Institute of

Personal Care Science

PO Box 995, Coolum Beach, QLD Australia 4573
Ph: (07) 5345 5038 Fax: (07) 5471 6177
www.personalcarescience.com.au

What is your Intellectual Property (Formula) Worth?

Companies can get very ‘precious’ about their formulations – especially when you consider the 1000’s of
ingredients a formulator has to choose from! So what is your Intellectual Property (Formula) worth? The true
worth of a formula is measured on 5 key criteria:
 If you actually own it and have full formulation details (compared to those who ‘think’ they own their
formula but actually don’t have exact % and method details)
 If it has proven stability either through history of manufacture or proper stability testing
 How unique it is in terms of performance and aesthetics
 Its turnover in the market
 Its stage in the product lifecycle

Most companies totally over value what they think their formula is worth, but yet aren’t prepared to invest in
good quality R&D to make sure it really is worth it. Think you don’t fall into that category? You may be
surprised… read on to find out how much your formula is REALLY worth!

Scenario 1: The Most Valued – you own your formulas and have full stability testing,
claims support and safety evaluations
When you have full formulation % details, method information and supplier references, your formula has the
greatest worth. Add in full claims support documentation, stability testing results and safety evaluations, and
you have a very valued formulation indeed. Your formula would also have extra value if the concept is unique,
it has good turnover in the marketplace and is still in the growth stage of its lifecycle. A formula with all of this
behind it could be easily worth $10,000AUD in the current marketplace.

Scenario 2: Still Considerable Value – you own your formulas but haven’t had them
stability tested or other documentation
If you have full formulation % details, method information and supplier contacts, your formula still has
considerable worth. This can however be impacted by the apparent stability of the product (for example,
without stability data, should stability data be conducted and the product fail, it would become worthless) and
its performance in the marketplace. As an example, a formula with full %, method and supplier details but no
stability, claims or safety data could be valued at $2,000 – 3,500AUD depending on its performance in the
marketplace – but worthless if it was to fail stability if tested.

Currently have full formulation details but want to increase this value or be sure you won’t have a worthless
formula? Then get stability testing conducted and get the claims support and safety evaluation data in place.
You could invest a further $350 - 1,000 as a once-off learning/assessment fee to learn how to conduct stability,
prepare claims support documentation and/or prepare safety evaluation data for multiple formulations; or
invest $1,500 – 2,500 per formula in getting someone (like IPCS) do these items for you - but refer to Scenario
1 – you’ll see this relatively small investment adds significant value when you have it!!!

1
 Institute of
Personal Care Science
PO Box 995, Coolum Beach, QLD Australia 4573
Ph: (07) 5345 5038 Fax: (07) 5471 6177
www.personalcarescience.com.au

Scenario 3: Very Little Value – your product has been developed for you by a Contract
Manufacturer (but you don’t have the actual formula)
Under this scenario, you don’t have the true formulation % details or any of the other information that means
you truly ‘own’ your formula. You may think you ‘own’ your formula, but if you don’t have the % input details
then you don’t. In this case, your formula only carries value to your brand. Even if your sales in the
marketplace were stellar, your Brand may carry value but your actual Formulation does not. For example, if
you ever want to sell your products/Brand or change manufacturers, then you will often find your existing
manufacturer wants to charge $10,000AUD++ for your formulation details alone (with none of the stability,
claims or safety evaluations information).

What are you to do then? One possible option is to get ‘Reverse Engineering’ conducted, where a Contract
Chemist creates a formulation for you based on samples of your current product and its ingredient list – but
Reverse Engineering takes much longer than normal product development, and could easily cost $3,500 –
5,000AUD per product for the formulation details alone. While it seems a much cheaper option to have a
Contract Manufacturer develop your products for you initially, it could end up costing you much more in the
long run than if you had a Contract Chemist create it for you at the start – or better still, learn to formulate
yourself! Both of these are cheaper options in the long run with more control over the process than having
them created for you where you don’t actually own the Intellectual Property.

