Pastry pricing

[Jeekinz]

My wife just got the opportunity to make a dessert for a friends party. She's making a Napoleon, which is truly outrageous. So we started talking about maybe starting a small home based pastry business, but we cant come up with pricing. We thought maybe an hourly rate plus materials or something like that. The Napoleon, which is completely hand made, takes 5 hours to complete. So we figured $10 per hour plus $25 for the ingredients. The pastry is the size of a large cookie sheet when finished.

How far off the norm are we? also, advise would be greatly appreciated.

-J

 

[Half Baked]

Where do you live? I don't know of one state in the USA that allows people to sell from home kitchens.

You must have many licenses, certificates, inspectiions, insurance.... If you are caught doing this the fines are outrageous and you have to pay for back licenses and taxes. Plus you are shut down, of course.

Sorry. I'm sure others will have more to add.

 

[Half Baked]

In Maryland, the kitchen must be separate from the house and contain all stainless steel equipment.

You can research the laws in your state pertaining all that is required to set up a commercial kitchen.

Things just keep coming to me.

 

[Jeekinz]

I'm not familliar with the legalities of licensing, but you see it all the time on Foodnetwork, right? There's people making cookies or whatever then selling on the internet or locally. This would just be a small "word of mouth" type operation. I mean, I'm not going to put a neon sign over my rose bushes.

 

[Half Baked]

People may have started businesses from home (Paula Deen) but the laws and times have changed.

There is no one in 'heck' who is illegally doing business and shows up on Food Network.

All someone has to do is think they got ill from one of your products, go to a lawyer and that's it.

Edited to add: I used to own a business that I ran from the house (nothing to do with food even) and the paperwork is trememdous to be legal. Now toss food (and people's health) into the mix and the work would probably be doubled, at least.

 

[Jeekinz]

OK, that aside, what would be a good rule of thumb for above average pastries as I explained in the OP?

 

[Half Baked]

Lol, I have no idea. I was just concerned about the legal aspects for you. Good luck and i'm sure someone will be aable to answer your questions about cost.

 

[Andy M.]

In addition to the cost of materials and labor, you have to figure in the cost of facilities: kitchen space, stove - gas or electric, lighting, heat, etc. then add in income taxes, RE taxes, state taxes, payroll taxes, license fees. Don't forget insurance. One law suit and you're in the poor house.

 

[Michael in FtW]

RE: Price - Call a bakery and ask them if they could make a Napoleon and then give them the details for the one your wife is going to make and see what they would charge.

Like Andy M. said - there is more to the cost to produce it than just the ingredients.

RE: Home Food Business - Check out this book from Jazz Foods for a start on what you need to know. There Federal food laws, State food laws, Local food laws ... insurance, taxes, record keeping ...

 

[Half Baked]

Here's the book my DIL and her mom purchased. They wanted to do some catering on the weekends but I warned them that after all the licenses and renting a kitchen, they'd be losing money. Plus if the housing area isn't zoned for business - there's a huge problem if someone gets vindictive, knows about your business and calls the county and state.

Barnes*&*Noble.com - Books: How to Start a Home-Based Catering Business, by Denise Vivaldo, Paperback

I won't post anymore. I know you really want to do this.

 

[Michael in FtW]

Jan - I'm with you ... I would never want to discourage someone from following a dream ... but I would encourage them to learn the ropes from those who have blazed the trail before them.

I'm not familliar with the legalities of licensing, but you see it all the time on Foodnetwork, right? There's people making cookies or whatever then selling on the internet or locally. This would just be a small "word of mouth" type operation. I mean, I'm not going to put a neon sign over my rose bushes.

Yes - but they don't always explain what someone had to do to move a product they developed at home into a legal business. There is a big difference between a friend, or a friend of a friend, offering to compensate you for making a cake and you offering your services to make cakes.

Martha Stewart started her catering business at home but had to step up to legal compliance as her business grew. Same thing with Paula Dean and the "Bag Lady".

 

[Michael in FtW]

Jeekinz - some of us have connections to the food industry in one way or another, or have thought about and investigated it, and therefore tend to think from that end of the business, like - Getting Started in the Specialty Food Business. We're not trying to rain on your parade - perhaps we're just thinking beyond your aspirations and trying to make you into a bigger business than you envision.

Looking at it from the other end ... you might find this article a little more relevant to your OP ... How to Start A Home Bakery of Your Own.

As for pricing .... I don't know your recipe so I had to shop around based on just a standard classic Napoleon .... for one 12x17 inches - I checked 7 bakeries and depending on the bakery the prices ranged from $50 to $125, with the average being in the $65-$70 range. So your price of $75 would not be out of line. FWIW - the low price wasn't a bakery but rather someone who does what you are trying to do ... make some money by custom baking from home ... the high end is a friend who is an Austrian pastry chef who has been in business for about 30 years ... the others were just bakeries picked at random from the phone book.

Good Luck!

 

[StirBlue]

Most of our grocery stores in town are downsizing their bakery depts. Grocery stores loose about 5 cents on every gallon of milk they sell. And so goes with everything except competitive processed merchandise. Having a bakery brought customers in but it didn't make a profit. People are buying more convenience foods in the deli and the stores are expanding the deli.
The first thing you need to start a business is customers. If you use your own money to start your business, you will manage your expenses very well.
90% of restaurants fail due to over managing their loans.
This is America; how much money can you make on a couple hundred Napoleons? Enough to get in a higher tax bracket!

 

[stargazer021]

Jeekinz,

I wouldn't want to discourage your dreams but what is the economy like where you live? Can you afford to put alot of your own money into this venture and still live with the stress of failure or success?

 

[Candocook]

Price. I am not sure you can do this one a basis of hours and material cost. i think it is a per piece. Most bakeries in the supermarkets around here get about $2.50-$3/piece. If you can't compete with that then maybe this product will not be your niche.
When we have priced caterers, for example, for a cocktail party, they will charge $1.50/piece for a phyllo dough triangle that I know I can make for next to nothing. But they are charging for all the things I just "give".
But the legalities are not to be completely discounted out of hand. Suits can be a real result if something goes wrong. AND the health department takes selling to the public very seriously.

 

[Andy M.]

Go to local bakeries and get comparative prices. Charge accordingly.

Unless you have a unique product, ask yourself why someone would pay more for your stuff rather than buying from an established bakery down the street.