Does Anyone Sell Cupcakes Wholesale And Make A Profit?

Baking By robbynjaye Updated 7 Nov 2011 , 9:20pm by Stephy42088

robbynjaye Posted 4 Nov 2011 , 2:31pm
post #1 of 8

Great morning!

I received a call from a restaurant owner who tasted my cupcakes and want to sell them in their store.

I usually give a 10% volume discount on each dozen after 4 dozen. Other than that, what would warrant a deeper discount? I dont see me cutting cost anywhere else b/c I'm using the same ingredients. The only thing I can think of is trying to find cheap, standard boxes to deliver them in. But even cardboard boxes are expensive.

Does anyone else sell cupcakes wholesale and willing to share your method?

Thanks so much for your help!

7 replies
jason_kraft Posted 4 Nov 2011 , 2:52pm
post #2 of 8

It's certainly possible to sell cupcakes wholesale profitably, as long as the markup charged by the retailer doesn't push the retail price out of reach of the mainstream market while still allowing you to make your own margin above your cost.

What is the restaurant's markup and what is your cost per cupcake before you factor in your profit margin?

robbynjaye Posted 4 Nov 2011 , 3:14pm
post #3 of 8

I'm not sure what the retail mark-up will be but my cost per cupcake is $.60.
My whole thing is should I be looking at it as guaranteed business? B/c i can sell 8 dozen retail myself and make more. Why should I mark down my price for wholesale when I'm doing the same work? Again, please let me know if I am looking at this the wrong way.

jason_kraft Posted 4 Nov 2011 , 4:16pm
post #4 of 8

I would be very surprised if your cost per cupcake was 60 cents, make sure you include labor and overhead in your cost calculation (and with a retail shop you will have a ton of overhead).

Wholesale is only guaranteed business if the retailer can sell your product, so you need to find out what the markup will be so you can make sure your cupcakes won't be priced out of your target market.

If you know you can sell the same quantity yourself at retail and you have resource constraints on the production side, there's really no reason to sell wholesale until you can expand your production capacity.

robbynjaye Posted 4 Nov 2011 , 5:42pm
post #5 of 8
Quote:
Originally Posted by jason_kraft

I would be very surprised if your cost per cupcake was 60 cents, make sure you include labor and overhead in your cost calculation (and with a retail shop you will have a ton of overhead).

Wholesale is only guaranteed business if the retailer can sell your product, so you need to find out what the markup will be so you can make sure your cupcakes won't be priced out of your target market.

If you know you can sell the same quantity yourself at retail and you have resource constraints on the production side, there's really no reason to sell wholesale until you can expand your production capacity.




Then consider yourself surprised! I am very fortunate with the retail space I have as I am in a small office building. I converted their communal kitchen into my baking space. We put up a half door and I am selling from there. My rent is EXTREMELY low with utilities included!

I will find out his mark up once we speak this weekend.

jason_kraft Posted 4 Nov 2011 , 6:27pm
post #6 of 8

That's a really interesting setup, very creative solution for finding retail space!

But even with low overhead, once you factor in the cost of labor chances are the cupcakes are costing you more than 60c each. For example, if it takes you an hour to make two dozen cupcakes (including prep, baking, decorating, packaging, and cleaning up) and your time is $15/hour, that's 62.5 cents per cupcake in labor alone. And you still have other overhead costs like liability insurance, licensing, and advertising that need to be built in to your cost.

robbynjaye Posted 7 Nov 2011 , 8:30pm
post #7 of 8
Quote:
Originally Posted by jason_kraft

That's a really interesting setup, very creative solution for finding retail space!

But even with low overhead, once you factor in the cost of labor chances are the cupcakes are costing you more than 60c each. For example, if it takes you an hour to make two dozen cupcakes (including prep, baking, decorating, packaging, and cleaning up) and your time is $15/hour, that's 62.5 cents per cupcake in labor alone. And you still have other overhead costs like liability insurance, licensing, and advertising that need to be built in to your cost.




Didn't think about all of that!

Stephy42088 Posted 7 Nov 2011 , 9:20pm
post #8 of 8

I give an approx. 15% discount for whole sale, which for me is $1.25 each for unfilled cupcake. For a filled cupcake it is $1.50 each. It's the same amount of work but the place I sell them to does a lot of advertising for me and they order them every week so its a guaranteed order. HTH

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