Bakery Pricing and Why I Charge What I do

Posted on April 08, 2017 by Kathryn Alvarez

I used to get complaints - and sometimes I still do - about my pricing and why I charge what I do. This has always frustrated me and I've lost quite a bit of business to other bakeries and home bakers who charge less.

When I started out again I used to own my own bakery in 2002-2005 until my divorce when I lost everything - my home based bakery included) I again did my homework when I created my business plan - which now a days I feel I can do in my sleep. Pricing needs to be competitive, fair, in line with other bakeries (grocery store and big named placed excluded) and most of all - what it costs me to make that product. This is a business, not a hobby.

Even home based businesses if you're serious about it being a business has expenses. And though some home bakers want the business they undercharge thinking they are taking business away from bakeries and real bakery businesses - but what they are doing is really hurting themselves. Seriously, how much can you make off those cookies you are selling for $7 a dozen? It costs me almost $3 just for the butter that goes into one regular batch of my cookies!! Even if you're using a mix or prepared dough and cheap ingredients like margarine - you would still want to make money. The difference between myself and them are that I don't use that stuff. It costs more to purchase local flour, real butter, real vanilla, sugar, good quality chocolate chips and the list goes on. Shoot, even if they use a smaller brand name chocolate chip - the bag alone is about $2.38. If you take $2.38 and subtract that from $7 that leaves $4.62. You still have other ingredients, your time and utilities and taxes left to pay out of that $4.62. Get where I'm going! AND if a home based bakery isn't charging taxes - they aren't a business.

It is really frustrating to me because I want to make people happy and satisfy their sweet tooth but there is no way I can cheapen my prices or my product.

I'm sorry some people have such a hard time with real bakery pricing. I'm not the only bakery that has this problem. But because other bakeries and home based businesses have low balled their prices so low - I did have to drop mine a bit.  I do want to make a profit. That's what I'm in the business to do! I believe that some of the issue is that they see the cost the grocery stores and big names sell their products so cheap for and think we can do the same. There's NO WAY we can do that!! You have to remember that they purchase such an extraordinary amount of ingredients or pre-made products that it affords them the luxury of being able to have such cheap products. But really, how good for you can that $3.97 pie actually be for you?!! And they use so many chemicals and preservatives its not funny.

When I had to add on a $6 delivery fee (more in some other areas) - I got a rather harsh email from a repeat customer saying she was no longer going to order from me because I now charge a delivery fee. Wow! That hurt!! When we start losing money because of delivery, we had to do something. Gas and maintenance are expensive and we had to cover that. Because of the rental house I rent from - we can't have anyone pick up from here. It really bites because we have to deliver every item!! But I understand why. If something happened, the homeowner would be legally responsible as would I. It wasn't a risk they wanted to take. Some don't like this and hang up. But it is what it is and I'm trying to continue doing what I love to do and make my business work despite the odds against me. At least I didn't give up on my business or quit when I had to move!!

The cost of ingredients keeps increasing and on top of that I pay self employment taxes, sales tax for each county and city I deliver to and each county and city I ship to within Kansas, water/sewer, repairs, any professional cleaning,  loan debt that I acquired when I went into the store front (please do background checks on your property owners!!!! that store front was a HUGE mistake at that location and under that property owner!!!!), gas, electric, insurance, donations, the extra cookies and any additional shipping costs to ship to soldiers (we charge a set shipping fee and anything over that we pay plus we add in an extra dozen cookies to them), cleaning supplies, point of sale/internet costs and fees, website fees, phone/internet, advertising, shipping cost, shipping/freight and taxes I pay on items I order, accounting, office supplies, dues and subscriptions, business cards, vehicle maintenance costs, printer ink and on and on and on of expenses.

I consider myself to be like a mom and pop store. I'm a small business owner. It costs us more to do business. We do everything we can to keep costs in check and keep them down but sometimes - its beyond our control. It would benefit other home based bakeries and small bakery store fronts to do their homework and be in line with their competitors. This would be a win-win for everyone. Yes, there are competitors - but they are also trying to do what you are doing and that's make a living. Sometimes they are in the same boat you are. That doesn't mean you hate them. I've even referred some people to them when I was booked up. Some are cut throat competitors - yes, I deal with them, too. But just stay focused on you and your business.

For customers, I'm truly sorry. I wish I could charge less but I just can't. I can promise you that you are getting the best product I can make using local, natural, simple and wholesome ingredients and everything is made from scratch by hand with my heart and soul in it. And I truly appreciate and value as customers.

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