Are you thinking about starting your own cookie business? If so, one of the most important things you need to do is figure out your pricing. However, if you’re like many new business owners, this can be a daunting, if not downright uncomfortable task.
But here’s the thing, if you want to bring the joy of tasty cookies to a world full of hungry people, you need to make a profit. There’s no shame in that. In fact, the truth is, the more confidence you have in your pricing, the more willing your customers will be to buy your cookies.
So, before we go any further, I’d like to set your spirit at ease and answer the question that likely led you to this article in the first place: how much should you charge for cookies?
In short, you should plan to charge between $2 and $6.50 per cookie, or between $8 and $15 per dozen if you choose to sell your cookies in bulk. When setting your pricing, you should consider the cost of both the ingredients and baking equipment, as well as your time, and complexity of the cookie.
For instance, you might charge $3 for a basic, un-decorated snickerdoodle, but $6 for an elaborately decorated sugar cookie.
To put it in simpler terms, the more time, cost, and skill that goes into a cookie, the more you should charge.
But setting the price of your cookies isn’t something you should ball-park. Like any business, it’s important to set your price based on how much profit you want to make for each cookie.
How do you do that?
Well, that’s exactly why I decided to write this post.
For the rest of this guide, I’m going to help you put a price on your cookies that will not only ensure you turn a profit, but also give you the confidence to look a customer in the eye and tell them exactly how much your cookies cost.
So, if you’re ready to start your business off on the right food, let’s get baking
How To Price Your Cookies (5 Simple Steps)
If you want to price your cookies properly, there are quite a few things you need to consider.
From the cost of ingredients and equipment to your time and the number of cookies that go unsold, you don’t want to just shoot from the hip.
That’s why, for this next section, I’m going to walk you through 5 simple steps to help you price your cookies the right way.
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Step 1: Figure Out Your Cost Per Cookie
Like any business, when setting your price, you need to know how much each cookie costs you to make.
At first glance, this process might seem pretty easy; just add up the cost of your ingredients and divide that number by the total number of cookies you bake. And while that’s better than just guessing, it is actually a little more complicated than that.
Beyond ingredients, there are a few other important costs you should take into account.
In fact, for this first step, I recommend grabbing a pen and paper, sitting down, and adding up the following expenses:
The first thing you should consider when figuring out your costs is equipment.
From mixers to spatulas to baking sheets, you need to add up the cost of every piece of equipment, and then estimate how many cookies you think you can make over the life of each item.
In other words, if you paid $500 for a mixer, and you think it will last you 3 years before you need to upgrade, then you need to divide that money out until you have a cost per cookie.
Here’s how I recommend doing so:
- Figure out how many cookies you bake per week. For our example, let’s say you cook 35 cookies per day, 5 days per week. That adds up to 175 cookies per week.
- Then, multiply your weekly average by 52 (the number of weeks in a year). For our example, that results in 9,100 cookies per year.
- Now, multiply your yearly cookie count by the number of years your mixer will last you For our example, we’re assuming your mixer will last you 3 years, which adds up to a total of 27,300 cookies. (That’s a lot of cookies!)
- Now, all you have to do is divide $500 by 27,300, which results in approximately 2 cents per cookie.
While $0.02 might not seem like a lot, little numbers like that can add up fast. And the more equipment you have, the more important it is to figure out your expenses.
The next thing you need to calculate is the cost of ingredients per cookie. And for every cookie, this will be slightly different.
This is a fairly straight-forward process. All you have to do is add up the cost of your ingredients for each type of cookie, and then divide that number by the total number of cookies you can make.
Then, take each cookie’s ingredient cost, and add it to your equipment cost per cookie.
Another expense that you need to consider, especially if you’re going to sell them by the dozen, is the cost of packaging. Whether you choose to box them, wrap them, or anything else, you need to incorporate packaging costs into your cookie business expenses.
Like ingredients, this should be fairly easy. All you need to do is add up the cost of your packaging and divide it by the number of cookies it will allow you to package.
Then, just add that number to your cost per cookie.
4. Other Business Costs
Like any other business, if you decide to start a cookie business, you will have to pay other expenses.
For instance, you may have to pay rent for a commercial cooking space. At some point, you’ll probably need to pay for a website and other forms of marketing. You may need to pay insurance or bookkeeping costs. As your business grows, you might even need to pay employees.
In general, I recommend adding up your total monthly business expenses and dividing that by the number of cookies you sell each month.
Then, say it with me, add the resulting number to your cost per cookie.
The next item on the list is the Tax Man. As a business, you will need to set aside money for taxes. And this is a number that you should incorporate into your cost per cookie.
