4 Important Points Covered in the Amari Costing & Pricing Masterclass

We held our first Bakery Business Masterclass of the year this past Saturday and it was such a success. We had such wonderful attendees who were ready to learn and really participated in the class.

In this session we were covering the very important topic of costing and pricing your baked goods. We also had a wonderful guest speaker, Lucy Wanjiku of The Bakers Club who gave a small talk on being a home-baking entrepreneur.

We covered many topics on that day, but I wanted to highlight 4 very important points we covered on that day that will be of help to you – if you weren’t able to attend. Make sure to attend our next one ^_^

3 Main Factors to consider while costing and pricing

When you’re about to start doing the costing of your baked goods there are several factors to consider, in this post I will share the top 3 factors to consider. First; you need to consider your TARGET MARKET, the kind of people you will be selling your cakes to (Do they look for quality or quantity? What need do they have that you will be meeting?) Second; consider your COSTS. How much do you pay or get paid as the baker? Which expenses do you pay per month? Which raw materials do you use and how much are they? Third factor to consider is your COMPETITION. Which other bakers or bakeries are catering to the niche you are in? How much do they sell their products? How do they do their marketing?

Make sure you consider these factors while doing your pricing

Information you should have at hand in order to cost accurately

For you to be able to get the actual cost of producing your baked goods; there is information you need to have with you in order to cost accurately.

Cost of ingredients – how much it costs you to buy your raw materials (e.g. flour, sugar,etc)

Labor – how much the baker is paid

Depreciation – cost of using your equipment

Factory overheads –expenses your small baking business has to pay every month e.g. rent & utilities

Standard Recipes – You need to have a consistent recipe for each product you are costing

Sales Projections – How many cakes do you sell per month? Or estimate you will be selling per month?

Other costs – Indirect costs and expenses in your business e.g. airtime, marketing, internet, etc.

3 important records you need in your small baking business in order to cost accurately

There are various records you need in your small baking business. I will mention the top 3 you require in order to price accurately, they are as follows:

Cash Sale/Receipt Book – This keeps track of the number of cakes/baked products you sell per month

Petty Cash Book/Voucher – To keep track of all your daily and monthly expenses (you can also use a payment voucher or expenses book)

Fixed Assets List – A list of all equipment you use in your bakery (e.g. oven and mixer)

Before you start baking for business; do a thorough and honest evaluation

A brief insight that our guest speaker, Lucy Wanjiku, gave during her talk was on entrepreneurship as a baker. Baking is a highly demanding activity and baking for business can be quite time-consuming and tiring. If you bake as a hobby and you want to start baking for business, it’s important to get serious and honest about why you want to do so. Evaluate yourself and your situation in order to see if you’re making that decision for the right reasons before getting started. Baking for business is not for the faint-hearted; it can be quite a success though, if you are passionate about it and do it for the right reasons.

I hope those few insights have helped you gain some clarity. If you would like to get more information on the actual costing and pricing, we have an E-publication you can purchase that will clarify more on the topic and guide you in doing the actual costing. Click here to get more information on the pricing book.

Please leave a comment below if you have a question or just to leave some feedback.

To get details of our next Costing and Pricing class, click here.

Share this in your networks; it might be of help to someone else as well ^_^