The Fresh Loaf

News & Information for Amateur Bakers and Artisan Bread Enthusiasts

a local country store wants to sell my artisan breads.

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crustycrumb233's picture
crustycrumb233

a local country store wants to sell my artisan breads.

How much should I charge per loaf? I also make and will sell pastries.  I am very new to all of this, so I am not sure what is reasonable in Ohio to ask for my breads and goods when a business wants to partner with me in selling.  Any one have some suggestions?  Thanks!

Muffin Man's picture
Muffin Man

Congratulations... I think.  I know nothing of the food regs in Ohio, but here in Florida, foods prepared for sale must be done in an inspected and licensed facility.   Check with your Department of Agriculture or whomever licenses food processing and be sure that you will be in compliance. 

crustycrumb233's picture
crustycrumb233

Fortunately, in Ohio, I am covered under the cottage industry laws, so I am not required to be licensed. That is the easy part I don't have to consider now.  I just need some guidance on pricing, especially when partnering with another business.  Thanks for sharing your thoughts! :)

HeidiH's picture
HeidiH

And if you are going to do the baking at home, make sure to check with your homeowner's insurance to see if you need a rider.  You also may want to look into becoming an LLC to protect your family resources from your business resources.  Let's say someone claims to have broken a tooth on your bread, you want to be fully protected. 

Where I am, in South Carolina, the health department makes it difficult to sell edible goods from the home kitchen and, for me, my house cats make it impossible.  Some states, like Texas and Maine, have recently passed cottage industry laws that make it more possible to do this kind of activity legally.  Of course, thousands of people do it without worrying about the regulations but I decided the liability factors were just too much to even contemplate selling anything for human consumption. 

Just make the check out to "Heidi Hoerman LLC." ;-)

 

crustycrumb233's picture
crustycrumb233

Great suggestion on the homeowner's insurance.  That is something I had not yet considered.  Hubby and I are looking into that today. I am covered under "cottage industry laws" in Ohio, so as long as I only bake items that are considered "non-hazardous", I can bake anything else from my kitchen.  I would, however, like to expand eventually, because my other speciality is cheesecakes.  I am trying to find kitchen space to rent where I would fall under their licensing, but it's been tough to find that in this area so far.  Thanks for your comments!

Emelye's picture
Emelye

In New York you can get an exemption from the state kitchen licensing laws (a 20-C exemption) by having your kitchen inspected and by agreeing to limit your products in certain ways.  I 'm not sure what Ohio does in this area but I'm sure there must be some way of doing it.  Those who sell using food stands and farmer's markets must have some sort of regulatory system governing their actions in that state.  Call the Dept of Agriculture or the county health department for information on what's required.  I also had to get a county business certificate.  If you have a local small business advisory group, they can help with all of this.

I had to switch insurace companies to one that would allow home based business under their home owner's policies.  I also purchased business liability insurance.  Your insurance agent should be able to help you with that stuff.  If not (mine couldn't) find another who will.

I built a spreadsheet for myself that listed the original formulas, used baker's math to calculate how much of everything I needed to scale the formulas up and also generate a total cost of ingredients for the formulas.  I collected the ingredient costs from the sources where I acquired my supplies (including packaging - the internet can help alot with collecting this cost info) ad put them in a look-up table.  The spreadsheet then calculated the total costs for the ampunt of dough.  I applied an overhead cost - estimated to be 1/3 of the total ingredients cost (will revise that when data becomes available, I haven't been doing it long enough to tell if this is adequate or too much/little) - and then applied a labor cost (equal to the ingredient cost, again subject to review and revision at a later date).  The store that I sell from charges a 20% commission rate, I add that in as well.  Finally I add a profit margin, the amount of which varies by the formula and how much it increases the cost per loaf.  I aim the cost per loaf so the retail price is just a bit above the most expensive "artisan" bread I could find in the area (par baked loaves at the local mega-mart but still pretty good).  If I cannot make a bread with enough profit margin (say, 10% min but that's not a hard and fast rule) without radically pricing it way above what the local market will bear, I do not use that formula.

Don't be afraid to charge a fair price.  Most of my loaves are in the $4.00 to $5.00  range for a 1¼ lb loaf (after baking).  So far the sales have been good.  Not selling out yet but near the 90-95% range.  You'll have to decide what to do with the bread that doesn't sell the first 2 days.  Mark it down or just take the loss?  There are arguments both ways.

