Pricing Homemade Food Products

Pricing is the most important task when starting your food business. As a food entrepreneur, Cottage Food Operator or Homebased Baker, you are in the pleasure business. You may not see this now but there are few things today people get real pleasure from and food is one of them.

“As a food entrepreneur, a small food processor, you are in the pleasure business. There are few things today people get real pleasure from and food is one of them.”

It doesn’t matter if you bake, cook, or produce food for those with special dietary needs. Your goal should be to put a smile on the customer’s face. The problem that often rears its ugly head? New food Startups treat pricing products like an afterthought. It’s the last thing on their mind.

Common Pricing Errors

Food entrepreneurs are so eager to launch, they forget one essential part of pricing. Digging into the cost of every ingredient. So the question of price is rarely addressed until they take their product to market. When a price is set, there is little strategic thinking associated with the final number.

Bakers, in particular, are notorious for ignoring the work needed to price products. It’s easier to ask other bakers what to charge. It doesn’t even matter where those ‘other’ bakers live. Unfortunately, bakers in the UK can never tell you what to charge if you live in Mesa, Arizona.

If you make traditional jams and jellies, selling them for $5.00 per 8-ounce jar; means you’re ignoring a major pricing error. You’re offering a product that’s not unique enough to demand a premium price. Ignoring industry standards.

Think about it: If your prices don’t set you apart from the competition, what else will? If the answer is nothing, get back to the pricing chalkboard. So you use exotic chocolate, spice or alternative sugar? Is the cost reflected in your price? If not, why not?

Pushing the Pricing Envelope

By failing to push the envelope (a.k.a. innovate), you’re positioning your product as nothing more than a Walmart alternative. Is that what you want?

You may know the four Ps of marketing: product, price, place, and promotion. Do you know that price comes in at number two for a reason? It’s important. It’s the reason you will stay in business.

If you are not comfortable pricing your products or if you need help join our Pricing for Profit online course. It was specifically designed for Cottage Food Operator new to the pricing thing. There is no judgment. The goal is to have a solid understanding of how to find the cost of each ingredient. Understanding how to itemize the cost of everything is essential. You must know about the following:

  • Every ingredient
  • Your labor
  • Overhead
  • Fixed & variable expenses, it all adds up.

Do you know the value of your product? What does that mean? You may work diligently to produce a beautiful wedding cake or 60 jars of Ghost pepper hot jelly, but if your prices compare to Walmart or the local bakery, you are jumping over a dollar to pick up a dime; leaving money on the table.

Do you know who makes a product profitable?

You do. The first thing the consumer see’s is your product, but whether they buy or not is totally up to you. It’s your personality, passion, and belief in your product. You must ask yourself:

  • Do I believe in my product?
  • Do I believe in my ability?
  • Do I like making this product?
  • Would I buy my product?

If there were only one thing in life you could do to make a living… is this it?

Do you see how answering these questions before you take your product to market might be beneficial?

Was this article helpful?

2 Comments. Leave new

  • Catherine M Wolf
    September 18, 2021 2:34 PM

    I am not finding your Pricing for Profit online course. Is it still available and if so where can I sign up?

    • Hi Catherine, the Pricing for Profit is now in the Kitchen to Market Course, which will soon be a Club. I will post the information about it on our YouTube Channel.


Leave a Reply

Your email address will not be published.

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed