Hey /biz/, I'm planning on starting up a home business baking cookies. It'll mostly be local in the hopes that it will one day expand into something more, but for now I'm starting small.
How do I determine how much I should sell each cookie for? I realize that I need to account for the price of all the ingredients, the time I put into it (which I suppose I need to determine the price of that myself) and the utilities and such.
It seems a bit tough because if I were to, say, buy giant bags of flour, sugar, salt and other ingredients from Costco, that would lead to a huge amount of cookies. Would I need to use my recipe and find out how many cookies I would make with a set of ingredients, divide the cookies into the price, then make sure that I at least break even on the price of ingredients + something established for hours I put in and the utilities (rather minor)?
The problem is that, obviously, there are some ingredients that will run out before the others. Flour bags are fucking huge, so I would definitely run through the sugar, cocoa powder, baking soda, etc. well before I ever run out of flour, if only because some of those items you just can't buy in that amount of bulk. (Costco doesn't sell 10-15 lb bags of cocoa powder or baking powder).
Also, if I want to keep the price of all my cookies the same, how would I account for specialty items such as wanting to add nuts or M&M variants? I don't want to price them differently since they would certainly be more expensive.
I feel like I'm almost ready to start putting my products out there at work, with friends and family, but the pricing part is preventing me from going forward.
Any advice or help on this matter? Thanks.
I would actually have to measure out how much of the bag I've used, then divide that by the size of the bag.
500 cookies would not dent a 25 lb bag of flour very much, but it would dent all the other stuff.
Just divide the costs by units you actually use and it's easy. E.g. 32T in 1lb butter. 20lb block of butter = 20 * 32T. Block is $x/(20*32) per T. you can do this with every ingredient. Factor in packaging, delivery, maybe electricity for your oven. Estimate what your clients will pay per unit produced, and make sure the markup is at least above 80%. Raise it as high as you think people will pay.
That's a funny looking number...
Materials+labor+expenses(rent etc)to make 500 cookies=cost. If you're cheaper than everyone else at this point, you can add in profit and start baking. If it's real tight, you can still move forward, but you'll be building a job not a business.
Let's stop and talk about this for a minute...
Before you come back here in two weeks covered in flour, asking how to sell 500 cookies. Op, what is your plan for moving baked goods? The "if you build it, they will come" mentality fucks over a lot of energetic youngsters.
How you going to sell these, senpai?
look up product costing / cost inclusion / cost measurement
these are all accounting ideas that help you understand how much it costs to manufacture your product
>The problem is that, obviously, there are some ingredients that will run out before the others.
you're fucking autistic if you think that is a problem, LOL
>because some of those items you just can't buy in that amount of bulk
stay poor my friend, you can buy anything in any size of bulk if you have the cash
I work in an office full time, as well as have many friends who work in offices. For special events, they order lots of sweets, and they are always looking to try something new.
I've gotten some pretty good reviews from their office workers and it sounds like some of them wouldn't mind making my item something they'd order over and over.
So for now, it would be word of mouth and selling through friends. I guess sort of like Girl Scout cookies? I baked numerous samples to send with variuos friends to their various offices and got consistently good feedback, as well as ways I can make improvement.
I suppose I am autistic, but this is my first time wanting to make something I enjoy doing (baking) into something more. It's pretty obvious that business isn't my strong suit considering how much I'm here asking this. I am trying to get educated and learning as much as I can, but the financials part is definitely my weak point.
Yeah, I should look harder about finding things in bulk.
Thanks. That really does sound like a easy way to see it. I'll keep this in mind while I gather more info.
We need a "rent commercial Kitchen space" solution for startup caterers asap
It's basically office space, but for culinary purposes.
The licensing and commercial equipment expenses are prohibitively expensive to most of the people that actually cook.
Also why there are so many chic restaurants that fail within 1-2 years because they were started by people that have never cooked anything more than a Hot Pocket yet treat their Executive Chef as just an employee with benefits.
and lo anon used the power of fractions and all was well with the world.
this is a solved problem. please refer to people who've done it before.
You work in an office full-time, so your plan is to make the entire batch the night before?
Your competitor's cookies will be fresher and they will also be cheaper because you're working on a job to job basis.
