Is Private Labeling Profitable?

Is Private Labeling Profitable?

You might be wondering if private labeling is profitable. To answer the question —  yes, private labeling is highly profitable if you’re selling the right products and if you’ve secured the right wholesale partner. Selling products with significant margins to an exclusive audience can translate directly into considerable profits. 

But why is it profitable, and how do high margins translate into more zeroes into your business’ bottom line? 

Fortunately, we can help. Aloe Laboratories has been working with small businesses for three decades, providing private label products tailored to their needs, delivering custom formulations for food, drinks, and cosmetics that help build brands. 

What Is Private Labeling?

Private labeling is the method of selling products manufactured or formulated by a supplier that are specifically labeled and marketed under your brand. It helps put good products into the hands of your customers, letting your brand handle the marketing, and skilled suppliers ensure the best priced and best formulated products are being developed for it.

You, as a brand, would work with a private-label manufacturer to sell products without ever referencing the manufacturer. With private labeling, you’re buying the rights to sell a product under your name, often with the creative control to make changes as you see fit.

Many brands may decide to sell their own products to be used as private-label ingredients. Even without their brand getting any recognition, they’re garnering considerable sales — both the brand buying the product and the brand manufacturing the product experience a mutually beneficial situation. 

When To Private Label 

Private labeling is a great way to get started selling your products. If you have an already established brand identity, no matter how small, you’re going to be able to reach customers more directly. 

You may worry that you’ll just be selling the same thing that everybody else is, but that is far from the truth. Some private labeling manufacturers may work with you on small batches that let you test your own ideas and formula tweaks at a low cost to you as the eventual buyer. At Aloe Laboratories, we make sure that you are satisfied with the products you will be selling, and we work with you to ensure the formulation meets your standards.

4 Reasons to Private Label Your Product

Private labeling is one of the best ways to increase your brand loyalty and create a more consistent overall brand. 

1. Profit Margins

The primary reason to private label your goods is that you have an extremely high margin of cost-to-profit. Reselling something brings about significantly less profit than selling something that has been privately labeled, and it allows you to buy into an existing infrastructure and have input on how your product comes out without struggling to secure manufacturing elsewhere or purchase expensive equipment yourself. 

This is for multiple reasons. One, buying the rights to relabel an existing product is cheaper than sourcing ingredients and making a comparable product yourself. Second, the ingredients and development process behind the product you’re putting your name on is quality. In that case, you’re more likely to be saving even more money on the production side of things and turn more cash directly into profit. 

It might seem that buying things wholesale may be a similarly great option, but buying recognized brands at wholesale prices requires you to sell those recognized brands at a higher cost to make any significant profit. On the other hand, you can sell your private label at a lower price while taking in all of the profit for yourself, and often, it’s the exact same thing as what’s in the recognized brand. Both are good options, and both present benefits. It’s just about deciding what works best for the size and capabilities of your business.

2. You Stand To Sell More

It might seem entirely impossible for your independent brand to sell better than recognized brands, but it’s true. Consumers often prefer private label options from local stores because they feel like they’re supporting small business and getting a more pure, natural product. 

Indeed, you’re likely to multiply  your current sales by offering your own private label option of the exact same recognized brands you already sell. 

3. Limit Your Risk 

Developing your own products comes with inherent risk. How do you know the combination of different ingredients will work out right? How do you know it won’t end up a colossal failure? 

The benefit of private labeling is that another business has already done the work of creating a perfect end product. As a result, you don’t need to worry about the initial investment in producing, testing, and packaging a product, and you have the option to iterate on that product to tailor it to your needs

4. You’ll Serve Your Customers Better

You’re the expert when it comes to your consumers. You know what their needs are and what things they want out of you as your business owner. The previously mentioned customization can mean you create a product that will attract new customers and convince repeat customers to continue buying. 

A product with your unique branding also helps to position you as an expert in the field and helps your customers feel more confident in your brand. You are offering a high-quality product designed specifically for the individual needs of your customers. That care you put into your customer needs will translate directly into a thriving business. 

As you can see, private labeling can be quite profitable. You’ll see higher profit margins, stand to sell more products, limit your risk, and serve your customers better. 

Let Aloe Labs Help You with Your Natural Private-Labeling Needs

The best way to ensure that you’re getting the highest quality aloe gel possible is to choose a company with complete control over the manufacturing process, from growing to harvesting and processing. 

At Aloe Laboratories, we maintain our own aloe vera farm and production site, allowing us to craft the most satisfactory products possible while keeping bulk and wholesale prices low. We pride ourselves on producing aloe vera gel, juice, and powder specific to each customer’s needs.

If you’d like to learn more about how aloe vera gel can enhance your products, or if you have some ideas of your own, reach out to us to learn more about how we can help you make your product a reality.