7 Tips to Start a Perfume Business [Step-by-step Guide]

How to start a perfume business in the UK is a question many ask, but few are prepared to face the reality behind the glossy image of the fragrance industry. This is not a playground for hobbyists mixing oils in their kitchen. It’s a cutthroat market where established brands spend millions to keep newcomers out, and customers have been conditioned to believe that only big names define quality.

Yet, the tide is shifting. Consumers are growing tired of overpriced, mass-produced scents and are hunting for fragrances with character, especially niche and Arabian perfumes that tell a story.

If you’re serious about breaking into this fiercely competitive space, read on: you’ll learn what it really takes to build a fragrance brand that people can’t stop talking about.

1. Understanding the perfume market in the UK

The UK perfume sector is worth billions, with steady growth fueled by consumer interest in luxury and artisanal scents. This means new businesses have opportunities, especially if they offer something distinctive.

Recent years have seen a surge in demand for Arabian perfumes, such as oud, musk, and amber blends. These scents have gained popularity due to their depth, longevity, and cultural allure.

Alongside this, consumers are looking for eco-friendly, alcohol-free, and cruelty-free products. Meeting these preferences can help you stand out.

💡 Example: Brands like Jo Malone built a loyal following by focusing on bespoke, layered fragrances, while smaller brands like Sunnamusk capitalised on the rising demand for Arabian blends in UK cities. Both show how a clear market position drives growth.

🔸Key points to research:

• Who your target customers are (age, gender, lifestyle)
• Current trends (niche perfumes, natural ingredients, refillable packaging)
• Competitor pricing and marketing strategies
• Gaps in the market where your product can shine

Knowing this information helps you design products that resonate with your audience and gives you an edge over established brands.

2. Legal requirements and company setup

Setting up your perfume business correctly from day one avoids headaches later.

In the UK, you can trade as a sole trader, a limited company, or a partnership. Each has different tax obligations and levels of personal liability. Many fragrance entrepreneurs begin as sole traders for simplicity, then switch to a limited company as they expand.

Here’s what you need to do legally:

1. Register your business

• Sole traders must register with HMRC if earning over £1,000 per tax year.
• Limited companies must register with Companies House (the online fee is currently £50 or free if you register through ANNA) and receive a Unique Taxpayer Reference (UTR).
• Register for VAT if turnover exceeds the £90,000 threshold.
• If you plan to hire staff, set up PAYE for payroll compliance.

2. Meet cosmetic product regulations

Perfumes applied to the body are classified as cosmetics under UK law. You must:

• Have each product undergo a Cosmetic Product Safety Report (CPSR) by a qualified assessor.
• Follow Good Manufacturing Practices (GMP) to ensure safe production.
• Notify each fragrance on the UK Cosmetic Product Notification Portal (CPNP) before selling.
• Keep technical documentation on ingredients, formulations, and safety assessments.

3. Label products correctly

• List all ingredients using INCI names.
• Include allergen warnings and batch codes.
• Add business contact details and usage instructions on every label.

💡 Remember: Work with a cosmetic compliance consultant early. They can streamline safety assessments, ensure your labels meet legal standards, and prevent costly recalls.

4. Get insured

• Product liability insurance protects you if a customer reacts to your perfume.
• Public liability insurance covers accidents at your premises.
• If employing staff, employer’s liability insurance is mandatory.

3. Calculating the costs

Starting a perfume business in the UK can be done on a budget if you’re making small batches at home, but scaling into a professional operation requires a clear understanding of expenses. Costs vary based on whether you’re launching an artisan brand online, opening a boutique, or private-labeling products.

Typical startup costs

• Product development and testing – Safety assessments (CPSRs) cost around £150 – £500 per formula. High-quality ingredients like natural oud or ambergris can significantly increase your costs.
• Packaging and branding – Expect £1,000 – £5,000 for custom bottles, boxes, and design work that elevates your brand.
• Legal and regulatory fees – Company registration (£50 online), cosmetic portal notifications, and legal consultations can total £500 – £2,000.
• Marketing and website – A professional e-commerce site, photography, and initial ad spend may cost £1,000 – £3,000.
• Premises and equipment (if not home-based) – Renting a small studio or retail unit ranges from £800 – £3,000 per month. Basic lab equipment like scales, mixers, and bottling tools may add £2,000–£6,000.