As a general rule of thumb, you should plan to pay approximately 25% to 30% of your revenue after expenses.
So, you should set your price so that you are still left with a decent profit after paying taxes.
One of the expenses that new business owners often overlook is waste (i.e. the number of cookies you baked but didn’t actually sell).
To figure out your waste, you need to add up the average number of cookies that are left unsold each day, and then multiply that number by your total cost per cookie. From there, you need to divide that number by the average number of cookies that get sold each day.
Then, add the result of that equation to your cost per cookie.
Ok, after calculating all of your expenses, and determining your approximate cost per cookie, the next step is to assess your target market.
Step 2: Figure Out Your Target Customer
I imagine that when you decided to start a business, you probably had a target customer in mind. What you might not have realized is that your target customer plays a big role in how much you charge for cookies.
For instance, if you want to make cookies for weddings, then your pricing will probably be different than if you want to sell cookies individually to walk-in bakery customers.
The hard part about this is that you just need to use your best judgment.
For instance, if you plan to sell cookies for high-end occasions like weddings or corporate events, then you might want to charge a premium.
Or, if you plan to sell cookies with a more artistic touch that requires you to spend a lot of time decorating, then you might set your prices a little higher than the average cookie.
Then again, if you plan to sell cookies for less luxurious events, or want to focus on volume, then you might want to charge a little less.
Over time, your target customer might even change, or you might even cater to multiple markets. You really just need to figure out what you want, and then factor that into your pricing.
Step 3: Determine How Much You Want To Profit
After you know your costs and your target market, your next step is to figure out how much profit you’d like to make on each order.
Whether you choose to sell individual cookies or cookies by the dozen, you need to figure out how much profit you’d like to make on every order, and then add that number to your cost per cookie.
Just make sure to calculate your taxes when figuring this out. Remember, as a good rule of thumb, you should plan to allocate around 30% of your revenue after expenses to pay for taxes.
As an example, let’s imagine you’d like to make $2 per cookie after taxes, and your per cookie cost was $1.75. To achieve that number, here is your equation:
(Desired Profit ÷ Revenue % After Taxes) + Per Cookie Cost = Cookie Price
So, for our example, that would be:
($2 ÷ 0.7) + $1.75 = $4.61
And there you have it.
At this point, you should know exactly how much you should charge for your cookies!
But we’re not quite done. It’s time for the scary part: testing your pricing.
Step 4: Test Your Pricing
After you determine how much you want to charge for your cookies, the next step is to actually test it out.
As the old saying goes, “the market sets the price.” So, just because you want to charge a certain price, doesn’t mean your customers will be willing to pay for it. Then again, if you set your price a little low, you might actually discover that you need to increase your pricing a bit.
The key here is to give yourself enough time to really test things out.
In other words, don’t go changing your pricing every single day. In fact, I recommend testing your prices for about a month before you go changing them.
Step 5: Adjust
If after setting your pricing, you still don’t feel like you’ve found your sweet spot, then it’s ok to make small adjustments.
Whether you don’t feel like you’re making enough profit for your hard work, or you’re just not getting as many customers as you’d like to see, price adjustments are a part of starting your own business. Every once in a while, you just have to do it.
Just make sure that you are adjusting your prices for the right reasons.
In other words, if you aren’t getting as many customers as you’d like, don’t just assume it’s because of your price. Rather, take a look at your marketing efforts and see if that can help you get more customers through your door.
Or, if you can’t keep up with demand, rather than increasing your prices, consider looking for ways to increase the volume of cookies you’re able to produce.
How Much Should I Charge For Sugar Cookies?
As a good rule-of-thumb, you should plan to charge between $2 and $6 for individual sugar cookies, or between $10 and $25 if you plan to sell them by the dozen. When setting your pricing, make sure to consider your costs, time, as well as the size and decorating complexity of each cookie.
How Much Should I Charge For Chocolate Chip Cookies?
In general, you should charge plan to charge between $2.50 and $5 for individual chocolate chip cookies, or between $10 and $20 if you plan to sell them by the dozen. At a minimum, your pricing should account for the cost of ingredients, equipment, your time, and the size of each cookie.
How Much Should I Charge For A Dozen Cookies?
If you want to sell cookies by the dozen, you should plan to charge between $10 and $20 for undecorated cookies; or between $12 and $25 for cookies with frosting/decoration. When setting the price of your cookies, make sure to account for the size of your cookies, your expenses, time, and profit.
As a new business owner, figuring out your pricing can be a difficult endeavor. However, if you take the time to work through the five steps in this post, I’m confident that you will know exactly how much to charge for your cookies.
Now get out there and start baking! Your future customers are waiting. (I just hope I’m one of them!)