At a local 3-day festial, I was approchaed by a Coffee Shop and Resteraunt to start selling my Gourmet Cupcakes. I am thrilled, but nerveous at the same time. I have read over several threads on the subject but still have a couple questions.
1. How do you personally price your wholesale cupcakes? I see 20%-50% off normal pricing...Wanted to see what the average is.
2. Do you require a minimum order?
3. Do you sign a contract with the establishment?
Thanks for all the help...I know I can always count on everyone here for their wisdom!
I would talk to them about how much you sell them for and see if they think they can get away with marking up from your current price. I don't see why you should have to decrease your price just for the sake of getting a sale.
As far as a minimum order, if they only want six at a time, then I'd say it's not worth your efforts. However, if they want a dozen at a time, is that doable for you? It would be for us.
I'd sign a contract with them only if you think you need one. When the guy that we use space from wants a cheesecake, we make one, give him an invoice, and he pays us.
The way to charge them is first to go to other coffee shops and restaurants in the area that are similar to your client's place in location and prices and sell gourmet cupcakes like yours . Ask them how much they sell them for and, if possible, how much they pay for them. That's the most important information, regardless of how much they cost you in terms of ingredients or time. I don't understand people who charge 3 times the ingredients or pay themselves X amount per hour. The price is what the market bears! If you are happy with the outcome of your investigation (yes, you will make money from this business transaction), then have a list of items to discuss with your client: how many per day/week, etc. See if the answer is worth your trouble, then the next item is for them to sign a contract where a minimum/maximum order is guaranteed. Guaranteed.
Good luck! Your cupcakes must be wonderful!
Wholesale is not defined ONLY as "something to be resold". Wholesale is also a quantity and packaging issue. The person reselling the item usually adds a value-added step and ups the price.
What makes wholesale pricing lower than retail is the fact that I am making a HUGE amount of product at one time, which decreases my overhead per-unit cost. It costs the same to run my oven for an hour, no matter if there are 12 cupcakes or 150 cupcakes baking in it.
What makes wholesale pricing lower than retail is that wholesale is usually bulk-packed. The reseller usually "adds value" by displaying them in their display case or repackaging them in cute little boxes or something. I'm saving money because I can package 50 cupcakes in one box instead of 10 cupcakes in five boxes. Less labor ..... lower COGS.
When I bought my supplies via Sysco or GFS, they never asked me what I planned to sell the item at and THEN they figured what my buying price would be. Nope! They told ME what their price was and I had to figure if I could sell that item at a profit or if I had to switch to something less costly.
Your cost is your cost and it's NOT determined by what the re-seller is going to sell it at.