The Four Pillars of Cookie Pricing
Pricing Your Cookies:
Pricing your cookies can be a super spooky issue! Whether you are a hobby baker who sells every once in a while or a well seasoned baker with a full calendar every month, sometimes pricing can be a daunting topic to think about.
There are fears on both sides. What if I charge too little and get burnt out? But we also know of the fear of charging too much! What if I charge too much and then no one will order from me?
There are a few things to consider when you are pricing your cookies. We call it The Four Pillars of Cookie Pricing - but honestly, these principles can be applied to most handmade things!
Product Costs
The first and typically most obvious thing to think about is product costs. Has anyone else noticed how groceries have sky-rocketed in the past few years? But it’s not just your eggs, flour, and sugar that go into getting your end product into the customer’s hand. You have to also consider your disposable products, food colorings, and embellishments as well as all materials required for packaging (cello bags, paper shred, bakery boxes, labels, receipts, printer costs).
At our bakery, when we make a batch of dough it usually makes enough for about 4 dozen cookies. There are quite a few apps out there that offer free tools to help you calculate the cost per batch (CakeCost and Bake-u-lator are two free ones). To get your price per dozen, you then divide the cost per batch by how many dozen it produces. Once you have that number MULTIPLY IT BY 3. This is your minimum price per dozen.
Let’s say for example’s sake, I calculated that it cost me $5 per dozen in materials. My minimum cost per dozen should be $15. But those cookies didn’t materialize overnight, next let’s talk about labor.
Labor Costs
The next thing to consider is how much YOU as a baker want to make per hour. You and I both know that these cookies do not make themselves and they can become anywhere from a whole day’s task to a few days.
You have to sit down and be honest with yourself - how many hours does it take to do the following things FOR YOUR MOST BASIC COOKIE?
Buying Supplies
Making Dough
Baking
Mixing and coloring icing
Flooding
Piping Details
Photographing/Packaging
When you add all that time up, you want to be paying yourself minimum wage (at least!).
Continuing with our example from above, let’s say I calculated that it takes me 4 hours from baking to getting them in my customer’s hands. In the state of Kansas (where we live) minimum wage is $7.25/hour. When we calculated our minimum price above, we created a $10 margin by multiplying our product costs by 3. I know now that if I want to make minimum wage on my cookies, I need to charge at least a $29 margin on top of my product costs. Now my minimum price per dozen, for my most basic cookie, is $34.
Experience/Quality
The third pillar of Cookie Pricing is experience and quality. Maybe these are your very first cookies and you know you are still learning. Even in the learning phase, I would encourage you to consider offering cookies for sale. The nice thing about having some orders is that you will have a reason to practice! And don’t worry, some nervousness is normal! I remember having anxiety when people would place orders for a few months after we opened for business. What if I can’t produce what they’re requesting? But as you continue to practice, I promise that you will get more and more confidence!
During this learning phase, you might feel perfectly comfortable charging minimum wage for your labor - and this would make sense! But as you continue to grow and get better at decorating, you will want to give yourself raises.
Most importantly - do not forget that the skills you possess in cookie decorating are extremely unique and sought after! People hire YOU to skip the hours upon hours it takes to master this art.
Continuing with our example, let’s say I want to give myself a raise since I have almost 10 years of experience decorating cookies. Let’s say I bump up to wanting to make $12 per hour. Now with 4 hours of labor per dozen, and a calculated $5 for a single dozen’s worth of materials we are at $53/dozen for my most basic dozen.
Current Market
Finally, the last pillar of Cookie Pricing is the current market. Search for other cookiers in your area with the same skill level as you and see what they are charging. Understand that you are looking at the “competition” to see what people in your area are willing to pay - be careful not to compare yourself to others! It can be hard to see another cookier doing really well when your business is just starting out and think ‘well no one is going to buy from me, there’s already 4 bakeries doing xyz!’ I promise you that there is room for everyone in this business and that your customers will come!
If you have calculated your base price at $53/dozen and you see that most cookiers in your area are charging a minimum of $60/dozen, I would consider raising your base price to $60 with successively increasing prices per dozen for more intricate orders.
But that’s way too much…no one will buy from me…
and you might be thinking this! Ultimately it should be our goal to scale our business in such a way that each and every cookie order we take is WORTH OUR TIME. Especially if you are working towards cookies being your full-time income!
We hope this has helped you work through some questions you might have about pricing, leave me a comment below with any questions or comments you might have, and we will get back with you! And if you’d like a pricing guide cheat sheet here you go!
