WiseBaker Posted 17 Mar 2013 , 8:47pm
post #1 of

Hey everybody! I am about to take my first step from hobby baker to legit seller of baked goods by joining my local farmers market (in a suburb of Dayton, OH). I plan on selling mostly cupcakes, but potentially also muffins, cookies, and/or brownies. I have a full-time job, but my hours are about to be cut by one whole day a week, costing me 20% of each paycheck. Coincidently, the workday I'm losing is Friday, and my FM is Friday afternoons 3-7 (weird, I know).

 

So, to cut to the chase, I need advice!! How much should I make? How should I price things? Should I sell individual cupcakes? Packs of 4? Packs of 6? What's the best way to transport them from my house to the FM? What about hot weather? 

 

For some background: I am required to purchase liability insurance that costs about $250 for the year, and I may also need to buy things like a table and/or tent, since my FM just gives me a physical spot, I provide the rest. My production cost is approx $0.50 per cupcake, not accounting for those big one-time expenses.

49 replies
jason_kraft Posted 17 Mar 2013 , 9:33pm
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AHow many people visit the farmer's market, and what type of customer does the market attract?

WiseBaker Posted 17 Mar 2013 , 9:45pm
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I have no idea how many people regularly visit, but it's in one of the more up-scale high-income neighborhoods in the county in a pretty busy shopping center. The FMs in surrounding towns are much smaller and less organized than this one (which is why I'm going to sell at this one instead of the one a few blocks from my house). Last year they had around 20 vendors selling a variety of things from your usual veggies and produce to honey and jams to soaps and lotions. There are two existing baked item vendor: a very established local company that makes artisan bread and an organic bakery that sells bread, granola, whole wheat muffins, etc. They don't make dessert type items except the occasional cookie, so I wouldn't really be competing with them.

Paperfishies Posted 18 Mar 2013 , 7:42pm
post #4 of

I would have cupcakes packaged individually and in sets of 4.

 

cupcakes are something most people will eat while they walk around and shop.

 

i would make 4 different varieties, and a total of 100 cupcakes to start...use this first farmers market as a test...you can gauge what you will need from here on out based on what you sell or don't sell at this first one.

remnant3333 Posted 18 Mar 2013 , 7:54pm
post #5 of

I agree with Paperfishies. After the first time you should have a better grasp for how many cupcakes to make. When weather gets hot sometimes frosting melts. I don't know if dry ice would help in a cooler or not. I am sure others here will have a solution for the hot weather issue. Good luck and I wish you lots of sales. Most people love cupcakes!!!! If I was in a market and saw cupcakes I would head right on over and buy me one or a few!!!
 

WiseBaker Posted 18 Mar 2013 , 8:59pm
post #6 of

Thanks guys! That's actually just what I was thinking in terms of ~100 cupcakes, sold individually or in packs of 4. Thanks for validating my ideas!

 

Any suggestions for pricing? I was thinking maybe $1.50 for one or $5 for 4? Do you think people would pay more than that? Production costs are around $0.50 each including packaging costs, but I need to make enough profit to cover my liability insurance and one-time big purchases like folding tables, etc, and also come out ahead enough to make the whole venture worthwhile. Most bakeries in my area charge around $3 per cupcake for "gourmet cupcakes", FYI.

WiseBaker Posted 18 Mar 2013 , 9:40pm
post #7 of

Tried to post a reply once and it didn't work, so sorry in advance if it shows up and double-posts.

 

Thanks for the advice! I was actually thinking of doing ~100 cupcakes sold individually or in groups of 4, so thanks for validating my ideas!

 

How much do you think I could charge for them? Pro bakeries in my area sell $2.75-$3.25 each for "gourmet cupcakes", but I figure I'd have to go much lower as I'm not an established brand and I don't have a storefront or anything. I was thinking $1.50 each or 4 for $5? Do you think I could go higher and still have people buy them? My production cost is around $0.50 per cupcake including packaging, but I need to make enough profit to cover the major one-time purchases like required liability insurance, tables/tent, etc, while also making a profit for myself.

 

What do you guys think?

jason_kraft Posted 18 Mar 2013 , 10:01pm
post #8 of

A

Original message sent by WiseBaker

I was thinking $1.50 each or 4 for $5? Do you think I could go higher and still have people buy them? My production cost is around $0.50 per cupcake including packaging, but I need to make enough profit to cover the major one-time purchases like required liability insurance, tables/tent, etc, while also making a profit for myself.

How much is your labor and overhead cost per cupcake?

