When potential clients ask for my pricing table, I get sticker shock, a lot. In an attempt to educate the masses on why these cookies are so pricey, let’s look a breakdown of materials and process. — This doesn’t apply just for cookies, but for many home based, hand-crafting business.
Here’s what goes into making ONE DOZEN of these cookies, which I charged $55 USD for. These are standard size cookies, approx. 3-4 inches on their longest side. I challenge every single cookier out there to hit pause and do this analysis for their situation. It’s truly eye opening. Some folks will be faster or slower, that’s fine, baseline it according to YOUR reality.
- Make Dough: 10 minutes (note– I did not account for chilling time because it’s dead time and I do other stuff while dough chills)
- Cut and bake — some of these had to be hand cut because I don’t own the cutter for them, so it takes longer! 20 minutes
- Make Icing: 5 minutes
- Color icing & make a few different consistencies: 15 minutes
- Decorate: 50 minutes — note I did not count drying time! And did not count time resting in-between layers– this is all actual HANDS ON time for the dozen
- Clean Up: 10 minutes
- Packaging: 10 minutes
- Client communications (starts at step 0 really), research, cookie design, coordinating pickup: 1 hour — clients expect this part to be free, but you need to find a way to account for this cost in your service
I also accounted for the fact that some of these steps can be done concurrently, for example while the cookies are baking and cooling, I can make and color the icing. So this way, I am not double-counting my time.
So here’s what it breaks down to for ONE DOZEN cookies:
- Material Cost: $5.25 (materials, ingredients+ piping bags, coloring, icing, labeling, bags, etc. everything)
- Total Time: approx. 3 hours (BTW– this is pretty fast for a detailed dozen cookies)
Again, I charged $55/doz — so what does that mean?
Simply put, profit = revenue – costs
This means: $55 – $5.25 – $1.50 for misc. costs below = $50
$49.75/3 hrs = Means my hourly rate is: $16.58 per hour. — READ ON to understand what this actually means because this DOES NOT tell the whole story.
Misc. Costs: You are not literally decorating cookies every waking minute. Lots of time is dedicated to admin, answering client inquiries that go nowhere, dealing with a gazillion questions that also go nowhere. There are costs associated with packaging materials (and SEARCHING for the right packaging!), ink, gas, & other small materials. Every cello bag, every sticker, every baggie and shipping box = $$$!!!
We still need to pay taxes (although we do get to write off all business related purchases), don’t get insurance, paid time off or any kind of other benefits that many “full time day jobs” get– but we really SHOULD be treating our businesses like what it is, a business! If you are serious about doing this for profit:
- Get REALLY DAMN GOOD at what you do so you can CHARGE appropriately for YOUR SKILL LEVEL
- Price appropriately and understand that it’s OK and expected that not everyone can or want to afford your product.
Something you CAN do it to find ways to REDUCE TIME SPENT on decorating and find ways to automate other processes like ordering, label printing, shipping (if applicable), etc. wherever possible. Make ordering easier- utilize forms and invoicing services– usually these are super cheap add ons for your website or come on mobile apps and it’s so worth it to spend that few bucks. Don’t cheap out on things that will save you so much time in return.
At the end of the day – everyone’s situation is different. Depending on what your goals for your business are (hobby, part time, full time), you need to set your targets appropriately. Pricing should also vary based on YOUR SKILL LEVEL & EXPERIENCE. I stress this so much. If you are a beginner you need to get real about your product quality and make sure if you are charging a lot, it’s worth it. Same goes for the cookie pros– charge what you’re worth. This can also differ based on location– some metropolitan areas can support higher prices than others. Do your research. Understand your demographic.
Some other things to keep in mind:
- Charging more is really uncomfortable. But growth does not come without discomfort, like any other form of change. You can expect to lose some existing clients, but you’ll probably gain more. You will take on less orders, but make more money.
- We, as small business are ALL ACCOUNTABLE for upholding the perception of similar businesses. This means that if some of us undercharge, customers will start expecting that. So when you are under charging, you are doing nobody a favor at the end of the day, except for the client you undercharged– except even then, that is a temporary shame since they will walk away with a false perception…and have unrealistic expectations for their next order… so you decide if that’s good or bad.
If you are struggling with your business and are SERIOUS about taking a hard look at your business and making some changes for the better, I do offer a very comprehensive cookie consult HERE.