Cookie Pricing Diagram

Gaphique cookie

 

Hi everyone!

I run a cookie business in France and I decided to make a diagram with the different components of the price of one cookie.

I based my diagram on a 3 € (4 $) cookie, which is constructed as such:

  • 6,67% for ingredients and electricity (0,20 € /0,27 $)
  • 2 % for packaging (0,06 €/0,08$)
  • 38,6% for wages (1,16 €/1,57 $)
  • 11,31% for social security contribution(0,34 €/0,46 $)
  • 35,94% of margin (1,08 €/1,47 $ ) on which I have to pay for the rent, phone and internet, website, accountant etc.
  • 5,5% of VAT (0,17 €/0,23 $)

 

I think it would be interesting to have cookiers from other countries do the same analyze of their pricing to compare.

Here in France, we don't have any cottage law for any food production so I had to get a professional kitchen, and we also have quite a lot of taxes to pay.

 

How does it works in your country, I'd love to know?

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Great chart. It doesn't surprise me at all that the labor cost component on a decorated cookie is 6-7x that of the ingredients. That's why it's so important for people to compute/understand labor standards before they price. If you simply mark up ingredients by 3-4x, you could lose your shirt as this example shows very clearly. When I had my bakery about 8 years ago, I rarely did decorated cookies for under $5 each. Otherwise, I couldn't cover labor costs, not to mention overhead. Off my soapbox - I just feel it's critical for people to get paid what they're worth, because sooner or later, working for nothing becomes a chore. Thanks for sharing.

First of all ... that chart is fantastic!  I have a business from home under the Michigan Cottage Law ... and although many think that would make things much cheaper, it doesn't!.  Julia, I absolutely agree with what you wrote.  My cookies are expensive.  I have certain designs that I have priced per dozen.  But my cookie favors start at $5.50 and go up from that point.  Yes, I have had people say 'no thanks' but there is no way I could bake a cookie from scratch, come up with a custom design, or even if they provide you with a design or idea, I still draw it up to scale.  It's all VERY time consuming and there has to be some kind of profit in order to call it a business.  

I am still amazed by that chart!  Did I happen to mention that's a fantastic breakdown??! 

And, mind you,  that "margin" isn't pure profit margin, or even "operating margin", which typically includes rent; it's "gross margin" which is revenue less direct cost of goods sold (direct materials and labor applied to the making of the product). So by the time rent, etc. is all paid, food businesses are typically very lucky if they see more than a few % points of net margin.

Les Delices de Plume - Would you say your chart is representative of a relatively simple or a relatively complex decorated cookie? Just curious, because labor is such a huge swing factor. What's the average time in one of your cookies? and what's the going labor rate there?

 

I wish I had more specifics of my own to share but it's been a long while since I priced a cookie for sale. 

You brought up a great point! I, just last night, has a potential customer tell me that they found my same exact designs (a WHOLE other topic!!!) on someone else's store and were selling them for $2.40 each and I was selling them for $5 -- would I price match...UM, no. I too run a real commercial bakery and I know the costs involved and obviously, that person isn't pricing their stuff accordingly. Decorated cookies are time consuming...the initial ingredients may not cost a lot, but the overhead in creating them does.
 
I love the chart. I could copy something similar from Quickbooks maybe later. I was an accountant in my past life (prior to child) and the details and numbers always interest me.
 
Originally Posted by Julia M. Usher:

Great chart. It doesn't surprise me at all that the labor cost component on a decorated cookie is 6-7x that of the ingredients. That's why it's so important for people to compute/understand labor standards before they price. If you simply mark up ingredients by 3-4x, you could lose your shirt as this example shows very clearly. When I had my bakery about 8 years ago, I rarely did decorated cookies for under $5 each. Otherwise, I couldn't cover labor costs, not to mention overhead. Off my soapbox - I just feel it's critical for people to get paid what they're worth, because sooner or later, working for nothing becomes a chore. Thanks for sharing.

 

Originally Posted by Julia M. Usher:

Les Delices de Plume - Would you say your chart is representative of a relatively simple or a relatively complex decorated cookie? Just curious, because labor is such a huge swing factor. What's the average time in one of your cookies? and what's the going labor rate there?

