Hey all! I know to charge for item cost, clean up cost, etc..
But what im not sure of if im still charging to low.. this seems like a problem for me.
I sold three cookies for 1.50. it costs me .16c per cookie, the recipe makes 50 which in whole costs: 8.18. These cookies are not big by any means, they are not flat though.
not counting driving time/cleaning time/energy costs.
To be honest, i am not sure how to calculate all of that.
as well as, i honestly need help with calculating cost for the small things like baking soda/powder/salt. Whenever i try to do the math, it always ends up costing less than 1c.. I really, really need help with that.
Thank you so much in advance.
What kind of cookies are you selling? Are they decorated? If so, I'd say $1.50 for 3 is too low. Don't forget about your time investment. You are the only one who can really put a value on that! If you don't, your customers certainly won't. I'm discovering a lot of people think you should only charge for ingredients and don't realize just how much actually goes into the finished product.
As far as pricing goes, right now I have a spreadsheet set up on excel that takes the total cost of an item, divides it by the number of servings, and gives me price per serving. For example, if I buy flour for $5.00 a bag, there's 10 cups in a bag, so each cup costs 50 cents. Then I can multiply 50 cents by however many cups are in my recipe. The same would work with smaller items. It may come out to under a penny so I would count it as a penny.
I'm saving my pennies to get the Cakeboss software that does all this for you!
I've found that time is the biggest expenditure when it comes to making cookies, especially decorated ones. Remember the old saying, "Time is money". Be sure to figure that into your pricing!
Our cookies start at $1.25 each, and decorated cookies are usually $2-3 each. This includes ingredients, packaging, labor (the hourly wage for our pastry chef as well as the hourly rental for our commercial kitchen, it's illegal to sell food made in an unlicensed home kitchen here in CA), and per-order overhead (liability insurance, utilities, advertising, etc.).
Regarding adding up ingredient costs, it might help to price by the recipe (in this case, 50 cookies) and then work backwards if selling by the dozen. This also makes it easier to calculate labor and overhead costs. We used an Excel spreadsheet to calculate ingredient costs, so if some ingredients end up costing less than a penny it still includes that fraction of a penny in the cost of the product.
For example, if it takes you an hour to complete an order of 50 cookies (including prep, baking, decorating, packaging, and cleaning), and your time is worth $15/hour, the labor component for each cookie is 30 cents. And if you have $1000 in annual overhead with 100 orders per year, the 50-cookie order contributes $10 in overhead, or 20 cents per cookie. Now let's say packaging costs $5 for the 50-cookie order, that works out to 10 cents per cookie.
Add up the 16 cents for ingredients, 10 cents for packaging, 20 cents overhead, and 30 cents labor, and you have a total cost of 76 cents per cookie. Add a 25% profit margin and you have a price of 95c per cookie.
Now if you are in a state that requires a licensed commercial kitchen, you can expect the labor (which includes hourly rent) and overhead to at least double, so you are looking at a cost of $1.26 per cookie and a price in the $1.50-1.60 range. This is not including delivery, we charge $1/minute.