Should I Calculate Candle Profit Based Only on Materials or Include Labour, Electricity, Packaging, Payment Fees and Shipping Supplies?

Four profits, one month

Here is a month that looks like many small candle businesses. The maker sells 150 candles at ₹799 across 100 orders, so an average order holds 1.5 candles. Customers pay courier separately, so courier is a pass-through and stays off this page. A helper is paid a piece rate for wicking and packing. The owner works about 120 hours a month on production, admin, photography and marketing. CSI prices cover the materials; everything else is an example figure you replace with your own.

The material margin says this candle keeps 63.8% of its price. That is the figure most makers quote, and it is true. It is also the figure most likely to lead a business into trouble, because 52.4% of sales still has to pay for things that are not materials. By the last line, the month leaves ₹13,615.54, or ₹90.77 a candle. That is the money that can grow the business, repay a loan or sit as a cushion.

Material margin is still worth tracking, because it moves when your recipe moves. If Dark Vanilla Oud were swapped for Vanilla Bean at ₹7.90 a gram, oil per candle would rise from ₹94.40 to ₹126.40, and material margin would fall by about ₹4,992.00 a month. The fragrance-load profit post and the dosage comparison post show how to test that kind of change before you make it.

Which cost goes on which line

The question in the title — materials only, or labour, electricity, packaging, payment fees and shipping supplies too — has a precise answer. Every cost belongs somewhere. The test is simple: does it rise with each candle, with each order, with each month, or with your own hours?

Electricity is the one people argue about. A melter uses more power in a bigger month, so strictly some of it is variable. For a home workshop the amount per candle is small and hard to measure, so most makers treat it as a monthly cost. Either is fine, as long as you choose once and stay consistent. Wattage and melt time are not published for CSI's melters, so if you want a per-batch figure, read your meter before and after a batch.

Your own pay

Many makers treat whatever is left at the end of the month as their pay. That works until you want to hire, take a break or compare the business with a job. Put a figure on your hours instead. The example uses 120 hours at ₹150.00 an hour, ₹18,000.00 a month; pick a rate you would accept, or what you would pay someone to do the same work. Then there are two honest answers to "did I make money?": operating profit (₹31,615.54), which is what the business made before paying you, and profit after your pay (₹13,615.54), which is what it made beyond a fair wage.

Paid help is different. The helper's ₹20.00 a candle is a cost that exists only because a candle was made, so it sits above contribution with the packaging. If you later hire someone on a monthly salary, that salary moves down to the fixed-cost line, and your piece-rate line disappears. The structure of the ladder stays the same.

Why fixed costs stay out of the unit price

It is tempting to divide the month's fixed costs by candles sold and add that to the unit cost. The trouble is that the answer changes every month. At 150 candles, fixed costs are ₹179.00 a candle. At 60 they are ₹447.50. Price on that basis and you raise prices in a slow month, which is exactly when you can least afford to. Keep fixed costs as a monthly total, and ask how many candles' contribution it takes to cover them.

Contribution per candle is steady at about ₹389.77, so the whole business turns on volume. Fixed costs of ₹26,849.96 need about 69 candles' contribution. Fixed costs plus the owner's example wage need about 115. Below that, the business is paying its bills but not you. These break-even figures are the most useful numbers on the page, because they turn a pricing question into a sales target. The scaling post shows how these lines change at 1,000 candles a month.

Setting up the monthly view

Do this once from your sales records and it takes an hour. After that it takes ten minutes a month. The ladder does not need accounting software: a sheet with the eleven rows in the first table is enough. Your accountant will want a formal profit and loss account for tax, which may treat some items differently; this view is for running the business.

The materials line, priced

The first rung is the one CSI prices. The worked candle's materials come to ₹281.32: ₹94.40 of oil, ₹110.22 of wax, a ₹5.90 wick and a ₹70.80 jar. The 4% allowance adds ₹8.18. Here are the oil and wax with every pack size.

For the costs themselves, the forgotten-costs post is the checklist and the packaging post works out packaging per order. To see how contribution changes across a range, read the gift-set margin post and the target-pricing post.

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