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How to Price Your Products By Pankaj Sharma

  in Food and Drinks | Published 2015-10-29 11:58:59 | 277 Reads | Unrated

Summary

Baking is becoming a booming business in the nation! With the quick advancement of the baking industry across borders it is important to take care of all the elements of a business, pricing being the most important.

Full Content

Baking is becoming a booming business in the nation! With the quick advancement of the baking industry across borders it is important to take care of all the elements of a business, pricing being the most important.

Eventually, the price of your goods is dictated by the market requirements and trends. But, you should calculate the actual cost of your goods and then add a profit margin to it. Followed by this you can compare your pricing to the market price and analyse if you can compete in the industry with your pricing.

Having a clear idea of how to price your products

and make money in bakery business is as important as having great recipes. Just having a rough idea of the cost of your products is not what is called as a strategy for success. The price you charge should cover all your costs.

A lot of professional bakers do not pay much attention to their product costs and hence, create a space for financial breakdown through which they can’t come out. You would not want to do this, right?

We have a list of things for you that you can take care of while pricing your product. Here you go!

Settle down on Your Inventory

Decide what you are going to offer your customers. Initially you can have limited offerings with basic costs. Think of including unique items in your bakery. These should be those items which are unique, classic and not easily available in the nearest stores except yours. For example every bakery sells brownies, but you can choose to offer something different like, brownies with peanut butter pudding frosting. Hence, people will have a reason to check out your offerings and pay a little more for your unique baked products!

List down the Cost of Ingredients

After finalizing your inventory of baked goods, you will now have to make a list of all the ingredients required. Buy as much ingredients as possible for your store and product offerings. Make a cost list of each listed ingredient. Once all the costs are listed, break it down into everything you require for a recipe.  

Include the Cost of your Equipments

You need to include the cost of equipment too. Though it is a bit difficult to figure out, you can do it by estimating how long each piece of equipment will last and then go ahead and divide the cost by the total number of years; then you can divide that figure by 12 months, followed by dividing that figure by the number of items you will be selling.

Determine the Cost for Supplies

Figure out the cost of your supplies like baking equipment and supplies online, cake moulds (cake moulds online India), cupcake liners, waxed paper etc. You need to evaluate the number of time you will require these in a month which will be based on your monthly sales. This you will come to know after a few months in a business. Estimate it for a few months to know the exact cost of your supplies. You can then divide the cost of each supply by the total amount of items you are selling every month. For example if you sell 100 cupcakes you’ll need to divide the cost of each item by 100. In case for any product you get fractions of the total amount, you can round it up.

Incorporate the Operating Costs

These include all the utilities of your bakery, like phone, printer cartridges and other essentials etc. You can do this in the same way you did for equipments. Other costs include the advertising and promotions cost.

Lastly, Map Your Costs for Profit

Once all the costs have been listed and broken down; add all of them. Now, in order to make the profit, you have to price a little more than the total cost. Normally it is done by multiplying the cost thrice or more.

Before finally pricing your products, make sure you have an idea of what the bakeries in your area are charging. Eventually, you shouldn’t be charging too high or too low than your competitors.

Pricing is time consuming and tiring, right? But these efforts pay in the long run, yielding profits for you.

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