Introduction:
Having a home bakery is cool and all, but it’s even cooler if your sweet treats are turning a profit. Today, we will take a deep dive into pricing your baked goods, starting with ingredient costs and breaking those costs down per cookie. Then, we will look at adding your base pay rate and cost of packaging per cookie. So, to take a page from what I have learned so far, we will look at what it takes to bake 28 of my Bakery Style Chocolate Chip Cookies.
Ingredient Costs: Bakery Style Chocolate Chip Cookies
Below, I have made a table of how I determine the cost of ingredients per batch of cookies. This is rudimentary because I am still revamping my Google Sheets baking tracker spreadsheet, which helps me fully account for all the costs in my bakery. But this is the basis for this part of my spreadsheet.
If you want to skip the table, total cost is $7.70 for the ingredients used
- Column A: List each ingredient.
- Column B: Record the cost of the item after adding sales tax.
- Column C: Enter the total quantity of the ingredient purchased (in grams, teaspoons/tablespoons, or quantity).
- Column D: Enter the amount of the ingredient used in your recipe.
- Column E: Calculate the cost per recipe by dividing the total cost by the proportion of the ingredient used.
- Column F: Round the calculated cost to the nearest cent and total the costs at the bottom of the column.
Please Click Arrow Below To See Table
**This table is best seen on a computer**
| Ingredient Name | Ingredient Cost at Store After Taxes | Weight of Purchased Item or Volume or Qty | Ingredient Use in Recipe | Ingredient Cost in Recipe | Recipe Rounded Cost per batch |
|---|---|---|---|---|---|
| A | B | C | D | E | F |
| Flour | 1.07*$6.72 = $7.19 | 12 pounds or 5,443.11 grams | 3 cups or 360 grams | $7.19/(360g/5443.11g) = $0.475 | $0.48 |
| Sugar | 1.07*$7.28 = $7.79 | 10 pounds or 4,535.92 grams | ½ cup or 100 grams | $7.28/(100g/4535.92g) = $0.1717 | $0.17 |
| Molasses | 1.07*$3.48 = $3.72 | 12 fl oz or 24 tablespoons | 1 ¼ tablespoons | $3.72/(1.25/24) = $0.194 | $0.19 |
| Brown Sugar(Molasses + Sugar)(Combine the cost of sugar with molasses on the previous line) | 1.07*$7.28 = $7.79 | 10 pounds or 4,535.92 grams | 1 ¼ cup or 250 grams | $7.28/(250g/4535.92g) = $0.4012 | $0.40 |
| Baking Soda | 1.07*$0.87 = $0.93 | 8 ounces or 226 grams | 1 teaspoon or 7 grams | $0.93/(7g/226g) = $0.0288 | $0.03 |
| Salt | $1.07*$0.79 = $0.85 | 26 oz or 737 grams | 1 teaspoon or 8 grams | $0.85*(8g/737g) = $0.0092 | $0.01 |
| Eggs | $2.00 | 2 eggs | 2/12 eggs | $2*(2/12) = $0.3333 | $0.33 |
| Chocolate Chips | $1.07*$13.98 = $14.96 | 72 oz or 2,041.17 grams(1 tablespoon = 14 grams) | 2 cups or 32.46 tablespoons(32.46*14) = 454.46 grams | $14.96*(454.46/2041.17) = $3.3307 | $3.33 |
| Vanilla Extract | $1.07*$23.99 = $25.67 | 16 fl oz or 96 teaspoons | 2 teaspoons | $25.67*(2/96) = $0.53479 | $0.54 |
| Butter | $1.07*$8.29 = $8.87 | 32 oz | 8 oz | $8.87*(8/32) = $2.2175 | $2.22 |
| TOTAL | $7.70 |
Hourly Rate and Your Dough
So now we know that the total ingredient cost is $7.70. But this amount is for the entire batch of cookie dough, not just for each cookie. But before we can get to the per-cookie cost, we need to address your pay rate!
