I was just reading the Woodland Bakery Guide to Owning a Bakery! What a fun read! How many have read it? How many found it useful? HERE IS AN EXCERPT: How do you price your products? I get this question all the time. There are formulas for pricing retail products, well-known and used all over the world, in retail businesses of all kinds. There are some of these formulas that are specific to the food service industry. You must first know your costs; then there a lot of other things to consider too, before you can come up with a retail price. The other things I ask you to consider include not just your raw ingredient cost, but the labor cost, the rent, the lights, gas to run the oven, insurance premiums, and the list goes on and on. These are the things that customers would never consider. That’s why so many of them balk at a $2 price tag for a muffin or a cupcake. Some have even exclaimed, “$2 for a cupcake!?” And then proceeded to tell me that they know how much it costs to bake a cupcake, and it’s NOT $2 each! Well, Sally Jones, that is true. If you’re at home and you are baking a batch of 24 cupcakes, you may be able to do it for under $15. That is, if you already have the eggs leftover from breakfast, and some flour from last year’s pizza party, and plenty of other ingredients. Otherwise you will have to buy all of those things, and you will spend way more than $25. But let’s just say you have some of the ingredients already, and only have to go to the store to buy some butter and cocoa and some cupcake liners. Let’s stick with the original guess of $15, which comes to about $.63 each. But don’t forget the icing! Sally Jones doesn’t have to pay rent for her bakery when she makes those cupcakes at home, and she doesn’t have to pay her employees to try to sell those cupcakes, and she sure doesn’t have to pay business liability insurance in case her son accidentally eats the cupcake paper. So give me the two bucks and shut the hell up! I am getting off the subject, but as you can see, this topic can really get me going! Such customers have no idea what it takes to operate a profitable business. And let’s face it: If it wasn’t profitable, then WHY WOULD WE DO IT? Sure we love it, blah, blah, blah, but we also love having a place to live that’s NOT a cardboard box!
Posted on: Mon, 30 Sep 2013 01:02:11 +0000
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