For example, if annual overhead is $1200 and you forecast selling 4 dozen cupcakes per week on average, overhead cost is $0.50 per cupcake. If it takes an hour to make 2 dozen cupcakes and your wage is $12/hour, your labor cost is another $0.50 per cupcake. Add that to your production cost and you are already at $1.50/cupcake, so if you sell at $1.50 you are making zero profit for your business.

scrumdiddlycakes Posted 18 Mar 2013 , 10:06pm
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That is way too low, if you don't think your cupcakes are worth what the other bakeries' are, then neither will potential customers.

You really need to figure out exactly what each market day will cost you, at only $.50 or less profit per cupcake after baking expenses, it is very unlikely you will make anything.

That means if you sell all 100, you would only have $50 left over to cover insurance, gas, electric, table and tent rental, the cost of any advertising, (our farmers markets require a banner), and then your wage.

I wouldn't go a penny less than $3.

 

I'm in a different area, but I take 10% of the estimated turn out and almost always sell out. I do packs of 6 assorted or singles, $20 for 6 or $3.75 for a single.

Prices in my area are between $2.75 and $3.75 for a cupcake if you go into a bakery.

WiseBaker Posted 18 Mar 2013 , 10:15pm

Thanks so much! You guys are really helping me out. 

 

I think my cupcakes are at least as good as what you can get from local bakeries and probably worth just as much. I was just afraid customers would think less of me selling from a Farmer's Market stand like I'm not a "real" bakeshop, even though my cupcakes look and taste awesome and I'll have a professional-looking stand and a facebook page for my business and everything. I guess that's just poor baking-self-esteem, haha. I know people would be interested in my cupcakes because I donated some batches to a charity auction in my area recently and there were more bids ($1 = 1 bid) for each batch of my cupcakes than for things like $50 gift cards and such. One of the cupcake winners shared with the rest of the group and I was bombarded with requests to buy more! So yeah, my product is good enough for me to charge more, I guess.

 

I'm really excited about the idea of being able to make a profit off of something I love to do so I'm researching everything I can about how to be successful at it. I already have the awesome product, I just have to find an efficient, profitable way to sell it!

leah_s Posted 18 Mar 2013 , 10:44pm

Undercutting the local bakeries in price is really, really, bad form.  MATCH their prices.

WiseBaker Posted 18 Mar 2013 , 10:50pm

Oops, I wasn't trying to be a jerk and undercut them! I was just afraid people wouldn't be willing to pay as much for my cupcakes since I'm not a legit "real" bakery with a storefront and everything, I'm just some random chick at the farmer's market, lol.

Occther Posted 18 Mar 2013 , 11:42pm

Don't ever consider that you are not a "legit" baker.  Ohio has cottage industry rules so we are allowed to sell items baked in our homes (within their restrictions.)  Think of yourself as a great, creative baker who just happens to bake out of her home!!  Think of all the Amish home bakeries in our state! 

Have a professional appearance - buy some nice professional looking, business cards and labels from some place like Vistaprint.  And make sure to make labels that include the ingredients.  (You can easily set this up on your computer and pick up some labels at a local office supply store.)  Wear a nice clean apron - maybe something with your business name embroidered on it.  Good luck with your new venture.

 

One of my favorite vendors at the farmer's market close to me, was a wonderful older lady who baked delicious pies and sold slices as well as whole pies.  Unfortunately, she is no longer there.  Another vendor who took her place sold shortbread cookies.  (I was shocked at her large inventory.)  I bought some the first time and they were delicious.  However, several weeks later when I bought them, they were stale and tasted like they must have been the same ones from the first week. 

Paperfishies Posted 19 Mar 2013 , 1:12am

A far as price you need to take many things into consideration.  You need to do a total breakdown of your costs.

for example, the flour I buy comes out to be .18 cents per cup, sugar is .28 cents per cup, .12 cents per cupcake liner and so on most of my cupcake recipes, each cupcake costs me between .70 and .95 cents to produce...then you need to price your packaging.

 

My cupcakes start at $3 each, or $30 per dozen.

epaty25 Posted 4 Apr 2013 , 8:38pm

AWisebaker, I'm also trying to start selling cupcakes at my local farmers market and liability insurance is required. Where did you purchase liability insurance? Was it a local company or online? I live in south Florida and trying to get quotes. I got one for $350 for the year. I'm trying to find something cheaper.

jason_kraft Posted 4 Apr 2013 , 8:53pm

A

Original message sent by epaty25

Wisebaker, I'm also trying to start selling cupcakes at my local farmers market and liability insurance is required. Where did you purchase liability insurance? Was it a local company or online? I live in south Florida and trying to get quotes. I got one for $350 for the year. I'm trying to find something cheaper.

You won't get much cheaper than $350/year. You can try www.fliprogram.com, they have coverage starting at $300/year.

DebJ812 Posted 5 Apr 2013 , 2:19am

ASo happy to find this thread! WiseBaker, I'm in the same position starting out and doing the farmer's market.

