Do you struggle with pricing in your baking business? We know many people do.
Let me tell you a bit about the tool we use. We created a Pricing Calculator that has saved our butt several times over the year. I mean, there are just so many parts to pricing your items. Am I right?
Luckily for us, my mom has spent 20+ years in accounting before becoming a pastry chef. She holds so much knowledge that has allowed our business to be successful even without a storefront. Due to her background, we are priced to not only recoup our costs, but we are priced to make a profit. She developed our pricing tool so that we don't have to spend our energy on pricing. Our time can be spent on other things like marketing and developing our products.
When it comes to managing pricing, we believe that it starts with changing your mindset about pricing. So many of us are afraid to actually charge for our products. We are afraid it is not good enough. We are afraid people will hate it. There are just so many negative feelings towards selling a product.
As business owners, we have to stop all that negative talk. We have to know that we have a product that people want and people need. We have to know that our knowledge and our time add value to the products we create.
Once you start to get in a positive mindset for your pricing, then you will be ready to start pricing your products like a pro. We use a very mathematical way to price our products that ensures we capture our costs, pay ourselves, and price our products to make a profit.
Now you can create your own calculator. We give you the instructions here on how to create the calculator for yourself. We understand that some of you are a do-it-yourself kind of person.
We understand that others of you are on a do-it-yourself kind of budget, but as business owners even without a storefront, it is important that we think about the ROI (return on investment) of our decisions.
Before you decide that you will just do-it-yourself, I want you to think about the value of the $20 you could spend just to get the done for you version vs the time spent creating one yourself.
If you do it yourself, you will need the time to read the instructions on how to create the calculator. Then you must build the calculator. After all that, you must test all the calculations to make sure they work properly.
If you are tech savvy, this process may take you 1-2 hours, and if you are not tech savvy… well you can only imagine the time you may have to invest in creating the calculator. That $20 isn’t looking so bad right now.
Now you may be thinking… who needs to actually do a calculation to get a precise figure for pricing. I mean industry standard tells you to just take your food cost and times it by 3. I mean that should capture everything right? Wrong!
Yes, times 3 may work 80% of the time, but boy oh boy I would hate to be that 20% 😳
I mean why would you put all your time, sweat, and effort into something only to play the odds and hope that your pricing doesn’t fall in that 20% category? Instead of leaving your pricing up to chance, take charge by knowing that you have accounted for all your expenses. Take charge by knowing you are paying yourself. Take charge by knowing that you are also priced to make a profit.
Stop playing the odds. Don’t let your business run on chance even without a storefront. Instead, know how to account for costs, know how to pay yourself, and know that you are making a profit every time that you sell an item.
Still not sure what your $20 will get you? Then watch this preview on using our pricing tool.
If you want to build your own calculator, then remember to include these 5 things in your calculator
Make sure you break down the cost per ounce of each ingredient
Make sure that you calculate a fair rate for yourself. (You add value to everything you touch)
Make sure to capture costs for items like parchment paper, non-stick spray, and cupcake liners
Make sure you mark up enough to account for variances in your ingredient costs
Don’t forget to add your profit mark up
Remember you can go here to find more information on building your own calculator or you can click on the picture below to get the done for you product we use in our business even without a storefront.
We are here to help you succeed. We believe there are plenty of fish in the sea which means we should help each other. That is why we share tips, tricks, ideas, and more to help you grow your baking business even without a storefront. We offer all kinds of business information in our blog posts, but we also offer help via our podcast and our YouTube channel. Check them both out below.