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Wholesale cupcake price?

post #1 of 12
Thread Starter 
I have an opportunity to sell cupcakes (no filling, swirl of frosting) to a chain of convenience stores in our area.
Being that this involves large quantities (at least 4000cc a month) and consistant sales I will be selling at a wholesale price.
My question is what to charge? When researching market retail prices there is a range from $.70 per cc (grocery store) to $2.00 (professional) ... additional charges for filling and decorating.
I have calculated my costs at material/packaging - $.30 per cc, labor at $.25 per cc, overhead (rent, utilities, advertising, vehicle, insurance, etc...) at $.25 per cc and profit ?
The convenience store charges $1.50 for brownies and the like.
I do not know what profit margin the store is desiring or what price is reasonable to sell a cc for at a convenience store.
Any thoughts? Not sure if this is worthy to pursue?
post #2 of 12
Quote:
Originally Posted by thecakechic

I have an opportunity to sell cupcakes (no filling, swirl of frosting) to a chain of convenience stores in our area.
Being that this involves large quantities (at least 4000cc a month) and consistant sales I will be selling at a wholesale price.
My question is what to charge? When researching market retail prices there is a range from $.70 per cc (grocery store) to $2.00 (professional) ... additional charges for filling and decorating.
I have calculated my costs at material/packaging - $.30 per cc, labor at $.25 per cc, overhead (rent, utilities, advertising, vehicle, insurance, etc...) at $.25 per cc and profit ?
The convenience store charges $1.50 for brownies and the like.
I do not know what profit margin the store is desiring or what price is reasonable to sell a cc for at a convenience store.
Any thoughts? Not sure if this is worthy to pursue?



NO.

a. You are posting a question of this magnitude on a cake forum to strangers. You are asking strangers if this is worthy to pursue?
b. You don't have any photos of your work, or a link to photos, or a link to a business website. You only have 24 total posts.
c. You are asking about "pricing" for a massive quantity of cupcakes.
d. You don't know the "margin" of profit.
e. If you're going to ask strangers, at the very least, ask on the Business forum.

Any single one of the questions above automatically tells me that you do not have the basic business acumen to assess the business aspects of an endeavor of this magnitude.

My answer may sound harsh, but 4000 cupcakes a month IS harsh. You asked a business question, I answered with no soft talk, no concerns about hurting feelings, just reality.
--------------------
With that said, since I am a total stranger, you SHOULD ignore everything I've just said. You should also ignore everything anyone else may say.

This is not the way to get answers. Do a business plan. Talk to an attorney.
post #3 of 12
Thread Starter 
Apti,
My apologies for offending you. Please do not make judgement on my character or business ... you have no knowledge of either.
I simply wanted feedback and was not looking for set in stone answers. I value opinions from all likes.
Reality is I do have a business plan, an accountant, 15 years of being a self employed baker.
My mistake posting in the wrong forum.
From this point I will ignore any comments that you may share.
post #4 of 12
When you read posts about pricing by Jason_Kraft he always adds in about 30-35% profit to come up with a price. Your costs are pretty low, so it works out to $0.80 per cc. If you add 30% markup for your profiit, that makes each cc about $1.05. Doing the math, 4000 cupcakes would cost you $3200 and you would sell them for $4200. Is $1000/month to do this worth your time?
What stores plan on selling them for isn't really your concern. If they feel that $1.05 is too much because they want to sell them for $1 a piece, then this is not the opportunity for you. If you think that they would be more likely to price them along side the brownies, which is probably a reasonable guess. Then that would be a 40% markup for them. I might even say you could go as high as $1.25 which, with 40% markup by the store, makes them $1.75/each selling price. But again, what they're going to sell it for isn't really your concern. You need to decide what amount of profit is going to make this worthwhile business for you.
post #5 of 12
I agree with pmarks on pricing. I don't know if you do a lot of cupcakes already, but if not, you may want to do a trial run with, say, 100 cupcakes, to time how long they take to make to see if if the pricing will work for you. I'm not a big fan of making a lot of cupcakes, because they take me more time, but if they're simplistic in design, it might not be so bad.You don't want to agree and thena fter the first month decide its too much work. Also, I wouldn't worry about grocery store prices. There's a big difference between grocery store cupcakes and homemade cupcakes. BTW, whatever you decide to do, congrats on the opportunity.
post #6 of 12
Thread Starter 
I appreciate your feedback!
post #7 of 12
You need to know what percentage markup the retailer uses, and what the market price for your product would be. If the retailer won't tell you this, walk away from the deal.

For example, if the retailer has a 40% markup and the market price of a similar cupcake from a similar venue is $2, a wholesale price of $1.42 would work. Other factors (like how delivery is handled, what happens to unsold cupcakes, etc.) also need to be worked into your wholesale price. You also need to know how the retailer will store and handle your cupcakes (including expiry dates) since if your brand appears on stale cupcakes you will take the reputation hit.