You need to compete in one of these areas, otherwise you only have the friend card to play
Oh and to answer your pricing question. If you want to sell every cookie for the same amount you're going to need to learn how to make a budget, it's more or less trial and error.
Next figure out how much it will cost to make a single cookie of each type.
Cost of entire bag of ingredient/Amount that goes into batch/ amount of cookies that come out= Cost of ingredient/cookie
10lb. flour= $25/ 1lb. per batch= $2.50 flour per batch
each batch has 25 cookies so $2.50/25= $.10 of flour per cookie
Total all the ingredients that go into that cookie and multiply by how many cookies of each kind you think you will sell
Now total the cost of all cookies, and add 25% (this is standard markup for the food industry) and divide by total number of cookies you expect to sell. That should give you a good estimate for sales price.
Hope this helps. I can make you an excel table if this is just jargon.
How can you run a business if you can't figure out this brain dead requirement?
1. Calculate the cost of making X amount of whatever type of cookie.
2. Integrate your desired profit margin.
3. Divide by number of cookies.
HOLY FUCK IT'S MAGIC
I suppose right now it's just a small thing, I don't mind making them overnight because I already have a process that lets me pump out lots of cookies out really fast.
They still stay very soft for numerous days, so it's almost indistinguishable after one evening if I wrap them up right.
I understand that right now, I only have the friend card to play because I feel it's one of the best ways for me to get my name out, through word of mouth. Kind of like how when parents help their kids sell their candys and shit, only this time it's not See's candy or Girl scout cookies that are, for the most part, seasonal.
Because I made it much more complicated than it really was, apparently and let it sort of scare me into thinking that it was much more daunting than it really was.
Hmm, this seems reasonable. I know it isn't jargon, but if it isn't too much trouble, could I ask you to please demonstrate it in an excel table? Like I said earlier, I think I'm just making this more complicated than it really is. At least, for a small scale operation. Really small.
I actually just bake for fun because I enjoy it, share it with friends and family. So I actually have a lot of ingredients already to make quite a bit of cookies already.
They all did that shit that family and friends do when they say "Oh man, you should sell these!" which I never really took to heart. But one day I just made a batch of miniature versions and asked them to distribute them to co-workers, along with some little survey link about the cookies if they took one. Got back a small amount of reviews (as expected), and it was about a 78% approval rating. The 22% they needed adjustment in some way or another, and none of them said that it was flat out trash.
If this doesn't pan out, then it doesn't pan out. I realize that this is no different than a sort of modern day "kid selling stuff from his lemonade stand soap box". If something comes of it, great. I'll focus on it and educate myself more. If it doesn't, I didn't lose much since I already enjoy baking stuff.
No. I just have a culinary background and happen to enjoy the baking aspect of the kitchen more than any other part.
This is probably where the thread derails and I get accused of being called a faggot or whatever.
In any case, thanks to everyone for the information, it looks like I've got a great number of resources to look in to.
Hmm. I make smaller ones, like the size of those Famous Amos ones. People I'm around tend to enjoy them more than larger ones because they can just pop the whole thing in their mouth.
You need to estimate how many cookies you can sell in one period (let's call a period a month since you are a small operation). You also need to know the going per-cookie market price (check local mom-and-pop bakeries).
Figure out your monthly costs attributable to cookie baking and split them into fixed and variable. You have to do this for mixed costs (like utilities, which have a large fixed component and small variable charge) to be accurate. Once you have estimates for these monthly bills, divide by the expected cookie sales to have per-cookie variable and fixed costs.
Can the market per-cookie price support, at least, your per-cookie variable costs? If so you are onto something, if not, find ways to cut costs or quit now and save your money.
If you have VC covered, look at per-cookie fixed costs. If you don't have those covered you will need to grow quickly to survive. If you can cover per-cookie FC then you can break even from day one.
Then it's just a matter of determining what your profit margin will be.
as an example, i took prices from amazon.com
im sharing this as view only, but you'd be able to make a small excel sheet and any blue text is where you input data and red text is outputs
>The "if you build it, they will come" mentality fucks over a lot of energetic youngsters.
No interest in cookies here, but I have to say that this post just made me seriously rethink the priorities on a project I've been working on. Thank you anon.