Many home bakers guess their prices and end up working for almost nothing. Pricing starts with knowing what one batch actually costs.
1. Cost per unit for each ingredient
Divide the package price by its size to get a cost per gram, ounce or each. A 5 lb bag of flour at $4 is about $0.0018 per gram.
2. Cost the recipe
Multiply the amount used by the unit cost for every ingredient, including small ones like vanilla and baking powder.
3. Add packaging
Boxes, bags, labels, ribbon and stickers.
4. Pay yourself
Multiply your hours (baking, decorating, cleanup, shopping) by an hourly rate.
5. Add overhead
Electricity, wear on equipment, fees and supplies. A simple percentage works.
6. Divide by yield and add profit
Total cost divided by the number of items gives cost per item. Then add your target margin and compare to local prices.
Checklist
- ☐ Unit cost for every ingredient
- ☐ Recipe cost per batch
- ☐ Packaging cost
- ☐ Your time x hourly rate
- ☐ Overhead %
- ☐ Cost per item
- ☐ Price with target profit
- ☐ Check no price is below cost
- ☐ Update when ingredient prices change
Check your local cottage food rules and set aside money for taxes with the free side hustle tax calculator.