July 28, 2021

5 Mistakes to Avoid When Pricing Your Homemade Food

Pricing impacts the way that customers think about your products.

If you’re the cheapest product on the market, will buyers appreciate your art, or will they just care that they’re getting a deal?

On the other hand, if you price your products a little bit higher than average, buyers are likely to see you in a different light — one that’s more premium and of higher quality. There’s a reason that luxury brands like Rolex, Chanel, and The Ritz-Carlton exist: it’s because there are people out there who are willing to invest in high-quality products and experiences. 

Remember: if someone isn’t willing to pay the prices you need to charge in order to cover your costs and pay yourself a fair wage, they’re not your ideal customer. 

You might even be surprised by how much your customers are willing to pay for your products. 

Pricing is an ongoing process, and you should evaluate your homemade food pricing regularly. Compare it to how other artisans in your area are pricing their products, and always keep an eye on your break-even point to make sure you’re covering your business costs.

As you embark on your pricing journey, here are five common food pricing mistakes to avoid.

Mistake 1: “I just need more customers, then I’ll be profitable.”

If you’re feeling burnt out and overwhelmed by the work you’re doing, but you’re still not making enough money to cover expenses and pay yourself, your solution shouldn’t be to go out and hunt for new clients. (Unless, of course your customers aren’t willing to pay your higher prices. Then it’s time to expand your network of customers!) One solution is to increase your prices so that you’re making enough money for your business to be worth your time. 

Mistake 2: “I feel guilty for increasing my prices.”

Charging higher prices isn’t being greedy or selfish. It’s what helps you build a resilient, long-lasting, sustainable business. Your business, even if it’s run from your home kitchen, needs to make money. 

For many cottage food operators and food artisans, the goal isn’t to strike gold and become a millionaire selling food from home. Instead, their goal is to create delicious food that delights their customers. 

When a customer sends an email after they pick up their order and they tell an artisan that their food was the best they’ve ever tasted, that can feel like enough. Positive feedback is great — and it motivates artisans to keep going, even on their toughest days — but it doesn’t pay the bills. 

Mistake 3: “I’m afraid someone will complain about my prices.”

You don’t want to be the “cheap cake lady,” do you? 

If your customers complain about your prices, they aren’t the right fit for your business. Think for a moment about your ideal customer. Who are they? What kind of products do they buy? How much are they willing to pay? Think of any demographics, geographics, or other information that may set your audience apart from others. 

Be confident in the products you produce! Whether you’re selling cakes, homemade pickles, or bottled teas, there’s a reason you’ve made it this far in your business — because you know how to make the best versions of your products! Feel empowered to translate that confidence into your pricing. 

Mistake 4: “I want my business to appeal to everyone!”

“If people don’t want to pay what I charge, they’re not my customer. Prove your value by providing a wonderful product.”

Lauren Cortesi shared this quote at the cottage food conference in April. Your business can’t be everything to everyone, which is why it’s so important to narrow down your target market. If your perfect customer is a mid-30s male located in your neighborhood of Los Angeles who’s a dedicated practitioner of yoga and vegan, so be it! Know who your business is meant for, and don’t deviate from that just to make others happy. 

Mistake 5: “I don’t know how much a product costs me to make.”

One of the biggest mistakes food artisans make is not understanding their cost of doing business. When you don’t know how much a product costs to make, how can you possibly price it in a way that makes you money consistently? 

To determine how much a product costs you, the maker, you need to look at the cost of your ingredients, packaging, and your own time. You can get a rough idea of your ingredient costs by taking your total grocery bill and dividing it by the number of products you can sell by using those ingredients. This helps you find your unit cost. 

Don’t forget to factor your time into your pricing as well. Don’t just pay yourself minimum wage — make sure you’re paying yourself enough to truly get by. 

If you do any marketing, think about any associated costs, like advertising, booth rentals, or influencer giveaways. 

If you rent a commercial or shared kitchen space, calculate your break even point. How much do you need to sell to make your kitchen rental worth it? 

All of these costs should be factored into the price of your food

As you evaluate your current product pricing, make sure you consider your target customers and what they’re willing to pay. Most importantly, think about yourself — what do you need to do in order to make your business worth it to you?

You're serious about your food business. We are too. Ditch the complex order tracking spreadsheets and late night texts from your customers. The Castiron platform is purpose-built to help culinary artisans build and grow their businesses online.
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