How much should a micro-bakery charge? A simple pricing method

It's the question I get asked more than any other, and the honest answer is that nobody can give you a number without knowing your costs. What I can give you is the method, because most small bakers underprice for the same few reasons.

The four things a price has to cover

1. Ingredients and packaging, per item.
2. Your time, at an hourly rate you'd accept from an employer.
3. Overheads: energy, market fees, insurance, equipment, card fees, mileage.
4. Profit: money for the business to grow, replace the mixer, and get through a quiet January.

Most people price on the first one alone, because it's the only one with a receipt.

A worked example: a sourdough loaf

• Ingredients: flour, water, salt, starter: 62p per loaf
• Bag and label: 13p
• Time: about 3 hours of hands-on work for a bake of 20 loaves, including shaping, baking and cleaning. At £15 an hour, that's £45, or £2.25 a loaf
• Overheads: say £60 a week across 100 loaves (oven energy, stall fee, insurance), so 60p a loaf

That's £3.60 before any profit. Add 20% for the business and you're at about £4.32. Many bakers in this position charge £3.50 and wonder why they're tired and skint.

Then check it against the market

Now look at what similar bakeries near you charge. If yours comes out well above them, look for where your time goes (bigger batches help a lot) before cutting the price. If yours comes out well below, that's not a bargain you're offering: it's money you're leaving on the table. Customers who buy sourdough from a small bakery are rarely choosing on price alone.

Why "what feels right" is usually too low

A first price is often set by gut feel and never revisited. Since then, butter, chocolate, eggs and energy have all gone up. A price that was fair two years ago may now be paying you less than minimum wage. If your best seller is also your most expensive to make, it's worth checking first.

Price for a normal week, not a perfect one

If a price only works when nothing goes wrong, with no burnt batch, no leftovers and no last-minute dash for butter, it isn't a real price. Allow for a bit of waste in your costs. The good weeks will look after themselves.

Different customers, different prices

Your market price, your price to a café, and your price for a wedding order shouldn't be the same. See pricing for wholesale for setting a café price that still pays you.

Keep checking

Prices aren't set once. Check them whenever an ingredient goes up, and at least twice a year. MakrPrep works out each recipe's cost from your ingredient prices, suggests a minimum price for each of your price lists, and flags any recipe whose price has slipped below it. Start with how to cost a recipe if you haven't got your costs yet.