After following scp1127's advice, I have made a ingredients cost worksheet for 90% of the ingredients my items will need. I broke them down by cup, 1/2 cup, TBS, tsp, or serving size. I got a great worksheet going. You were right scp1127, it gets easier the more I do it. Thanks. I also took all ingredient costs and figured what 1 dozen would cost me to make, then figured out my electricity or gas cost for the product. I don't have to pay for rent where I am at, so I can actually make a pretty good profit. I am enclosing a for instance:
Hummingbird Cupcakes (this recipe makes approx. 30 regular size)
1 cup chopped pecans cost .90
2-1/2 cups mashed bananas (5) cost 1.00
1/2 cup crushed drained pineapple cost .50
2-3/4 cup flour cost .60
all spices (cinnamon, nutmeg, ginger, salt) various meas. approx. cost .25
3 large eggs cost .39
1-3/4 cups sugar cost .51
3/4 cup vegetable oil cost .42
All ingredient costs added up = 4.57 for the batch.
Divide this amount by 30 and get .15 to make each one. I add .10 for frosting and .05 electric or gas and my total is .30 for one or $3.60 for cost on each dozen. I will sell these as a fancy cupcake meaning the SRP for one dozen will be $35 for regular size and $27 for mini. Are these SRP's too high, in your opinion?
I shopped around, and NO ONE in my area, within 300 miles round trip make from scratch bakery items. I live in ND. Prices are outrageous for groceries, no Sams or Costco, just WallyWorld, where I got above prices. Everything at competitors bakeries is shipped in frozen, they just slap frosting on it. So I have NO competition.
What does everyone else charge for this? I also will not have any additional overhead as I am going to have a kitchen only, no store front, I will deliver most orders, or customers can schedule pick up.
You will still have overhead costs -- liability insurance, business license (most municipalities require them), cost of accounting, advertising, web site, etc. You'll also need to account for your time -- how long does it take to produce your typical batch, including prep, baking, decorating, packaging, and cleanup?
Another thing to look at is the demand for premium baked goods in your area. There may be a very good reason you have no competition in your market segment.
Also, you need to account for:
And then the extras:
And, if you don't have additional tools/storage items yet, you'll need to get those also. I.e. NSF storage bins and spatulas, mixing bowls, etc.
A few things to think about, and yes, btrsktch and Jason nailed it. I knew my cost was a lot higher.
That recipe is close to mine so here are my differences. First, can you save the pineapple or will it go to waste? If you don't have an immediate order, use the cost of the whole can.
Second, my buttercream is very expensive. I'm assuming cream cheese on hummingbird. You have butter, cream cheese, sugar, and hopefully a premium vanilla, as you are charging a premium price. That is much more than .10 each.
My boxes are BRP pink. Even in bulk, not cheap. And inserts, more money. I then add a bow and my expensive glossy business card as a label (temporary double tape for saving).
Now you have a product worth $35.00.
Another issue about overhead. If you own your space as I do, you must look at your space as a revenue maker. In other words, you deserve a reward (profit) for use of your investment, the space. So this is overhead that actually goes straight to profit. Add this in. You must pay yourself not only for your time, but return on investment.
So now that number will be more realistic. If you want, I will share my numbers in a pm to give you an idea because my prices for products are close. I think my Hummingbirds sell for $36.00.
You are almost there!
Very nice. I am so happy to see OP took the initiative to spell this out and all the great answers that followed by people who have businesses. This will really help a lot of ppl starting off who need this type of guidance and come here asking about costing and setting prices. Well done! This is how a lot of us cost our items. Same way by weight of ingredients used, overheads, misc costs for dish washing liquid etc etc etc
sfandm, that's a great price for pecans! [1 cup chopped pecans cost .90]. My figuring has one pound of pecans = 3 ½ cups chopped or 4 cups whole. Where do you purchase your pecans?
Mimi, I bought 30 #'s from a woman in Texas, and froze them, she was selling a # for $3.50, this is just a half out of shell, I chop them up. I can get 12 oz. at the small store near me for less than $7, on sale sometimes for about $5. I am using the cost I paid for bulk. They are from surrattfarms.com
Just went to their website, they have a 30# box of halves for $197.50, or $6.58 per #.
Hope this helps.