How to Calculate Prices for Your Baked Goods Home Business

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When you take the leap from bake sale contributor to business owner, re-think your pricing strategy to reflect your professional status. Consider what each product costs you to produce, but don't forget to add your overhead. Once you've figured your total cost of operation, you're ready to price your goods for market.

The Easy Part

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Total up the cost of the ingredients for each item you bake and add a value for your time. Ask yourself how much you would be earning if you were working in someone else's shop. Figure the cost of the total quantity of bread, cookies or whatever you are producing rather than a batch-by-batch figure to keep it as simple as possible. You can break it down into batches or individual pieces later.

Overhead and Marketing

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Overhead includes indirect costs such as energy -- gas and electricity -- incorporation, insurance, office supplies and communication costs, including advertising. Total these and divide by the number of days you operate for a per diem cost to you. Finally, consider demand and prevailing prices. Lots of bakers make oatmeal raisin cookies, but fewer make macaroons -- so macaroons can be priced a bit higher. If you make gingerbread houses for the holidays, you've got a unique item that can carry a higher price tag.

References

About the Author

An avid perennial gardener and old house owner, Laura Reynolds has had careers in teaching and juvenile justice. A retired municipal judgem Reynolds holds a degree in communications from Northern Illinois University. Her six children and stepchildren served as subjects of editorials during her tenure as a local newspaper editor.

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  • Sarah Vantassel/Demand Media