Cookie Pricing Diagram

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.

Thanks for your comments and appreciation!

Of course, my chart is based on French food prices and taxes and but it can't be so different in other countries.

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:

 

 

 

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.

Thanks - very helpful! You decorate pretty darn fast!

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.

Thing is, if I count all the time I spend decorating (mixing icings, filling bags and bottles, cleaning...) I probably would have to ask for prices so high I couldn't sell the cookies!

 

So I estimate my time, and try to find a middle way between working for nothing and not selling annything.

 

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?

Sorry if my post came out choppy and with some bold... not intentional! My phone apparently doesn't play well with the mobile version of this site

 

Ditto that - couldn't agree more with Tammy Holmes. Value yourself or no one else will!

Couldn't agree more Tammy!

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

FYI, you all might be interested in Aymee VanDyke's latest From Dough to Dollars column; it addresses the very issue of costing/pricing your cookies for profitability. Much depends on the complexity of your cookies and how long they take you to make! http://cookieconnection.juliau....com/blog/from-dough

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.