 

I wish I had more specifics of my own to share but it's been a long while since I priced a cookie for sale. 

This is the price of a "medium" complicated cookie like this one for example:

 

 

 

gateau anniv2

For this type of cookie, I count 3 minutes of decorating time, plus baking, wraping and so on.

Here in France the minimum labor rate is of 7,39 €/9,97 $ an hour once the social contributions are paid, but my goal isn't to pay myself minimum wages, of course.

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Prices here are relative to the competition and the economy. Allot of competition  and a near broke economy.  So people are working for nothing if they want to work. Talking to people in more Eastern countries they make even less. And it becomes tedious and not joyous. (A chore, like Julia says) Why do it? Because something is better then nothing. The birthday cookie would start at 1 euro and may go up to 2.00( but not likely) here in Greece. People that stand on their prices may find SOME work but generally shoppers are looking for cheap, not quality.

My quick two cents ~ I think it's more about finding the right market. If you have an $80,000 Porsche for sale and you take it around to people who either can't afford it or to people who would never buy a luxury vehicle,  does that mean you should sell your Porsche for $40,000 instead?

 

I respectfully disagree with the, "Something is better than nothing" approach.  It's different when your just starting out and you still have a ways to go, but those who have great skill and have spent a lot of time developing their t

alents, need to value their work or no one else will. 

No matter what type of creative industry you are in, there will always be people who are going to try to get what they can from you for as little $$ as possible.   Everyone places value on things differently.  Just because you get that person who says, "How much??!!" doesn't mean you should feel discouraged and lower the value of your work.  It's about placing the proper value on your work & talent and finding the right market ~ those who either want your product, no matter the cost and those who care about the cost, but love your work so much, that they will save up to buy it.

 

 

Value yourself... if you don't,  why would anyone else?

Bravo!!! Very well stated and I cannot agree more!
 
Originally Posted by TammyHolmes:

My quick two cents ~ I think it's more about finding the right market. If you have an $80,000 Porsche for sale and you take it around to people who either can't afford it or to people who would never buy a luxury vehicle,  does that mean you should sell your Porsche for $40,000 instead?

 

I respectfully disagree with the, "Something is better than nothing" approach.  It's different when your just starting out and you still have a ways to go, but those who have great skill and have spent a lot of time developing their t

alents, need to value their work or no one else will. 

No matter what type of creative industry you are in, there will always be people who are going to try to get what they can from you for as little $$ as possible.   Everyone places value on things differently.  Just because you get that person who says, "How much??!!" doesn't mean you should feel discouraged and lower the value of your work.  It's about placing the proper value on your work & talent and finding the right market ~ those who either want your product, no matter the cost and those who care about the cost, but love your work so much, that they will save up to buy it.

 

 

Value yourself... if you don't,  why would anyone else?

 

I have to admit ... when I'm told 'we were given a price for less' ... I start second guessing my prices.  I get that momentary sinking feeling ... BUT THEN I think, why would I want to put so much time and effort into something that I'm not getting PAID for??!  I'm sorry, I'm going to just put it out there, covering the cost of ingredients but not getting paid for your time is ridiculous!  It's been said before, I'm saying it again!  Can you really call something a 'business' when there's no profit?  I'd rather pop bonbons and watch TV, than 'work' for free.  Okay, there I said it and quite frankly, I feel much better now  <--- me feeling better 

Gigi- And does that lower price include a design that's as unique as yours? Techniques as well executed as yours? Cookies that TASTE as good as yours? Etc.... My point is that, two different sets cannot be compared soley on price. And when someone says that they see the same cookies somewhere else, for less - FALSE! Out of the thousands of cookies I've seen over the years, I have yet to come across two exact cookies by two different people/companies. Anyway, maybe the answer is, "Yes" to all of the previous questions. Then great, that person can do all that work for less money. That's their choice. Don't let that influence your decision making for your business. Everyone has their own unique skills, every customer wants something different. Try not to take the business end of things personally. Every time you start to question your pricing, first decide if it's coming from an honest place or out of insecurity. If it's out of insecurity - forget it! Nothing good comes from insecure decisions . It takes time to build a business/clientele. Figure out what type of cookie business you want (mass production, bakery, wholesale, weddings, online) and work towards that. Each type requires a different approach & different pricing. Everyone who is trying to build a business, no matter the form, is in the same boat as you, so you're not alone. If you work hard at building a clientele, keep advancing your skill and price your work fair, you will be successful

