Find solution
Starting baking business.

My partner is starting a baking business. How does she price her goods? She has a spreadsheet with all her costs and a friend in the business said to add at least 35%. She is baking for a cafe who will then sell. Does she add RRP for the cafe?

  • Homebaking business in London

  • Answer:

    That doesn't sound like nearly enough, unless her new business is named Costco.  I'm not in the baking business, but would think keystone (costs x 2) would be a minimum.  That's 200% percent, not 35%.  Here is a thread of from people in the business. http://forums.egullet.org/index.php?%2Ftopic%2F97886-wholesale-baked-goods-pricing%2F However, practically speaking, it would look very odd simply applying a fixed percentage to each product. Doughnut: $1.37 Apple Fritter: $1.51 Croissant: $1.92 Another approach is to see what the market will bear.  Tell her to pay a stealthy visit to her competitors and observe what their pricing is.  Flour is flour,  eggs are eggs, sugar is sugar.  They can't be too far off from what she is making.  Staying competitive within the marketplace is going to be crucial.  If she is selling truffle filled doughnuts for $27.95 because of expensive ingredients, I think she will soon go under.  Pricing it too low, and she'll be depending on volume which may or may not be there.  If the latter, the slim profits will not be sufficient to cover overhead and she'll soon go under. Finding a middle ground which blends market conditions along with cost is the best advice, I think, rather than a mathematical formula.

Garrick Saito at Quora Visit the source

Was this solution helpful to you?

Other answers

She needs to do a pricing sheet like chefs and patissierse do - that means the unit cost breakdown of the item ie, flour amount, butter amount, sugar, eggs - and that includes time.  After that, she has to factor in her cost for every item......and decide what volumes are going to be sold - as well as factor in the care profit - and likely wastage. The quality of the ingredients - as well as the labour intensity will all factor in. That is why a lemon curd tart with grated lemon rind tastes so good - and costs so much more.

Karen Teoh

Perhaps I am missing something. But it seems that your friend has one customer -- a café. Your friend has a spreadsheet that details all of her costs. She wants to figure out how much to add for her labour. IF, in fact, it is this simple, then all she needs to do is to figure out how much she wants to earn after taxes. So, let's say, her total expenses are $100,000 per month -- ingredients, transportation, insurance, electricity, rent, phone, etc. And let's say that she wants to earn $10,000 per month. Assuming that her tax rate is 50%, she would need to earn $20,000 to get $10,000, after taxes. So, she can sell her entire production to the café, each month, for $120,000. Let the customer figure out how much to charge per product.

Nandan Choksi

Related Q & A:

Just Added Q & A:

Find solution

For every problem there is a solution! Proved by Solucija.

  • Got an issue and looking for advice?

  • Ask Solucija to search every corner of the Web for help.

  • Get workable solutions and helpful tips in a moment.

Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.