For me, I’m a slow baker. I like to take my time. But at the bare minimum, I want to make at least $15/hr. I think this is reasonable with my experience and skill level. So we will take this $15 and add it to the $7.70, which brings our total up to $22.70.
You can lower or raise your hourly rate to match your current skill level and account for what products you offer to your customers. But for the love of everything that is holy, do not pay yourself less than $10/hr. Start yourself at least at $10/hr, even if you are brand new to baking. In this economy, anything less than $10/hr is too close to poverty wages, and your time and effort are worth more than that.
| Hourly Rate: | Mixing/Baking/Packaging Duration: | Ingredient Cost: | New Total Cost: |
| $15/hr | 1 hr | $7.70 | $22.70 |
Additional Costs
When I make this recipe, I end up with 28 cookies. Each cookie weighs about 45 grams, but since we know how many we will make, we can now get a rough estimate for the cost per cookie. So $22.70/28 = $0.81 cost per cookie. I sell my cookies for at most $2 each. That gives me some wiggle room with my pricing, as I have roughly $1.19 to deal with taxes, packaging, new ingredients, mixer maintenance, and other necessary expenses for my home bakery.
Pricing Tiers
My business also has three different pricing tiers. Each tier has its own profit margin, which is shown at the end of each line.
- 1 cookie for $2.00 – Cost ($0.81) = Profit $1.19 (59.5%)
- 3 cookies for $5.00 – Cost ($2.43) = Profit $2.57 (51.4%)
- 14 cookies for $20.00 – Cost ($11.34) = Profit $8.66 (43.3%)
This allows me to incentivize customers to purchase more than one cookie. But as I offer steeper deals, my profit margin shrinks. You must maintain a careful balance between being profitable and offering a good discount for your customers.
Taxes/Fees
So, with each cookie sold, I owe roughly 10% in taxes since I work a full-time job on top of my side hustle.
- 6% State of West Virginia
- 1% City of Charleston
- 3% Additional Taxes
For my business, I include this tax in the cost of the cookie, so I, as the business owner, shoulder the weight of the taxes so it does not get passed onto my customers. While I like collecting change, I don’t like dealing with change for my business, so I make my cookie tiers cost whole numbers.
- 1 cookie for $2.00 – Cost ($0.81) – Taxes ($0.20) = Profit $0.99 (49.5%)
- 3 cookies for $5.00 – Cost ($2.43) – Taxes ($0.50) = Profit $2.07 (41.4%)
- 14 cookies for $20.00 – Cost ($11.34) – Taxes ($2.00) = Profit $6.66 (33.3%)
City Service Fee
With my full-time job, I work within City Limits, and I do not need to pay the City Service Fee of $2 per week due to my main employer covering this fee. Once I open my own shop and I am working for myself, I will need to account for this fee going forward.
Bags/Stickers/Labels/Boxes
Lastly, to comply with the State of West Virginia Department of Agriculture, each cookie needs to be prepackaged and properly labeled to adhere to Home Bakery Guidelines.
Bags/Packaging
For my packaging, I use these Self-Sealing Cellophane Bags, as they fit my cookies just right. (As an Amazon Associate, I earn from qualifying purchases.) These bags are very cost-efficient – 1000 bags for roughly $0.02 each is perfect.
- 1 cookie for $2.00 – Cost ($0.81) – Taxes ($0.20) – Bag Cost ($0.02) = Profit $0.97 (48.5%)
- 3 cookies for $5.00 – Cost ($2.43) – Taxes ($0.50) – Bag Costs ($0.06) = Profit $2.01 (40.2%)
- 14 cookies for $20.00 – Cost ($11.34) – Taxes ($2.00) – Bag Costs ($0.28) = Profit $6.38 (31.9%)
Labels
For my labels, I use these 4×6 Fanfold Direct Thermal Labels (As an Amazon Associate, I earn from qualifying purchases). A pack of 500 costs around $10, making each label just $0.02. By printing these landscape, I can fit two of my cookie labels on each 4×6 label, effectively giving me 1,000 labels for the same price, lowering the cost to $0.01 each.
