This guide provides general pricing strategies for educational purposes. Your actual costs and appropriate pricing will vary based on your specific business, location, and market conditions.
Calculate true costs and set profitable, competitive prices
Many cottage food makers undercharge for their products, not realizing their true costs. Proper pricing ensures:
Cover all costs and earn income for your time and effort
Build a business that can grow and support your goals
Signal quality and value to your target customers
Avoid undercutting yourself and other makers in the market
Before you can price profitably, you need to know ALL your costs. Many makers forget hidden expenses!
Calculate the actual cost of ingredients for ONE unit (e.g., one dozen cookies, one jar of jam).
Example: Chocolate Chip Cookies (1 dozen)
| Flour (1.5 cups @ $0.10/cup) | $0.15 |
| Sugar (1 cup @ $0.08/cup) | $0.08 |
| Butter (1 stick @ $0.75) | $0.75 |
| Chocolate chips (1 cup @ $0.50) | $0.50 |
| Eggs (2 @ $0.25 each) | $0.50 |
| Other (vanilla, baking soda, salt) | $0.15 |
| Total Ingredient Cost: | $2.13 |
Don't forget boxes, bags, jars, labels, ribbons, tissue paper, stickers - everything that presents your product.
Example: Cookie Packaging
These are ongoing expenses that need to be factored into your pricing:
Pro tip: Add 15-25% to your direct costs to cover overhead expenses.
Many makers forget to pay themselves! Your time has value. Track how long it takes to:
Example Time Calculation:
If it takes 3 hours to make 5 dozen cookies, that's 0.6 hours (36 minutes) per dozen.
At $15/hour labor rate: $9.00 labor cost per dozen
Now that you know your costs, use a formula to ensure profitability:
Price = (Total Costs) × (1 + Markup %)
Total Costs
Ingredients + Packaging + Overhead + Labor
Markup %
Typical: 50-100% for cottage foods
Final Price
What you charge customers
| Ingredients | $2.13 |
| Packaging | $0.50 |
| Overhead (20% of direct costs) | $0.53 |
| Labor (36 min @ $15/hr) | $9.00 |
| Total Cost | $12.16 |
| Markup (50%) | $6.08 |
| Selling Price | $18.24 → $18.00 |
Result: At $18 per dozen, you cover all costs and earn $5.84 profit per dozen (32% profit margin). This is a sustainable price that values your time and quality ingredients.
Your calculated price is your baseline. Now check if it's competitive:
You can charge premium prices if you offer:
Offer multiple items together at a slight discount to increase average sale:
Offer different price points for different customers:
Adjust prices based on demand:
Small tweaks can improve perception and sales:
❌ Not valuing your time
Your labor is worth money. Don't work for free!
❌ Forgetting overhead costs
Utilities, equipment, marketing all add up - include them in your pricing
❌ Racing to the bottom
Competing only on price hurts everyone. Compete on quality and value instead
❌ Never raising prices
Ingredient costs go up - adjust your prices annually or you'll lose money
❌ Pricing based on feelings, not math
"That seems too expensive" isn't a pricing strategy. Run the numbers!
Stay organized and track your costs with these helpful tools:
Log book for tracking income, expenses, and profits
Large display calculator for quick cost calculations
Goal setting, planning, and tracking journal for entrepreneurs
Accordion file for organizing receipts and invoices by month
As an Amazon Associate, we earn from qualifying purchases. These tools help cottage food makers stay organized.
Calculate exact ingredient costs and suggested pricing for any recipe. Save your calculations and adjust as prices change.
Try Recipe Calculator →Ready to set profitable prices and start selling?