I'm glad I found this post. Pricing is something that has been a bit of a nightmare for me. I think my very first sale my cookies were $1.25 per cookie. That left a not so sweet taste in my mouth after all the time and effort I spent on them. I got that price because there was someone else locally making them for $1.00 and I felt that I pay a little closer attention to detail and bag and bow my cookies. After coming to realize it would be completely ridiculous to charge such a low amount for such detailed cookies I increased my prices. A lot of responses were, "they aren't even expensive to make", or "thats just crazy". I began to feel bad about my prices and began second guessing myself but at the end of the day no one wants to work for free. Bills aren't paid with hugs and rainbows. My new found talent brought friends and "family" from out the woodwork all wanting discounts or the friends and family price. This drove me nuts and led many people to try to boycott my cookies. If I could mass produce cookies and have a machine that I could set to make cookie designs I wouldn't mind doing what I could. Since I have to make each cookie individually I think it's unfair to cookie makers to be put in that situation. At the moment I am trying to really push my business to a more profitable level as my daughter will be here soon and I plan on staying home with her for a few years. I have a lot to learn and hope to find the answers I need on this site.

Thank you all so much for the invaluable information provided on this site.

Originally Posted by Stefanie:

I'm glad I found this post. Pricing is something that has been a bit of a nightmare for me. I think my very first sale my cookies were $1.25 per cookie. That left a not so sweet taste in my mouth after all the time and effort I spent on them. I got that price because there was someone else locally making them for $1.00 and I felt that I pay a little closer attention to detail and bag and bow my cookies. After coming to realize it would be completely ridiculous to charge such a low amount for such detailed cookies I increased my prices. A lot of responses were, "they aren't even expensive to make", or "thats just crazy". I began to feel bad about my prices and began second guessing myself but at the end of the day no one wants to work for free. Bills aren't paid with hugs and rainbows. My new found talent brought friends and "family" from out the woodwork all wanting discounts or the friends and family price. This drove me nuts and led many people to try to boycott my cookies. If I could mass produce cookies and have a machine that I could set to make cookie designs I wouldn't mind doing what I could. Since I have to make each cookie individually I think it's unfair to cookie makers to be put in that situation. At the moment I am trying to really push my business to a more profitable level as my daughter will be here soon and I plan on staying home with her for a few years. I have a lot to learn and hope to find the answers I need on this site.

Thank you all so much for the invaluable information provided on this site.

Stefanie - You should definitely check out Aymee Van Dyke's From Dough to Dollars column on this site, especially Parts 1 and 2 of her cookie costing and pricing series. Part 3, relating to calculating profit margins, will be posting in early January. You can see her full series, so far, here: http://cookieconnection.juliau...rom-dough-to-dollars

Wow - so grateful for this post.  I am taking an online class in order to make my business more profitable but it seems so difficult unless I do large orders - which I have done but they aren't consistent.  I will read the posts but may be back for some advice and maybe even a little support I am feeling kind of down today when I did the numbers last night

Originally Posted by SharonMuse:

Wow - so grateful for this post.  I am taking an online class in order to make my business more profitable but it seems so difficult unless I do large orders - which I have done but they aren't consistent.  I will read the posts but may be back for some advice and maybe even a little support I am feeling kind of down today when I did the numbers last night

Yeah, it's tough to be profitable making super complicated cookies on occasion; scaling up and diversifying to simpler types or other products (and pricing the really complicated ones at what they're worth) are really key.

Thank Heavens of this post!

