How to Calculate Prices on Your Baked Goods Home Business

Correctly priced baked goods result in a successful business.

Calculating prices for baked goods must be done the same as you would do for any other product. A correct calculation ensures that selling baked goods becomes a profitable business. A portion of all expenses must be included to arrive at the proper selling price. Whether the baked goods are made from scratch or made from prepared mixes, the costs must be calculated. Include the time for your labor as well when calculating prices.

Things You'll Need

• Grocery receipts
• Calculator
• Pencil
• Paper

Instructions

1. Gather the receipts that show the prices you paid for the ingredients in the baked good. For example, for a simple yellow layer cake, if you are using prepared cake mixes then the receipt would show cake mix, eggs and cooking oil.

2. Write out a list of the cost of each ingredient such as cake mix -- $1.39. To determine the cost of two eggs divide the cost of the dozen by 12. If the eggs were $1.60 a dozen then one egg cost approximately 14 cents, so two eggs would be 28 cents.

3. Calculate the cost of the cooking oil. If the bottle of oil cost $3.99 and contains 3 cups of oil, that's $1.33 per cup. If the cake mix calls for 1/4 cup then $1.33 divided by 4 equals approximately 33 cents.

4. Add together the $1.39 for the cake mix; 28 cents for the eggs and 33 cents for the cooking oil. This comes to $2. If the cake was made from scratch, follow the same procedure to calculate the costs of the flour, sugar, butter, eggs, flavorings and anything else that was used.

5. Add the cost of the frosting or the frosting ingredients if you made your own, to the cake costs. Include any other costs such as decorations for the cake to get the complete cost. The total cost for ingredients is $2. You should add at least $1 more for the utility costs. Some bakers may simply double the ingredient price and add in the labor charge.

6. Add the dollar amount that you pay yourself for labor. If you average $10 an hour and it took you 1 1/2 hours to complete the cake, then you must add $15 to the cost of the cake to arrive at your selling price. The total is $18. Check the prices with other home bakers. If this is too low, simply add a few dollars more. If it is too high consider lowering the price slightly. Your prices should be in the same range as other home bakers. If you start out too low you won't be able to increase the price. It's better to start higher and then lower the price if you need to.

References

• Domestic Cents: Make Extra Money Selling Baked Goods

Resources

• Labor Law Talk: Selling Baked Goods Online
• QueenslandGovernment Business Development: How to Determine a Selling Price