How to price baked goods
To price baked goods, first work out what one item costs to make: its ingredients by weight, its packaging, a share of the oven's energy and a share of your overhead. Then add pay for your time and a profit. Most home bakers underprice because they only count the flour, butter and sugar.
The four parts of a bake's cost
- Ingredients, by weight, at what you actually paid. Include the small things: starter, egg wash, sprinkles, parchment.
- Packaging and labels: the bag, box, sticker and label for one item.
- Energy: the oven's running cost for the bake, shared across everything in it.
- Overhead: insurance, permit fees, card processing, booth fees, your website and wear on mixers and pans, spread across what you sell in a typical month.
Your time is separate. Keep it out of the cost, so you can see clearly what's left to pay you.
Worked example: one sourdough loaf
Most bakers weigh in grams, but flour is usually priced by the pound, so convert once: 1 pound is about 454 grams.
| Item | Amount | Cost |
|---|---|---|
| Bread flour | 450 g at $0.90 a pound | $0.89 |
| Whole wheat flour | 50 g at $1.10 a pound | $0.12 |
| Salt | 10 g | $0.01 |
| Starter | 100 g | $0.10 |
| Bag and label | 1 | $0.25 |
| Oven energy | share of a 45-minute bake | $0.30 |
| Overhead | share of the month's costs | $0.40 |
| Cost to make | $2.07 |
Sold at $9.00, that leaves $6.93 a loaf. Now take your time out of it. If shaping, baking and bagging a batch of eight loaves takes an hour of hands-on work and you pay yourself $20 an hour, that's $2.50 a loaf. What's left, $4.43 a loaf, is the business's profit: money for a bigger oven, a slow month or a week off.
Setting the price
There are three ways to check a price, and a good price passes all three:
- Cost plus: cost to make, plus your time, plus a profit you're happy with.
- Ingredient share: a common rule of thumb is that ingredients should be about a quarter to a third of the selling price. Here they're $1.12 of $9.00, about 12%, so there's room.
- Your local market: what bakes like yours sell for at nearby markets and bakeries. If you're well under, you're probably underpricing.
Custom cakes and decorated cookies need your time counted most carefully: design, consultations, messages and decorating add hours that never show up in the ingredients. Price decorated cookies per dozen, and include the time for icing and drying. Sales tax depends on your state, and some states tax baked goods differently from groceries, so check with your state's revenue department.
Spreadsheet or bakerykeeper?
Spreadsheets are free, and plenty of good bakeries run on them. Here's an honest comparison:
| Spreadsheet | bakerykeeper | |
|---|---|---|
| Butter goes up | Update the price in every sheet that uses it | Change it once; every recipe's cost updates |
| Sub-recipes (frosting, filling) | Possible, with careful formulas | Built in, as deep as you need |
| Scaling a batch | Copy and adjust | Pick the number of items |
| Allergens | A separate list to keep in step | From the same recipe, so they can't drift |
| Orders, bake plan, sales | More sheets, or other apps | The same recipes and products, in one place |
| On a phone in the kitchen | Fiddly | Designed for it, with big buttons for floury fingers |
| Price | Free | Not open in the US yet; join the waitlist |
How bakerykeeper prices your bakes
You log what you paid for each delivery, and your recipes by weight, with sub-recipes such as a levain or a frosting. bakerykeeper works out each bake's cost from the latest prices, adding packaging, labels, oven energy (hours × kW × your price per kWh), your labor rate and your overhead percentage. The pricing panel then suggests a price for your target margin, shows profit per item and per batch and the break-even number, and tells you in words, not just colors, whether a price is on target.
Questions about pricing
Should I include my time in the price?
Yes. If the price only covers ingredients, you're working for free. Keep your time out of the cost to make, then add it when you set the price, so you can see both.
How do I work out oven energy?
Multiply the oven's power (in kW) by the hours it's on, including preheating, and by your price per kWh from your utility bill. Divide by the number of items in the bake. An oven running at 2.5 kW for an hour and a quarter (preheating plus a 45-minute bake) at 17¢ a kWh costs about 53¢: roughly 27¢ a loaf if you bake two, and less with a full oven.
How often should I re-price?
Whenever a main ingredient changes price, and at least every few months. Butter, eggs, chocolate and nuts move most.