I was wondering the same thing about hot weather and icing. Hopefully someone will address that.

Kellig Posted 5 Apr 2013 , 3:25am

AWow, this is great information! The cottage laws in Colorado are starting to get much more relaxed and I too am going to try and sell baked goods at my local FM.

I have a different opinion about "Undercutting" local bakeries. I feel that this is America, and was built on free enterprise. Bakeries have an advantage over small home bakeries because of the volume they can produce. I wouldn't accuse a Bakery of trying to outsell me because they can bake more goods than I can. I will sell my baked goods for less because I can produce them for less. This is a choice I made for myself, and I wouldn't expect you to follow my rules... A little competition never hurt anybody, and you know the old saying, “If you can’t stand the heat…”

jason_kraft Posted 5 Apr 2013 , 4:35am

A

Original message sent by Kellig

I have a different opinion about "Undercutting" local bakeries. I feel that this is America, and was built on free enterprise. Bakeries have an advantage over small home bakeries because of the volume they can produce. I wouldn't accuse a Bakery of trying to outsell me because they can bake more goods than I can. I will sell my baked goods for less because I can produce them for less. This is a choice I made for myself, and I wouldn't expect you to follow my rules... A little competition never hurt anybody, and you know the old saying, “If you can’t stand the heat…”

You are of course free to charge whatever you want, but by undercutting the market value in your area you can end up starting a "race to the bottom" that results in customers having a lower perceived value of what quality cakes are worth. If and when you decide to graduate to a bakery with normal overhead, you may find that you then cannot be profitable due to depressed market prices. That's great news for customers, at least until all the quality bakers in the area close up shop because they can't make any money or are burned out from charging too little. Walmart pursues a similar strategy.

The bakery that is "outselling" you due to higher production volume is doing you a favor (assuming they are pricing correctly) by reiterating a realistic market value to customers.

Kellig Posted 5 Apr 2013 , 11:28pm

Wow, I didn't realize that a cupcake had so much power.

 

Wal-Mart has a market and Macy's has theirs... Some people think that if they pay more for something it makes them "special"... You will always have the kind of people who are defined by their Coach purse. So the high end baker will always have their market.

 

For me it's about delivering such a beautiful cake to a precious little princess whose parents work hard for their money but would rather buy the latest Barbie dream house than a Coach purse... and yes those who might even shop at... Wal-Mart... gasp.

jason_kraft Posted 6 Apr 2013 , 1:27pm

A

Original message sent by Kellig

Wow, I didn't realize that a cupcake had so much power.

It's not the cupcake that has the power, it's how you price it. Economics 101.

Wal-Mart has a market and Macy's has theirs... Some people think that if they pay more for something it makes them "special"... You will always have the kind of people who are defined by their Coach purse. So the high end baker will always have their market.

For me it's about delivering such a beautiful cake to a precious little princess whose parents work hard for their money but would rather buy the latest Barbie dream house than a Coach purse... and yes those who might even shop at... Wal-Mart... gasp.

This is not about the quality of the product. In fact, the most economic damage is done by business owners who are very talented and can create beautiful products but are not as skilled at the business side and price those beautiful products well below what they are worth. These business owners reinforce the common attitude among customers that they can have champagne cake at beer prices.

MKBeck27 Posted 30 Apr 2013 , 4:55pm

:-( The "go-to" bakery in my town sells plain frosted cupcakes for 80 cents each. $10.50 a dozen if you want a pick put in it. I have a much higher quality cake than they do, so I can't afford to sell my cupcakes that cheap! They make it tough for me to sell mine for too much higher though.

liz at sugar Posted 30 Apr 2013 , 7:56pm
Quote:
Originally Posted by Kellig View Post

Wow, this is great information! The cottage laws in Colorado are starting to get much more relaxed and I too am going to try and sell baked goods at my local FM.

I have a different opinion about "Undercutting" local bakeries. I feel that this is America, and was built on free enterprise. Bakeries have an advantage over small home bakeries because of the volume they can produce. I wouldn't accuse a Bakery of trying to outsell me because they can bake more goods than I can. I will sell my baked goods for less because I can produce them for less. This is a choice I made for myself, and I wouldn't expect you to follow my rules... A little competition never hurt anybody, and you know the old saying, “If you can’t stand the heat…”

 

I find it surprising that you can produce baked goods for less than a retail bakery who can buy in bulk, can mass produce, and has systems in place to streamline every aspect of their operation.  Do you pay yourself market wages, and do your sales contribute to your overhead?

 

I love everything about America, including that anyone can enter a market at any time and compete.  But, a smart business owner knows and focuses on the maximum they can sell their product for, not the minimum.  Leaving money on the table (by undercutting the going rate) will get you nowhere fast, when you have all kinds of orders to fulfill for little to no profit.