Ongoing monthly costs

• Ingredient and packaging restock: £400 – £1,200 depending on order volume.
• Marketing spend: £100 – £500 for ads, influencer partnerships, and sampling.
• Insurance: £50–£150 per month depending on coverage.
• Website hosting, ecommerce tools, and accounting software: £30 – £100.
• Rent and utilities (if in commercial space): £800 – £3,000.

👉 Tip: Use inventory management tools like Ankorstore or Shopify’s Stocky app to prevent over-ordering and track expiration dates.

Also, cover all your taxes with ANNA +Taxes for just £3/month for the first 3 months, then £24 +VAT/month, with tools to automate VAT, PAYE, and Corporation Tax.

Enjoy features like direct HMRC filing, expense sorting, invoicing, payroll, and 24/7 expert support to keep your finances on track.

4. Choosing your products and suppliers

Your perfume line is the heart of your business. The products you choose to launch with and the suppliers you rely on will directly shape your brand reputation, customer experience, and profit margins.

How to decide on your first perfume product line

When you’re starting out, avoid the temptation to release a dozen different scents at once. Instead, focus on 3 – 5 signature fragrances that capture your brand identity.

• For niche markets: Consider Arabian-inspired scents like oud, musk, or amber, which are experiencing a surge in demand in the UK.
• For mainstream appeal: Floral, citrus, and woody notes remain bestsellers across all demographics.
• For exclusivity: Limited-edition seasonal fragrances can create buzz and urgency.
  
  

💡 Example: You can launch your perfume business with only three products — a fresh citrus daytime scent, a sensual oud evening fragrance, and a unisex woody blend. These clear, distinct options can make it easier for customers to choose and for you to manage stock.

How to select reliable suppliers for your perfume business

Finding trustworthy suppliers is non-negotiable in the perfume business. They must provide high-quality ingredients, safe packaging, and documentation for compliance.

What to check:

• Certificates proving ingredients are IFRA-compliant and safe for cosmetic use.
• Minimum order quantities (MOQs) — When just starting out, look for suppliers offering lower MOQs to keep costs manageable.
• Reputation — Choose suppliers with positive reviews or referrals from industry forums.
• Location — UK or EU suppliers simplify logistics, but global sources may offer rare oils.

How to avoid counterfeit products

Perfume oils and branded stock can be targets for fraud. To avoid being caught out:

• Work only with verified distributors.
• Check batch numbers against manufacturer records.
• Keep a record of every purchase order for traceability.

5. Branding and marketing your perfume business

In the perfumery business, you must create a story that customers want to be part of. From the bottle to the words on your website, every detail should make people feel something.

How to craft your brand identity

Start with what makes your brand different. Are you all about Arabian luxury, eco-conscious blends, or affordable everyday elegance?

• Logo and packaging: Keep them cohesive and premium-looking. Minimalist glass bottles with magnetic caps signal luxury, while colorful designs may appeal to a younger audience.
• Brand name: Short, memorable names work best. Consider French or Arabic-inspired terms if they suit your story, but avoid anything too generic or hard to pronounce.
• Tagline: Capture your essence in a line. For example, “Scents that tell your story” or “Modern Arabian elegance.”

How to build an online presence

Your website and social media are your virtual storefront. Even if you plan to sell in stores, most customers will research you online first.

• Website essentials: High-quality product photos, clear descriptions (with scent notes), and easy checkout.
• Social media: Instagram, TikTok, and Pinterest are ideal for perfume marketing. Use short videos to show how perfumes are made or styled.
• Content marketing: Share tips on choosing scents, layering fragrances, or behind-the-scenes from your lab to engage followers.

📌Offer a “Find Your Scent” quiz on your website to help customers pick a fragrance. It boosts engagement and conversions.

Marketing strategies that work

• Samples and discovery sets: Let customers try mini versions at a lower cost, which often leads to full-size purchases.
• Collaborations: Partner with influencers who align with your brand identity. Micro-influencers (with 5k–50k followers) often generate better engagement than big names.
• Storytelling campaigns: Showcase the origin of your ingredients or the cultural inspiration behind your scents.
• Events and pop-ups: Let people experience your perfumes in person. Scent is emotional, smelling it is believing it.

