The choice between custom and stock formulation of your skincare product depends on your business model. How much capital do you have and what is your ideal time to market? Stock formulations require less capital, while custom formulations will require capital, time and patience. A lot of testing needs to be done if you are creating your own formula. Below are the advantages and challenges you will face with these two options and how to decide which one is right for your business.

What is a Stock Formulation?

Want to start your own skincare brand but don’t have a degree in chemistry? No problem. To put it simply, a stock formulation is someone else’s product that you sell with your brand and logo on it. Stock formulations are usually a formula or your choice from a variety of formulas that are created by a manufacturer for private label purposes.

The manufacturers apply their research and development teams to create a product that is safe to use and follow the trends in the current market. These formulations are usually patented by the manufacturer. The FDA requires that each skincare product be verified for its safety before it hits the shelves. With stock formulation, you don’t have the stress of getting your product verified.

When should I choose stock formulation?

If you plan to start your business with stock formulations, you don’t need as much capital as you would with custom formulations. Rather than testing and researching ingredients for your product, the manufacturer will use their chemists and factories to produce a skincare product that is verified by the FDA. A good manufacturer will also assist with the design of your private label brand. This way you can focus on selling rather than testing for months before you find a product that you want to bring to market, especially if you are on a tight budget and timeline.

One of the challenges is that there might already be private label sellers using the same formula as you. Remember that branding is the way to differentiate your product if you choose stock formulation. The key is to spend your time building a strong brand around your product to gain interest and brand loyalty. You will have more dollars to spend on marketing and the profit margin over a short period of time will be higher than with a custom formulation.

What is a Custom Formulation?

If you’ve educated yourself in the world of skincare formulas, done the research and know what ingredients you want in your product, custom formulation is the way to go. You already know what niche you want to target, and which customers would choose your brand over a stock formula. These are most likely people who would pay more for a quality, original product over an off-the-shelf brand.

Take into account that you will need to test the formula multiple times to ensure the safety and efficacy of your product. This will require capital and time. The timeframe for your go-to-market strategy might be longer, but what sets you apart is your exclusive product. The branding will be focused on the unique formula of your product and will speak for itself.  

Developing and testing your product from scratch can take anything from a month to a year. Don’t try and rush the sample evaluation process. There might be several iterations of your product before you decide on the final formula.

It is not only you that should fall in love with your product, but also your customers. Be sure to do market testing if you are going to use a customized formula. Use the feedback from these future customers to make any additional changes to your formula. After all, you’ve done the research to identify your niche and you know how to engage your target audience.   

Conclusion

Choosing the correct formulation option directly impacts the success or failure of your business. Outline what your strengths and weaknesses are when you develop your business model. Do you have capital? What is your timeline? What are your options for branding? Do you have the resources for a strong marketing campaign? Answering these questions should point you in the right direction.

Keep in mind that you don’t need to be stuck in your decision. If you aim to have a unique and customized product but don’t have the resources, you can still reach your goal. Consider starting with a stock formulation first to create a unique brand, then expand that brand with customized products later. Many manufacturers will make small customizations to their stock formulations for you. We call this semi-custom manufacturing. After that, you can choose to launch an entirely customized formula.