 

Liz

jason_kraft Posted 30 Apr 2013 , 8:41pm

AFrom an economic standpoint, selling below market value ties in with the concept of "production for use", which is essentially where goods and services are provided for the price your customers can pay, not at a price where the vendor can make a profit. Production for use is one of the core concepts that defines a socialist economy.

Godot Posted 1 May 2013 , 5:14am

AKellig - why so eager to join the race to the bottom?

kvand Posted 1 May 2013 , 7:30am
Quote:
Originally Posted by jason_kraft View Post


You are of course free to charge whatever you want, but by undercutting the market value in your area you can end up starting a "race to the bottom" that results in customers having a lower perceived value of what quality cakes are worth. If and when you decide to graduate to a bakery with normal overhead, you may find that you then cannot be profitable due to depressed market prices. That's great news for customers, at least until all the quality bakers in the area close up shop because they can't make any money or are burned out from charging too little. Walmart pursues a similar strategy.

The bakery that is "outselling" you due to higher production volume is doing you a favor (assuming they are pricing correctly) by reiterating a realistic market value to customers.

 

 

Quote:
Originally Posted by Godot View Post

Kellig - why so eager to join the race to the bottom?

 

 

Quote:
Originally Posted by liz at sugar View Post

 

I find it surprising that you can produce baked goods for less than a retail bakery who can buy in bulk, can mass produce, and has systems in place to streamline every aspect of their operation.  Do you pay yourself market wages, and do your sales contribute to your overhead?

 

I love everything about America, including that anyone can enter a market at any time and compete.  But, a smart business owner knows and focuses on the maximum they can sell their product for, not the minimum.  Leaving money on the table (by undercutting the going rate) will get you nowhere fast, when you have all kinds of orders to fulfill for little to no profit.

 

Liz

 

 

Where is the "like" button when you need it!

tabathaba Posted 1 May 2013 , 12:15pm

Ok, here is my two cents for Farmers Markets.

 

If you are going to sell individually, make it a round dollar value ($2-$3). No one wants 50 cents jangling around in their pockets at a Farmers Market.

 

I personally would do samples and sell no individual cupcakes. Like very small peices of a cupcake in a mini cupcake paper (8-10 samples from one cupcake). Samples will get you SO much traffic, especially on your first few Farmer's Markets. Once you have a reputation, you could back off and have no samples and sell a few individual, but if people love your cupcakes they will buy a 4 pack or two or three. The thought process behind not selling individually is so you make up with volume for giving samples. If I tried your cupcakes and loved them, it would be no problem for me to buy a 4 pack.

 

Also, do as many combos as you can. For example if you are selling singles do one for $3 or two for $5. People make snap decisions when it comes to sweets and Farmers Markets. If I wanted one but my husband was on the fence, but I could get two for $5 I would make him pick a flavor and get two.

 

Also, do combos for your larger packages. So like $10 for a 4 pack but $15 for two 4 packs. If I loved the chocolate sample, but my husband loved your caramel, I would buy two different packages if I got a discount.

 

This will help increase your overall volume and help your customers enjoy more than one flavor.

Annie70 Posted 1 May 2013 , 1:14pm

I agree about having everything being even I hate change.    I also like your idea on the discount for purchasing more.  I am selling packs of 6 no singles or 4 packs.  I wish I could get $2.00 for a cupcake but I live in a rural area and nobody would spend that much for cupcakes.  The only bakery is our local grocery store so our fm does really well. 

MKBeck27 Posted 1 May 2013 , 5:47pm
Quote:
Originally Posted by Annie70 View Post

I agree about having everything being even I hate change.    I also like your idea on the discount for purchasing more.  I am selling packs of 6 no singles or 4 packs.  I wish I could get $2.00 for a cupcake but I live in a rural area and nobody would spend that much for cupcakes.  The only bakery is our local grocery store so our fm does really well. 


I'm doing the same this weekend. I did make 3 trays of 24 mini cupcakes to pass out...I just figured people will walk over to get a sample and then I'll have a better chance of selling. I live in a rural area too, and we have either a Walmart ($12 for a large cake, or $5 for 12 cupcakes!) or a bakery that sells individual cupcakes for 80 cents each. I'm going to try for $2 for a single cupcake or $5 a 6 pack. I did a bunch of quick breads, granola, and a few cookies just to make my money back on the FM fee if cake doesn't sell well in the morning. I figure it'll get my name out there, one way or another.

havealittle Posted 4 May 2013 , 12:24pm

Keep us posted....I know a lot of us are going to pay attention to this thread...I have my first farmer's market on May 25th!!! So keep the adivce and lessons flowing!!!

 

Lisa

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