Price every product with one formula: Sell price = cost per serving ÷ your target food-cost %. Aim for a food cost of 25–35% on most items — lower for custom and wedding cakes (their labour justifies a bigger markup), higher for bread and wholesale. Below is the full method in BakeOnyx, target percentages by product type, and when to raise prices.

Understanding the Pricing Formula

At its core, pricing is about covering your expenses and making a profit. The basic formula is:

Sell Price = Ingredient Cost + Labour Cost + Overhead + Profit Margin

BakeOnyx helps you with several of these components:

Ingredient Cost: Automatically calculated based on the ingredients and quantities in your recipes.
Labour Cost: Calculated based on the prep time you set for a recipe and your defined hourly labour rate (found in Settings).
Overhead: A percentage of your costs, also configured in Settings, to cover things like rent, utilities, and equipment.
Profit Margin: The amount you want to earn on top of your costs.

Target Food Costs by Product Type

Different types of baked goods have different cost structures and profit potentials. Aiming for specific food cost percentages can help you price strategically:

Custom Cakes: 20-28% (Higher labour costs justify a higher markup).
Cupcakes and Small Items: 25-30%
Bread and Rolls: 30-38% (Often lower margins but sold in higher volumes).
Cookies and Biscuits: 20-25% (Generally high margin with lower labour requirements).
Wedding Cakes: 15-25% (Premium pricing for specialized service and high perceived value).
Wholesale: 40-50% (Lower margins are common due to larger order volumes).

Note: These are general guidelines. Your specific ingredient costs, labour rates, and market demand will influence your ideal food cost percentages.

Using BakeOnyx to Set Your Prices

Follow these steps in BakeOnyx:

Ensure Ingredient Costs are Accurate: Go to Ingredients in your BakeOnyx dashboard. Make sure every ingredient has its correct purchase price and unit of measure entered. This is the foundation of all your cost calculations.
Build Your Recipes: Navigate to Recipes. For each product, enter the exact quantities of ingredients used. BakeOnyx will automatically calculate the ingredient cost for the entire recipe.
Check Cost Per Serving: Once a recipe is complete, BakeOnyx shows you the total cost. If your recipe makes multiple servings (e.g., a cake cut into 12 slices), divide the total recipe cost by the number of servings to get your cost per serving. This is your baseline cost.
Apply Your Markup: To determine your selling price, you'll use your target food cost percentage.
Formula: Sell Price = Cost Per Serving / Target Food Cost Percentage

For example, if your cost per cupcake is $1.25 and you're aiming for a 30% food cost:

Sell Price = $1.25 / 0.30 = $4.17

You would then round this to a customer-friendly price, like $4.25 or $4.50.
Update Product Prices: Go to Products in your BakeOnyx dashboard. Find your item and enter the calculated selling price in the Price field. This price will apply to all new orders placed after the change.
Monitor Your Food Cost Report: Regularly check the Food Cost Report (under Reports). This report shows your actual food cost percentage for each product based on the prices you've set and the ingredients used in sold items. Compare this to your target percentages.
Review Your P&L: The P&L Dashboard provides an overview of your bakery's financial health. Use this to see if your overall profit margins are healthy and if your pricing strategy is working.

Warning: Never price products based on ingredient cost alone. Always factor in labour, overhead, and your desired profit margin to ensure long-term sustainability.

When to Raise Prices

Pricing isn't a "set it and forget it" task. Consider raising prices when:

Your actual food cost percentage consistently exceeds your target (e.g., above 40% for most items).
You see significant increases in ingredient costs (check your purchase orders and supplier invoices).
You're introducing new services like delivery or complex custom decorating.
It's been more than six months since your last price review.

How to Raise Prices

When it's time to adjust, do it strategically:

Incremental Increases: Raise prices by small increments, typically 5-10%. Customers are less likely to notice or react negatively to smaller, gradual increases.
Prioritize Popular Items: Start by adjusting the prices of your best-selling products. This will have the biggest impact on your revenue and profit.
Update in BakeOnyx: Go to Products and update the Price field for the relevant items. Remember, this change applies to new orders only.

Tip: Use Bake Buddy! Ask it, "Which of my products have the lowest margins?" Bake Buddy can quickly analyze your entire product catalog and highlight items that might need a price increase.

Next Steps

Now that you're confident in your pricing strategy, explore these related topics:

Your Daily, Weekly & Monthly Routine