You may want to consider some kind of accounting system as well.  The IRS will definitely be interested.

This endeavor may not be an easy one - there's a lot to it and it's a lot of work.  On the other hand, it's been fun for me, maybe you'll find it as much fun for yourself.  I hope so!  Good luck!!

crustycrumb233's picture
crustycrumb233

I copied and pasted your paragraph on how you compute your earnings.  Great plan.  It gives me a lot to think about and consider for my own situation.  So far, I have been successful selling on my own at a couple farm markets with prices at $5 & $6 for my loafs and rolls.  I sell other baked items, like baklava, cookies, biscotti's and other fine goods and they are selling well also. This business which is soon to open next Spring, wishes to add another couple of bucks to my prices when I sell with them, but they would like me to sell my breads to them for $3-$4 a loaf (which I was insulted by!).  It wouldn't be worth my time to undercharge that much.  I also put a little extra into my packaging, because I have been told I have done so very professionally, so I don't want to change my style to lessen my costs.  I have a lot to consider with this business option, and I am grateful to have found this site to get some great advice from fellow bakers.  Thank you for sharing your strategies!  I am sure I will be back with more questions. :)  Best regards to you and your business, too!

pjkobulnicky's picture
pjkobulnicky

Do a contract with them to buy X loaves at Y price per week for Z weeks.  Then they own the loaves and can sell them for whatever price they want to sell them for and you get your, negotiated, price from them.

arlo's picture
arlo

It is hard to sell loaves to wholesalers for what you would for regular customers. That just seems to be the way it is, they need to make a profit too.

As far as Emelye stated, a spreadsheet to conduct and figure out your costs is the best way to analyze your pricing. Place a break down of each recipe on a worksheet with the ingredients broken up to show how much of each is used in the total recipe (Gram, lb, oz...ect.) Have a look up of all your commonly used ingredients with the cost per whatever weight you pay for them.

A column to figure out the the total cost per ingredient in the the recipe. A row for total price, then a row to include overhead, labor, markups and such, finally resulting in a cell with your selling price.

It may take a bit to set this up at first, but you will only really need to do it once. After the first one is done, it is really a matter of copy and pasting new ingredient measures in for recipes and perhaps updating your call sheet.

During my time in the culinary program I took a few classes dealing with P&L, Pricing, Menu management and really learned a lot from them. Also at the new bakery I am at, whenever I come up with a recipe, or am trying out a new one, I have to create a costing sheet with markups to see if it is feasible or not. Having an already made skeleton spreadsheet cuts the time down considerably. I am certainly thankful I have been learning all this before I take the leap and start my own bakery one day.

Perhaps if you are really interested in this, it wouldn't hurt to see if your local community college offers menu management or food and beverage cost control classes. In 18 weeks you will learn a lot of information that will help you out financially :)

crustycrumb233's picture
crustycrumb233

Arlo,

 Thank you for all your suggestions and expertise. I have a business friend who is going to help me with a spreadsheet this next week, and I definitely want to look into a class for food costs, like you mentioned.

I talked with this potential business partner last night, and they want to add a bakery section to their butcher/deli shop/country store and offerd to have me rent that space  for my baking ( I would still be my own boss baking for more than just their store) and what I would make for them for their store would be  there after I was done with their order for the week.  This would solve the issue that I was thinking about anyway, as I have been doing online searches for commercial kitchens in this area where I could rent some space for a certain amount of hours a week. Do you have any additional thoughts and/or red flags with this kind of arrangement?

Again, thanks you for advice!

 

mimifix's picture
mimifix

Congratulations crustycrumb, I hope this works out for you. It's a lot of work but can be a good source of income. As a single parent, I began a home-based baking business back in the late 1970's right after NY created a cottage food law. I then spent more than 30 years in the food industry. When the US economy tanked in 2008 I wrote Start and Run a Home-Based Food Business to help people create their own incomes. Most libraries have a copy so you don't need to buy it. TFL is a great place to learn about breadbaking. For business issues, my book covers just about everything else.  Good luck!

crustycrumb233's picture
crustycrumb233

Hey, thanks for that great tip on your book!  I know I have a lot of reading, talking, educating myself, etc. to get started on before I am really ready to make this happen. I am so grateful for this site and all the great people I have "met" here with great ideas, not to mention the great tips on breadmaking and some recipes I would like to experiment with.

Thanks so much!