If your $0.80 cost per cupcake figure is accurate (this seems low to me, especially if you are including rent), a 25% profit margin would give you a minimum price of $1.

It sounds like this might work in theory but you have to be absolutely sure of your numbers, including your costs, market demand (is it realistic to assume 4000 cupcakes per month will be sold out of convenience stores?), and the reputation of the convenience store as it relates to your other business (if you make high-end wedding cakes, do you really want your brand to be on display at 7-11?).
post #8 of 12
Quote:
Originally Posted by jason_kraft

You need to know what percentage markup the retailer uses, and what the market price for your product would be. If the retailer won't tell you this, walk away from the deal.

For example, if the retailer has a 40% markup and the market price of a similar cupcake from a similar venue is $2, a wholesale price of $1.42 would work. Other factors (like how delivery is handled, what happens to unsold cupcakes, etc.) also need to be worked into your wholesale price. You also need to know how the retailer will store and handle your cupcakes (including expiry dates) since if your brand appears on stale cupcakes you will take the reputation hit.

If your $0.80 cost per cupcake figure is accurate (this seems low to me, especially if you are including rent), a 25% profit margin would give you a minimum price of $1.

It sounds like this might work in theory but you have to be absolutely sure of your numbers, including your costs, market demand (is it realistic to assume 4000 cupcakes per month will be sold out of convenience stores?), and the reputation of the convenience store as it relates to your other business (if you make high-end wedding cakes, do you really want your brand to be on display at 7-11?).




I agree. Your costs are really low and like jason_kraft said do you really want your cupcakes in a 7-11 if you do high end cupcakes? I know I wouldn't and I wouldn't want the reputation of selling really cheap cupcakes. They are homemade and unless you are using a box cake mix they deserve a better rep. Good luck though!
post #9 of 12
Damn Apti are you always this nasty??????

How is 4000 cupcakes a month harsh? As long as she has her numbers worked out and it's the right situation than she's in a good place with her business.

thecakechic, you should not apologize to anyone it was an honest mistake not to post in the business forum. Some people on this site take these forums a little too seriously. It's ridiculous. There will always be the great ccers there to lend a helping cake hand. icon_wink.gif

Good Luck
Mommy1st Cake Decorator 2nd.........
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Mommy1st Cake Decorator 2nd.........
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post #10 of 12
Thread Starter 
again i appreciate the helpful and valuable input from all of you!
there were a few points addressed that i had not considered and need to put more thought into
i am reworking my numbers again and will be contacting my accountant once he is back from vacation
concerns of mine are quality control, distribution and fluctuation on quantities needed
i most certainly will not committ unless the numbers work and i am satisfied with how my concerns are met
obviously an accountant and attorney will be involved in this process
i have established a relationship with this company in past years by providing products for corporate events and for their corporate headquaters cafeteria and do not want to jeopardize a good thing
thanks again everyone!
post #11 of 12
I charge my wholesale clients $1.50 per cupcake for regular plain ones like red velvet, chocolate, and yellow. For gourmet stuff I have carrot cake, strawberry shortcake, and german chocolate and some other flavers. Those cost $2.00 each. They charge $3.00/cupcake so they are making about $1.00-$1.50 per cupcake. I charge what I want and they either take it or leave it. I have a family to take care of and this is my business. I'm doing all the work and I'm buying all the product. The only thing they have to do is sit it in their display case. They will make some profit but I will get the rest. Good luck. If it were me I would do it but I would also charge what I would charge. So for 4000 cupcakes I make about $6000. That would be great!!!
post #12 of 12
I'm with Karema on this. My labor is .83 per cupcake wholesale. Yes, I do wholesale. So 4000 cupcakes would give me $3320 monthly for my time. This does not include ingredients, fixed costs, and profit.

I also agree with Apti. I don't see those numbers working. I can't see the ingredient costs unless it's the cheapest possible way to make a cupcake. If they want that, why not just get it from the grocery store? Their profit margin would be higher.

There is no way I would do all of that work for $250 a week. For the $830 I would be making, I would hire someone and make more than $250 doing nothing but managing. And this price would be to one location, not multiple.

Did you add gas, commercial auto insurance? How many trips will you have to make all over town? That takes tons of time. Will you fill the case? More time. I hope you have liability insurance. Do you have a wholesale license? Most areas have separate licensing for that. Do they have it in a case that is approved by the HD?

Sorry, I'm not getting the numbers at all. You could work at the convenience store and make more money.

In every one of my on-going wholesale accounts, I make as much money as I do retail. That doesn't change or I won't take the job.
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