- 1 cookie for $2.00 – Cost ($0.81) – Taxes ($0.20) – Bag Cost ($0.02) – Label ($0.01) = Profit $0.96 (48%)
- 3 cookies for $5.00 – Cost ($2.43) – Taxes ($0.50) – Bag Costs ($0.06) – Label ($0.03) = Profit $1.98 (39.6%)
- 14 cookies for $20.00 – Cost ($11.34) – Taxes ($2.00) – Bag Costs ($0.28) – Label ($0.14) = Profit $6.24 (31.2%)
Stickers
For my stickers, I use these Matte Sticker Sheets. (As an Amazon Associate, I earn from qualifying purchases.) A pack of 200 costs around $30, but I can print 28 stickers on a single sheet, bringing each sticker to less than $0.01.
- 1 cookie for $2.00 – Cost ($0.81) – Taxes ($0.20) – Bag Cost ($0.02) – Label ($0.01) – Sticker ($0.01) = Profit $0.96 (47.5%)
- 3 cookies for $5.00 – Cost ($2.43) – Taxes ($0.50) – Bag Costs ($0.06) – Label ($0.03) – Sticker ($0.03) = Profit $1.95 (39%)
- 14 cookies for $20.00 – Cost ($11.34) – Taxes ($2.00) – Bag Costs ($0.28) – Label ($0.14) – Sticker ($0.14) = Profit $6.10 (30.5%)
Card Processing Fees
One thing that will always eat into a business’s profits is its credit card processor. I use Square as my central credit card processor, and while they have a solid business model, it is still a necessary expense to handle credit and debit cards.
- In Person Credit Card Fees (2.65%)
- 1 cookie for $2.00 – Cost ($0.81) – Taxes ($0.20) – Bag Cost ($0.02) – Label ($0.01) – Sticker ($0.01) – CC Processing Fee ($0.06) = Profit $0.90 (45%)
- 3 cookies for $5.00 – Cost ($2.43) – Taxes ($0.50) – Bag Costs ($0.06) – Label ($0.03) – Sticker ($0.03) – CC Processing Fee ($0.14) = Profit $1.84 (36.8%)
- 14 cookies for $20.00 – Cost ($11.34) – Taxes ($2.00) – Bag Costs ($0.28) – Label ($0.14) – Sticker ($0.14) – CC Processing Fee ($0.53) = Profit $5.57 (27.85%)
Boxes
My boxes are only used for online orders of at least 14 cookies. I spent $64 on 250 boxes, which cost around $0.27 each.
- 14 cookies for $20.00 – Cost ($11.34) – Taxes ($2.00) – Bag Costs ($0.28) – Label ($0.14) – Sticker ($0.14) – CC Processing Fee ($0.53) – Box ($0.27) = Profit $5.30 (26.5%)
Every Cookie Counts
As you see above, every additional cookie I can squeeze from a recipe helps my pricing model. If, for some reason, I made 27 instead of 28 cookies, my profit margin would drop from 26.5% down to 24.35%. When operating a home bakery, every tiny cost can make or break a recipe for profitability. Take some time and use this information to help you determine the cost of your baked goods.
Disclaimer
The information presented on this website is provided for educational and informational purposes only. The content reflects the personal opinions and experiences of Renee Brooks, Owner of BAKr, and is intended solely to broaden the reader’s understanding of the topics discussed. It should not be construed as professional advice or a definitive guide. Readers are encouraged to conduct their own research or consult with qualified professionals before making any decisions based on the content provided. BAKr and Renee Brooks disclaim any liability for any damages or losses resulting from the use or reliance on the information contained on this website.