Proper Pricing

Hi Cookie Lovers,

I must be on a pricing kick or something because last week I talked about how to make money from cookies and this week I'm talking about pricing cookies themselves. I just think it's important is all!

So pricing. If you've read my How to Make a Living on Cookies post, you'll remember I started out charging 2$ per cookie. That's not a lot but as a beginner, I had to charge accordingly for my skill set. As I learned new techniques and purchased new equipment, I realized that there are several factors that should go into the price of a cookie and that other pricing models I found didn't break it down or charge as I would have liked so I created my own model that factors in the following:

Amount of Colours

Hand Painting

Air Brushing

Text

Hand Cutting

Wrapping

Packaging

Delivery

Allergies

Cookie Size

All of these things take time and effort. If a cookie has more than 3 colours, that's more time mixing frosting. If it has gold or silver accents, I have to wait for the cookie to completely dry then individually paint them on. If I have to use an airbrush, I have to purchase the stencil, the colours and clean the machine (which is not fun) afterwards.....and so on and so forth.

But while these all play a factor, I also wanted to give my customers fair prices for what they want and to me, charging for the dozen to me seems a little unfair. For example say you have an assorted dozen cookies that normally would run 36$ but because you have to put gold on a couple of them, they fall into the higher pricing category of $42 a dozen. To me this doesn't justify charging 3.50 for each cookie when I could have charged you that extra cost for those 3 special ones.

Also, What if a person only needs 15 cookies? or can only afford 6? I wanted my prices to be easy to understand and fair for people of all price points. Therefore, in most cases I charge per cookie using a 3 tier approach for regular cookies and a 2 tier for minis. See below:

Regular Sized Pricing

Mini Sized Pricing

The only thing I DON'T have listed on here is gluten or almond free which is .50$ add on to any cookie.

To me, this is fair and clear about what you get for your money and thus far it has worked very well. The prices are competitive and it really helps me as the baker think before I put too much effort into a cookie that hasn't paid for that type of service. (an issue a baking friend of mine said she had).

Now this being said, once I've made an assortment of cookies, I know how much time and effort goes into each dozen and I can come up with a justification for a set price per dozen. This is why on my purchasing section of the website, you can order cookies by the dozen that have a fixed price. Once you make something, it's easier to make again (IN MOST CASES).

However all things considered, this is what works for me. Other bakers like Sweet Sugarbelle charge on the size of the cookie in addition to other things. Others charge overall per dozen like Issa Cookies with additional costs. For me, keeping it simple and per cookie with my very clear pricing chart is what works.

Hopefully this sheds some light into my particular pricing structure and helps you figure out yours.

Keep on Cookie-ing!

-Ashley

How to Make a Living on Cookies

Cookies for me are a way to fun way to pay off student loans. I needed some extra cash, I wasn't sure how to make it, I leveraged a skill I had. But in all reality, how can you actually make any money selling cookies? or really anything for that matter.

The trick is to learn how to properly price your goods and get familiar with this very easy formula:

Profit = Revenue - Costs

Profit is the end game. It's the money you make AFTER you've taken out the raw material and other such costs. This is the money you want to make. When I first started baking cookies I charged 2$ a cookie. It costs me about 8$ to bake a dozen so think about it, 24-8 = 16$ factor that into 2 hours of straight work and I was making 8$ an hour. I wasn't going to pay any student loans off that way. (unless I save all my 8$ and don't buy those 2 cookie cutters I saw on JH Cookie Co's Website last night).

Realistically, this just didn't make sense. So after a year of charging 2-3$ I decided to adjust my pricing structure because I had more experience, and knew reasonably and competitively, charging 3-5$ a cookie isn't crazy, it's the norm.

I started looking at cost in terms of raw materials, time, and misc. admin costs

1. Price of raw materials

To find the total cost of raw materials, I converted all my recipes to weight then do a lot of math to figure out my cost per dozen of cookies. Below is a snapshot of how accomplished this.

(P.S. if you want help solving these types of equations, let me know. I went to school from elementary to graduation in Asia. I can convert anything. )

I did this for ALLLLLL of my materials, flour, baking powder, meringue powder, food colouring, piping bags (average)...etc and what I came out with was that each dozen of cookies comes to roughly 7-8$.

2. Time

Hand frosted cookies are not something you can do on a whim. Every aspect of them takes time. This definitely something that needs to factor in the overall price of your cookies. If you're only making 8$ at the end like I did, that's no bueno and you're gonna rack up a fortune in cookie cutter debt.

3. Admin Costs

These are things like taking orders, following up with customers, Delivery Costs, Additional Supplies for various orders...All the behind the scenes things that people don't realize are out there

So how does this all factor into making money?

Well after I had sorted the above stuff out and decided I was going to charge more for my goods, I started calculating it. If I charge 3$ a cookie and my average order is 2 dozen, then realistically I can make 13.25$ an hour.

Add that up and I typically do about 4 dozen cookies a week, that's a little over 400$ a month, or about 5,000$ a year give or take if they want more detailed cookies.

So for me, that's worth it. BUT! realize, I have been doing this for a while, my skills have gotten WAYYYY more advanced than my first cookies, and you have to take that into consideration. Don't start out charging 3-4$ if your quality is that of a 2-3$ cookie right now. It's okay to adjust your pricing as you go, in fact it's healthy so if you eventually open a shop people aren't freaked out when you go from 2$ per to 5$ per (a friend of mine told me that's what happened to her). Regardless, if you're in it to help yourself out financially, charge what you think is fair that's going to also help you. And if you're not in it for the "cha-ching", then that's great! Continue to do you. but make it worth your while (monetarily or for fun) regardless.

Good luck Cookiers!

-Ashley