Candle Business Finance: How to Calculate Margin Per Order | Operations Success

Hi, we’re Katie and Eric Roering; the founders of Fontana Candle Co. In 4 years we took our hobby of making candles in our basement, and selling them at craft shows and makers markets and we turned Fontana into a nationally recognized eCommerce brand. This year we are doing 7 figures of revenue and have 12 employees. So how did we do it?
Welcome to The Candle Couple Podcast, where we will share the nitty gritty of scaling our e-commerce brand quickly. We are spilling the tea, so hopefully we can help you scale your brand quickly too.
Today we are sharing one of the most important calculations that we use almost daily in our business: how to calculate margin per order. You may not have the capacity to do it daily like we do, but it is a tool to use to understand if you are truly making money in your eCommerce business once all fulfillment costs, labor, and platform sellers fees are considered.
Because of this calculation, we know that one item orders have low margins and cost us money when we used a 3PL for fulfillment. This knowledge gives us the clarity to focus on incentivizing larger average order values (AOVs) through bundles, free shipping incentives, and up-selling accessories.
Timestamps:
1:11 Eric's background in Finance
2:00 Strategy meeting with a CPA for your tax strategy
2:40 Do your research for your own brand
3:33 Sales margin per order
4:20 Understand Excel for success
4:30 Example: negative margin bundles, gift sets, heavy items
6:50 Spreadsheet for margin calculation
11:35 One item orders hurt our business
12:13 Marketing Strategy: driving up AOV
13:15 Using free shipping incentives to increase AOV
14:10 Streamlining shipping to reduce labor costs
14:29 Sorting the data: investigating orders under 50% margin
17:00 Platform seller fees
18:37 Selling on Amazon
Resources:
How to Price Your Candles for a Profitable Candle Business: • How To Price Your Cand...
How Much Does it Cost to Start a Candle Business? • How Much Does It Cost ...
How Much Money Can you Really Make Running a Candle Business At Home? • How Much Money Can you...
Disclaimer: Everything shared in our videos is from our own personal experience, and is intended for educational and informational purposes only. Always seek legal guidance from a business attorney and certified public accountant. Everyone is responsible for their own business structure and business practices, and we will not be held accountable.
Since we love the companies we talk about so much, we may have an affiliate relationship with them. If you make a purchase through the above links, we may earn a small affiliate commission. There is no additional cost to you.

[@gaitreebalram437]

I bought one of your geranium candle and I love the scent.
Overall the candle is high quality

[@thecandlecouplepodcast]

Thank you so much for your order! We are so thrilled you are enjoying our candle!