Scenario 4: The Least Valued -you get product Private Label Manufactured
Under this scenario, your formulation is all but worthless to your brand. Multiple other brands may (and
probably do) have exactly the same formula as you – it just wears a different label. Even if your product has a
few ‘unique’ ingredients added in small amounts, it is unlikely to be unique. If you try to sell your Brand at a
later date, your Formulation would have no value at all, as it needs to be always made by the same Private
Label Manufacturer regardless of who owns your Brand and the Manufacturer will never even offer to sell a
Private Label formula. Therefore, someone doesn’t need to pay for your ‘Formulas’ as you don’t even own
them; the only value in your Brand would be based on the name the Brand has established for itself and its
turnover.

Are you currently getting product Private Label Manufactured and want to get value into your Formulas? Then
you will need to invest in Reverse Engineering, which is the most expensive way of having a formulation
recreated and it isn’t going to buy you ‘unique’. It would be a better investment to change your formulation a
little, build in stronger points of difference and have a new (albeit slightly different) formulation developed by
a Contract Chemist or learn to formulate yourself. Either of these options is going to instantly give you
something unique, with better value, than where you sit right now.

WANT TO KNOW HOW TO GET IT RIGHT?

Want to improve your skills and knowledge as a:
 Cosmetic Formulator,
 Brand Manager, or
 Regulatory Affairs Associate?

2
 Institute of
Personal Care Science
PO Box 995, Coolum Beach, QLD Australia 4573
Ph: (07) 5345 5038 Fax: (07) 5471 6177
www.personalcarescience.com.au

Study with the Institute of Personal Care Science – we have a range of Formulating, Brand Management and
Regulatory Diplomas, Certificates, short courses and workshops that can see you comprehensively trained
and/or rapidly up-skilled in key areas, all from the convenience of a time and place that suits you with:
 All distance (on-line) study
 1-on-1 tutorial support via skype or phone with our trainers
 Flexible study options – study full time, part time or very part time – from as little as 5-6 hours
per week!
 Instalment payment options – monthly instalments to help make study affordable

ALL STUDY IS ON-LINE VIA DISTANCE EDUCATION – study at a time and place that suits you,
anywhere in the world!

With 1-on-1 tutorial support throughout the study period if required and flexible study and payment options,
there has never been a better time to upgrade your skills and knowledge!

Take a look at our YouTube videos on various courses to see what you get when studying with IPCS:

Formulation courses:
 Diploma of Personal Care Formulation: https://www.youtube.com/watch?v=2BdfD56OCnY
 Certificate in Advanced Cosmetic Science: https://www.youtube.com/watch?v=9boS8XsoICw
 Certificate in Beginners Cosmetic Science: https://www.youtube.com/watch?v=Ir9b9f_sZ4Q
 Certificate in Organic Formulations: https://www.youtube.com/watch?v=svSWz2g1-n4
 Certificate in Colour Cosmetics Formulation: https://www.youtube.com/watch?v=fvFpJ8PQLtk

Brand Management courses:

 Diploma of Personal Care Development & Promotion: https://www.youtube.com/watch?v=0Zc6Fa-
dZnY
 Certificate in Cosmetic Brand Management: https://www.youtube.com/watch?v=t6nLkQhDXmY

Regulatory compliance courses:

 Diploma of Regulatory Compliance: https://www.youtube.com/watch?v=UetXx_jHsfg
 Certificate in Cosmetic Regulatory Essentials: http://personalcarescience.com.au/certificate-cosmetic-
regulatory-essentials/
 Certificate in Comp Med Regulatory Essentials: http://personalcarescience.com.au/certificate-comp-
med-regulatory-essentials/
 Certificate in EU compliance: http://personalcarescience.com.au/certificate-eu-compliance/

Contact us for more information to get the learning and answers you are searching
for no matter where you are located in the world!
info@personalcarescience.com.au
or visit www.personalcarescience.com.au