Pricing for Profit

The #1 Mistake: Underpricing

Most cottage food producers underprice their products.

The Pricing Formula

Price = (Ingredient Cost + Packaging + Labor) × Markup

Step 1: Ingredient Cost

Measure everything you use per batch.

Step 2: Packaging Cost

Containers, bags, labels, ribbon.

Step 3: Labor

Pay yourself at least $15-25/hour.

Step 4: Markup

• 2x for farmers market
• 3-4x for online (shipping costs)
• 2.5x for wholesale

Example

| Component | Amount | |-----------|--------| | Ingredients (24 cookies) | $8.50 | | Packaging | $3.00 | | Labor (1.5 hrs × $20) | $30.00 | | Total | $41.50 | | Per cookie | $1.73 | | Sell at 2.5x | $4.50 each |

Use our Pricing Calculator tool for automatic calculations.