✅ Actionable tip: Set aside at least 10–15% of your budget for marketing in your first year. Track which campaigns bring in sales, not just likes.

Do you remember this perfume ad, where Adam Driver transformed into a horse, then a centaur for Burberry Hero? Remarkable.

6. Taxes, tools, and staying compliant

Once your business is registered, you must keep track of your tax obligations:

• Income tax or Corporation Tax – Sole traders report profits via Self Assessment, while limited companies pay Corporation Tax on profits.
• VAT registration – Mandatory when your turnover exceeds £90,000 in 12 months, but you can also register voluntarily to reclaim VAT on purchases.
• PAYE – Required if you hire employees, covering income tax and National Insurance contributions.

💡 Example: If you sell perfume gift sets and your revenue hits £95,000 in the year, you must register for VAT, charge it on sales, and submit quarterly VAT returns.

Essential tools to simplify finances

Manual spreadsheets won’t cut it as you grow. Use tools that make compliance effortless:

• Accounting software (e.g., ANNA +Taxes, Xero, QuickBooks) – Automates bookkeeping, generates reports, and integrates with your business account.
• Inventory management tools – Keep track of stock levels and expiry dates to avoid waste.
• POS systems with tax features – If you run a physical store, choose one that syncs sales with accounting records.

✅ Separate your personal and business finances from day one. Open a dedicated business account to track expenses, automate tax savings, and avoid mixing transactions.

How ANNA +Taxes can help

Perfume creators often focus on blending oils, not balancing books.

ANNA +Taxes is built for small businesses like yours, making financial management stress-free:

• Tracks income and expenses automatically through your ANNA account
• Scans and matches receipts in seconds using your phone
• Reminds you of tax deadlines with a built-in calendar
• Files VAT and Corporation Tax accurately and on time
• Reserves your tax money in separate Pots so you never overspend
• Answers your tax questions through an AI assistant

At just £3/month for the first three months, it’s a small investment that keeps your finances organised while you focus on growing your fragrance brand.

7. Common mistakes to avoid when learning how to start a perfume business

Launching a perfume business is exciting, but many new entrepreneurs stumble over the same avoidable mistakes. Getting a few things right from the start can make your journey much smoother.

Practical tips for success

• Test your formulas thoroughly – Before selling, make sure every scent goes through safety assessments and stability tests. This ensures your perfumes meet UK cosmetics regulations and builds customer trust.
• Invest in branding early – The fragrance market is crowded. A strong name, cohesive packaging, and a clear brand story will set you apart from generic sellers.
• Use sampling strategically – Offer sample vials or discovery sets. They are cost-effective and encourage customers to commit to larger purchases.
• Stay visible online – Build an online store and use social media to tell your brand story. Instagram and TikTok are great for showcasing your products visually and engaging with customers.

Mistakes to avoid

🔴 Skipping compliance checks – Selling products without proper safety reports or failing to list allergens correctly can lead to fines or forced recalls.

🔴 Underpricing your perfumes – Don’t just cover the cost of oils and bottles. Factor in your time, branding, marketing, and profit margin to stay sustainable.

🔴 Neglecting bookkeeping – Trying to fix your accounts at the end of the year is stressful. Use accounting tools from day one.

🔴 Ignoring customer feedback – Early buyers can offer valuable insights. Use their feedback to improve formulas, packaging, or marketing.

How to start a perfume business with ANNA’s help

Starting a perfume business in the UK is a blend of creativity and careful planning. You’ll need to master fragrance formulation, branding, marketing, and compliance to stand out.

But, with demand for niche and high-quality perfumes growing, there’s never been a better time to launch.

Set up your business structure, invest in safety and branding, and use smart tools to stay on top of taxes and compliance. Do this, and you’ll be free to focus on what you do best: crafting unique scents that customers can’t resist.

💫 Ready to turn your perfume idea into a thriving business?

Register your company, stay compliant, and use ANNA to keep the back office under control while you grow your brand.