Pricing of products to sell on a market stall is a very tricky part of setting up your own business as you want to make a profit on anything you sell. To do this you have to take into account the cost of your ingredients as the cheaper the ingredient is the more profit you will make (in theory). The problem with cheap ingredients is that the quality of the product can be affected adversely if it is too cheap so you have to find a happy medium. It all depends on how much profit you want to make and how the quality of the product can affect your sales –a vicious circle. Personally, I have found that the cheap ingredients do not affect the quality of the baked goods which allowed me to make a bigger profit in my home baking business.

If you opt for a more expensive ingredient so that the quality is better you then will have to price the product higher and your market sector might not be willing to pay that much for a baked product. Therefore, the choices you make are all based on your market sector and whom you are aiming at. For example, at the market stall, which I ran, the customer base was mainly people who were looking for a bargain and were not always willing to pay the prices for a homebaked product. You could hear so of them say “you can buy that cheaper at Asda” which is fine but at the end of the day Asda are not homebaked are they? When you heard these comments, which became less and less the longer I had my stall there you would just brush them off. Don’t get me wrong there is nothing wrong with supermarket baked goods but when you are trying to sell your own produce your own are always better. Although, I remember a couple of times when customers, or rather prospective customers would try and knock my prices down, but I would react by stating that “homebaked goods cost more and if they wanted to pay a certain price then go to a supermarket”. Harsh I know, but then they would buy the cake from me at the price I had it advertised at so I won in the end.

When pricing your cakes and other bakes you need to take into account the cost of the ingredient, the amount of the ingredient and the amount you are using in the recipe. From these three figures you can calculate the cost of each individual ingredient. I have always used this method when I needed to price up a new baked product for my market stall.

Cost of Ingredient/Total Amount of Ingredient * Amount used in recipe = Cost of Product

For example, I use plain flour from Aldi which costs 45p for a 1.5kg bag. In a cake recipe, I use 200g of flour. So,

0.45/1500 * 200 = 0.06p

A simple enough calculation to perform and after you have worked out each individual ingredient cost in a recipe you add the results together to find the overall cost.

Therefore, in one cake the flour costs 6p. Not a lot I know but some of the ingredients cost a lot more such as the eggs which are probably the most expensive ingredient and one which I tried to save on by adding less to the recipe and adding milk instead. I still to this day employ this rule, as it is now just a habit, which I can’t seem to shift away from. I would always buy the cheapest eggs which at present is 15 eggs for £1.19 from Aldi.

With this figure you can then add on the cost of energy used, packaging, fuel for travelling and your time for baking. Once you have added in these other factors you need to add on whatever percentage profit you would like to make.

Next, you need to take into account the other cake stalls at the market where you are planning on selling your products. Here you look at what they are selling and at what prices they are charging. How does it compare to your products and what you are planning on doing? You do not want to cause conflict with other stallholders and really you need to be of benefit to each other. I found that when I started my cakes were priced higher than the other cake stall at the market because my cakes were bigger and when they had to increase their prices I had to increase mine in line with their own. Mutually this was of benefit to both of us and it worked really well. Neither of us priced each other out of the market.

The profit margin in homebaking is never as high as what a lot of people think and even though friends and colleagues would suggest a 30% margin it could never be that when working a market stall as the customers would not have paid the high prices. A farm shop or a fancy craft market may have paid the higher prices but I never tried to get into these markets.

As you can see your pricing strategy is very important especially when you develop your business further, for example, if you start to make celebration cakes you need to add your labour charges into the price as it takes time to make a quality cake for a customer and this should be reflected in the price you charge the customer. Feel free to comment below if you have any questions or want to discuss this further. Thankyou for reading. 🙂