My friend and I are just starting a cookie business (at home covered under Texas Cottage Law) and we are always wondering is it too much or too little? We currently charge by the dozen $20/dozen and have only had one person turn away but we will not budge in our prices because it does take a lot of work. But thank you for this post. Definitely have to value our work!

how much would you charge for a cookie like this? I am having a hard time figuring out my pricing and I its confusing my customers, currently I sell these for $8.50 a dozen since I am just starting out but I need some other opinions on pricing..i don't want to cheat myself or under value my cookies...I am just not sure what to do, thank you so much ~jenna age 24

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Originally Posted by Alistheboss09:

how much would you charge for a cookie like this? I am having a hard time figuring out my pricing and I its confusing my customers, currently I sell these for $8.50 a dozen since I am just starting out but I need some other opinions on pricing..i don't want to cheat myself or under value my cookies...I am just not sure what to do, thank you so much ~jenna age 24

Way too low . . . I'm sure you spent more than an hour on them. And I'm sure your time is worth more than $8.50 an hour. Here's a more rigorous post about how to figure out your costs and price to make a profit. It's important to know your cost structure so you can price without losing money. http://cookieconnection.juliau...costs-and-break-even

If you don't value your time, neither will your customers...food for thought. I personally would NOT charge so little...Up the price...people will still pay and if they don't you DO NOT want them as a customer.
 
Originally Posted by Alistheboss09:

how much would you charge for a cookie like this? I am having a hard time figuring out my pricing and I its confusing my customers, currently I sell these for $8.50 a dozen since I am just starting out but I need some other opinions on pricing..i don't want to cheat myself or under value my cookies...I am just not sure what to do, thank you so much ~jenna age 24

 

Jenna, I agree, you are not charging enough. 

If you feel more comfortable, you could say that you're currently charging discount prices, because you are still in the student phase.  But, you still deserve far more than $8.50.  Possibly double that... at least.
One more thought...you must be having a hard time even braking even from the costs of your ingredients, not to mention your time...If this is more of a hobby vs. a business, then I guess that doesn't matter, but I am assuming you'd like to make a little money? Depending on size, for my minis, I charge $1.25 PER MINI, then small to large range from $3.5 to $8.50 PER cookie...just so you have a frame of reference. Charge more.
 
Originally Posted by Alistheboss09:

how much would you charge for a cookie like this? I am having a hard time figuring out my pricing and I its confusing my customers, currently I sell these for $8.50 a dozen since I am just starting out but I need some other opinions on pricing..i don't want to cheat myself or under value my cookies...I am just not sure what to do, thank you so much ~jenna age 24

 

Hola a todas hermosas mujeres artesanas.

tengo el Problema Mismo Que los muchas "la VALORACIÓN de mi trabajo" yo no tengo una tienda las vendo por medio de mi página www.dulcesgalletasdecoradas.com

y por recomendacion. Yo vivo en Alicante (España) y las tiendas de aquí las venden entre 2,50€ y 4 ,00€ Pero son de pasta de azúcar punteadas y aplicaciones de pasta de azúcar, solo eso. Digamos que es una tarea fácil. 

Nadie las realiza a mano pintadas o con glass y diferentes técnicas como utilizo entre otras aerógrafo.

comparto que siempre habrá personas que no valoren el trabajo de uno. 

Yo quisiera poner Un saludo valor diferente a aquellas galletas que son pintadasna mano como a aquellas que son más complejas por tecnicas, llevándolas a Un saludo valor de 4,50€ a 5 € c/u. también hay que contar con su envoltorio, si es cierto que la cadena de producción inicia y termina en mi, no cuento con personal.

gracias por este espacio espero algún comentario o consejo 

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Here's a rough translation of the post directly above:

 

Hello to all beautiful women artisans.

 

I have the same problem as many: "the ASSESSMENT of my work." I have not a store; I sell through my page www.dulcesgalletasdecoradas.com and recommendation. I live in Alicante (Spain) and the shops here sell between 2.50 € and 4 € 00 but all are dotted sugar paste and fondant applications, just that. Call it an easy task. No one paints by hand or uses royal icing or different techniques such as airbrushing. There will always be people who do not value the work of one. I would like to put a different value to those cookies that are that are painted by hand, as those that are more complex due to technical nature, leading prices of € 4.50 to € 5 c / u. They must also have packaging, if it is true that the production chain begins and ends in me. I do not have staff.

 

Thanks for this space I hope any comments or advice.

Originally Posted by Dulces galletas:

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Hi, I'm responding the same way as I have to Stefanie and some of the others. In order to fairly price your cookies AND make a profit, you truly need to understand your cost basis in addition to knowing what others are charging in your area. 

