitor pricing, test different price points, and consider your product’s perceived value.

4. Inadequate branding and packaging

Don’t cut corners on branding and packaging to save money. While it might not offer immediate returns, strong branding ensures customers recognize your products everywhere—from billboards to Instagram ads.

5. Not planning for scalability

Most soap businesses start small, but growing demand means you’ll need more production space, inventory room, or better supplier relationships. Plan early for how you’ll scale operations, including equipment and staffing needs. This forward thinking lets you focus on your products, customer service, and branding without getting caught up in administrative challenges.

6. Overlooking customer engagement

Customer engagement builds relationships that turn buyers into fans. Creating community encourages repeat purchases. Here’s how to build engagement:

• Encourage and act on feedback: Ask customers for opinions through surveys, social media polls, or product reviews—and show them you’re listening by implementing their suggestions. This makes customers feel valued.
• Share behind-the-scenes content: Show the human side of your business by sharing glimpses of your soap-making process, new product development, or daily activities. This helps customers connect with your brand personally and sparks interest in your products.
• Build a loyalty program: Reward repeat customers with exclusive discounts, early access to new products, or special gifts to foster belonging and appreciation. Loyalty programs not only drive repeat purchases but create positive experiences that customers want to share.

7. Lacking an online presence

Without an online presence, your soap business might be invisible. Here’s what you could miss:

• Customer engagement opportunities: Your customers spend their free time scrolling social media. Without an online store connected to your social campaigns, you might lose them to competitors. Shopify’s social media integrations help connect your store to Instagram or Facebook, turning browsers into buyers faster.
• Credibility and brand awareness: Customers who can’t find you online might question your legitimacy. Most shoppers research before buying—if competitors appear in searches and you don’t, you’re likely losing those customers. Use Shopify’s tools and templates to create a professional online presence.
• Access to data and insights: Operating offline means guessing what customers want instead of knowing for sure. An online store provides real-time data about what’s selling, who’s buying, and how they’re finding you.

Selling your soaps online vs. offline

Deciding between online and offline sales affects your reach, costs, and customer relationships. Here’s what to consider: