Prices & Rates: Here’s How Much To Charge For Cookie Sales
Have you been munching too much of that baked goodness recently and have finally decided to take that final bite by starting your own Cookie Business? If that’s the case, here’s how much you should charge for cookie sales:
|Cookie Type||Price Per Piece||Price Per Dozen|
|Chocolate Chip Cookies||$2.5||$16|
|Peanut Butter Cookies||$3||$14|
|Oatmeal Monster Cookies||$3||$18|
|Apple Spice Drops||$3.5||$16|
This table shows the estimated selling price per dozen pieces for different types of cookies.
Starting right off, let me tell you that determining the right price to sell a product is one of ‘the’ most important aspects of business planning. And good planning leads to great success!
If you’re one of those recent business start-ups, though, this can be a bit difficult, if not downright un-doable.
But here’s the thing: you ‘have’ to earn a profit if you want to share the joy of delicious cookies with a world full of starving people, right? There’s nothing wrong with that.
The more confident you are in your pricing, the more likely your clients are to purchase your cookies.
So, before I go any further, I’d like to put your mind at ease by answering the question that drew you to this page in the first place.
Since it’s a business, you would naturally want to know how much profit you will be making at the end of the day. Hence the need for properly pricing your product.
How Much Should You Charge For Homemade Cookies?
You should expect to charge between $2 and $5.50 per cookie, or $9 to $18 per dozen if you plan to sell your homemade cookies. The price may depend on the ingredients, baking equipment, and the size of your cookie.
Just as an overview, when determining your price, take into account your prep time and the cookie’s complexity — It also matters in your cookie costing process.
For example, a plain, un-decorated snicker-bite might cost $3, whereas a lavishly decorated sweet cookie might cost $6.
To put it another way, the more time, money, and skill that goes into a cookie, the higher the price.
How Much Should You Charge For Printable Cookies?
|Cookie Size||Price Per Single Cookie|
|Small (3 inches)||$2.00 — $3.75|
|Medium (4 inches)||$3.00 — $5.25|
|Large (5 inches)||$3.50 — $6.00|
|Extra Large (5 inches)||$4.00 — $7.00|
This table shows the pricing for printable cookies of different sizes.
Printable cookies are a great way to offer an irresistible gift that has your customers’ favorite name on it.
In essence, the customer selects the concept, and the decorator makes a platter with a mix of simple and intricate motifs.
This offers the best value for money while still allowing the artisan to profit from their effort, which is what selling cookies is all about, right?
Whatever you decide to charge, you should always have set prices printed down and visible to everyone.
Customers are less inclined to consider pricing negotiable if they see the prices written.
Pricing My Cookies
There are several factors to consider if you want to correctly price your cookies.
You don’t want to just shoot from the hip when it comes to the cost of supplies and equipment, as well as your time and the number of cookies that go unsold.
That is why, in the coming part, I’ll lead you through a few simple steps to help you price your cookies correctly.
7 Factors Affecting Your Homemade Cookie Pricing
When it comes to pricing, you need to know how much each cookie costs to create, just like any other business does for its product.
Loosely speaking, this straightforward method might appeal to the mind at first; that is simply add up the cost of your ingredients and divide them by the total number of cookies you plan to prepare.
While this might be preferable to just ‘guessing’ directly, in reality, it boils down to something a little more involved than that. Aside from the cost of the components, there are a few more factors to consider.
In fact, I would recommend getting a pen and paper, making yourself comfortable, and jotting down the following expenses as a first step:
When calculating your costs, I believe, the first thing to consider is your equipment.
You must total up the cost of every piece of equipment, from mixers to spatulas to baking sheets, and then estimate how many cookies you believe you can create during the life of each item.
To put it another way, if you spend $550 for a mixer and expect it to last three years before you require replacing it, you must split that amount until you have your cost per cookie.
Here is my suggestion as to how to approach it:
Calculate how many cookies you bake each week. Let’s pretend you bake 35 cookies every day, five days a week. This works out to about 175 cookies per week.
After that, divide your weekly average by 52. (the number of weeks in a year). In my case, this translates to 9,100 cookies every year.
Multiply the number of cookies you make each year by the number of years your mixer will last you. For my example, I’ll assume your mixer will last three years, resulting in 27,300 cookies. (Wow, that’s a lot of cookies!)
All you have to do now is to divide $550 by 27,300, which equals about 2 cents per cookie. That is my equipment cost for one cookie.
The cost of ingredients per cookie is the next thing to figure out. And this will differ from cookie to cookie.
It is a relatively simple procedure. Once again, simply sum up the cost of your ingredients for each type of cookie and divide by the total number of cookies you can produce.
Then, add the cost of each cookie’s ingredient to the cost of your equipment per cookie.
Another cost to consider is your packaging, which is especially important if you plan to sell them by the dozen.
You must include packaging costs in your cookie company expenses, whether you want to box them, wrap them, or pack them up in an entirely different manner.
Calculating this cost, as the ingredients, should be simple. All you have to do is multiply the cost of your packaging by the number of cookies you’ll be able to package.
Then simply add that figure to your cookie’s cost per unit.
When it comes to baking non-traditional cookies or cookies with extra decoration, I know for a fact that labor expenses usually outweigh the cost of the basic ingredients.
The endless hours of labor and meticulous attention to detail are what distinguish these extra scrumptious goodies.
One way of going about it would be to estimate, yourself, how long it will take for you to make a batch of cookies. Conversely, a more precise way would be to use a timer to check how long different types of cookies would take to complete.
Then, decide on an hourly wage for yourself. Divide this wage by 60 min to get your per-minute wage. Multiply this per-minute wage to the time it takes to bake a particular cookie, and there you have it – your labor cost per cookie.
Miscellaneous Business Costs
So if you decide to establish a cookie business, you will have to pay extra expenses, just like any other business. For example, you might have to pay rent for a commercial kitchen or a simple all-purpose studio.
You might also end up paying for a website or social media marketing including promotion through hand-outs or flyers.
You may also spend on insurance and accounting.
Furthermore, as your company expands, you may need to hire more personnel.
In general, I suggest multiplying your monthly expenditures by the number of cookies you sell each month.
Then, multiply the result by the cost per cookie.
Just know that the aforementioned costs may or may not apply to you depending on whether you have plans on expanding your business into a commercial venture or simply staying on as a home-based enterprise.
Yes, taxes! You definitely have to pay taxes and will need to set aside money for this as a business. This is a figure you should factor into your per-cookie cost too.
I say, in general, you should prepare yourself to pay between 25% to 30% of your revenue after expenses.
This brings me back to the point that you should set your price so that after taxes, you still have a sizable profit margin remaining.
Waste, or the number of cookies cooked but not sold, is an expense that many small business owners underestimate.
To calculate your wastage, sum up the average number of cookies left unsold each day, then multiply that number by your total cost per cookie.
From there, divide that figure by the average number of cookies sold every day. Then add the result of that to your cost per cookie.
Determining Your Ideal Cookie Customer
After you’ve calculated all of your costs and estimated your cost per cookie, the next step is to determine your target market.
If I am to guess correctly, you had a target consumer in mind when you decided to establish this business. What you may not realize is that the price you charge for cookies is heavily influenced by your target customer.
For example, if you want to create wedding cookies, your pricing would most likely differ from if you want to sell cookies individually to daily bakery consumers.
The difficult aspect of all this is that, for this, sound judgment and decision are required on your part.
For example, if you want to offer cookies for high-end events such as weddings or business gatherings, you may wish to charge a higher price.
However, if you want to sell cookies for less extravagant events or if you want to focus on volume, then you may charge a more modest price.
Over time, your target cookie consumer may change, or you may cater to different markets. All you have to do is to figure out what you want and then price it accordingly.
Deciding Your Cookie Profit
After you’ve determined your costs and target market, you’ll need to determine how much profit you want to make on each order.
Whether you sell one cookie or a dozen of them, you must first determine how much profit you want to make on each order, and then multiply that number by your cost per cookie.
Just as a reminder, make sure to factor in your taxes while calculating this. Remember that, as a general guideline, you should set aside roughly 30% of your gross revenue after expenses to pay taxes.
Consider the following scenario: you want to make $2 per cookie after taxes, and your per-cookie cost is $1.75.
Here’s what you’ll need to do to get that number:
Single Cookie Price = (Expected Profit / Percentage Revenue After Taxes) + Per Cookie Cost
For my example, this would come out to be:
$4.61 = ($2 / 0.7) + $1.75
As simple as that!
By now, you should have a fair idea of how much you should charge for your cookies.
Take a Survey of Your Pricing
Now I come to the most brain-wracking part in my quest to decide the ultimate cookie price: Price testing.
After you have decided on how much you will be charging for your cookies, the next step is to put your price to the test.
Just because you want to charge a certain price, does not imply that your customers will agree to it. On the other hand, if you set your price too low, you may find that you need to raise it later on.
The trick is to give yourself enough time to thoroughly test your product’s pricing. To put it differently, don’t change your prices every day. In fact, I propose that you test your prices for a month before making any changes.
Tweak and Adapt
After deciding, if you still don’t feel like you have reached your ideal pricing spot, make modest tweaks. Price adjustments are a part of beginning your own business.
Regardless of whether you are not feeling like enough profit is being generated for your hard work or you’re just not getting as many clients as you’d like – you just have to stick to it every now and then.
Just make sure that pricing adjustments are being done for the proper reasons. If you are not receiving as many clients as you would like, don’t blame it on your price.
(Re)Evaluate your marketing strategies to determine whether they are sufficiently assisting you in attracting additional clients.
Conversely, if you can not keep up with the demand, instead of increasing the price, consider increasing the volume of cookies you can sell.
Concludingly, I would say that it can certainly be challenging to figure out how much to charge for cookie sales, especially as someone that is new to the business.
However, if you calmly focus on the steps outlined in this article, and move ahead based on that, I’m confident that you will be sure to arrive at a price that is ideal for you and your consumer.
So warm up those palms and start baking – you never know when a customer might come knocking!
[Honey! Should we open the other packet as well?] …. *Crunch Crunch Munch Munch*