 

You should definitely check out Aymee Van Dyke's From Dough to Dollars column on this site, especially Parts 1 and 2 of her cookie costing and pricing series. She links to a tool which can help you start costing out your work; it is a traditional and widely accepted food costing approach used in most profitable food service businesses. You can see her full series, so far, here: http://cookieconnection.juliau...rom-dough-to-dollars

Hi everyone!

 

I'd like to say, that here in chile, the cookie business is not too high (at least the good cookie art) what's trendy here is the cake business. Most of the people who sell their cakes and pastries are 99% women, and of course, cakes are more expensive than cookies, that's why i decided to start my own cookie art business (i create my cookies and then sell them) and what i've noticed about this, is that people find the prices "too high", since they think: "well, this is just a cookie". That's pretty offensive, considering all the art work behind it, the time spent, and creativity. I've seen cookie prices (on Etsy) that rounds the 35$ per dozen, and i find that pretty incredible, because the price that i came up with (after analyzing the costs, materials and time) is 23 - 24$ per 2 dozens (approx) and even so, many people still find it "too pricey". Someone once told me: "people don't care about how hard you worked for your cookies, they only care about eating them"... i think it's wonderful when people tell you how beautiful your creations are, and how much they admire your cookie art, but when they directly tell you "i think they're too pricey, in the end, they're just cookies" it's kind of offensive, cause in my case, i take my cookie art very serious, it's what i love to do and it's what fills my soul. 

Originally Posted by Cookies by joss:

Hi everyone!

 

I'd like to say, that here in chile, the cookie business is not too high (at least the good cookie art) what's trendy here is the cake business. Most of the people who sell their cakes and pastries are 99% women, and of course, cakes are more expensive than cookies, that's why i decided to start my own cookie art business (i create my cookies and then sell them) and what i've noticed about this, is that people find the prices "too high", since they think: "well, this is just a cookie". That's pretty offensive, considering all the art work behind it, the time spent, and creativity. I've seen cookie prices (on Etsy) that rounds the 35$ per dozen, and i find that pretty incredible, because the price that i came up with (after analyzing the costs, materials and time) is 23 - 24$ per 2 dozens (approx) and even so, many people still find it "too pricey". Someone once told me: "people don't care about how hard you worked for your cookies, they only care about eating them"... i think it's wonderful when people tell you how beautiful your creations are, and how much they admire your cookie art, but when they directly tell you "i think they're too pricey, in the end, they're just cookies" it's kind of offensive, cause in my case, i take my cookie art very serious, it's what i love to do and it's what fills my soul. 

I stumbled over your Price of $ 24 per 2 dozen. That seems incredibly low. I don't know about wages in Chile, guess they arge lower than here in Germany, and I also don't know about business costs (such as various insurances, taxes, etc.), but that means that you charge $ 1 per cookie. How long do you need as an average to finsh one? I'd guess about 10 min. per piece, based on your uploaded pictures, maybe even longer (and don't cheat yourself, cleaning time, preparing the icing, customer corrspondence, maintaining an onlineshop etc. has to go in this as well!). That would let you make appr. 6-7 cookies per hour = $ 6-7 per hour. Now deduct all the costs you had: cookie dough, colors, icing, electricity, baking paper, bags for packing, taxes, and so on, and so forth. That will probably leave you with $ 1,50 an hour net profit - this seems very low to me, even for Chile. And especially low for this kind of artful product.

 

I have pricing going on a lot on my mind lately, as I consider opening up a cookie business together with my boss - and I honestly have to say that I will either need to charge 20-40 EUR per cookie (yes, per cookie, not per dozen or whatever), or I will be working for no money at all. I need an average of 30-40 minutes per cookie and I am not very slow - I had the opportunity to compare my speed to people who actually do this for a living and I am about their speed, too. If I had a professional working area and made large amounts of identical cookies, I could be a bit more faster, but even then, no chance to make any of my designs with profit for less than 15 EUR per cookie. Ofcourse, we do have very high side costs in Germany, which make about 40% of this price.

 

I have to admit that I am reaching the conclusion that it is not worth it. Nobody will pay these prices and I am not willing to work for a couple of bucks an hour. Not if I have to make a living of it.

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