When starting a home bakery you need to bear in mind, first of all, that baking bread, cake, pie or cookies for a special occasion can be great fun. But to make money in a home baking business you have to bake your specialty many times a week, over and over again. In other words, you must first come to grips with the fact that “commercial” baking is work, good and lucrative work, but quite different from once-in-a-while party baking.
Starting a home bakery business is relatively easy. Let’s say your specialty is a delicious, rich cheesecake. The first step, before soliciting one order, is to figure out exactly how much one cake costs you. This means calculating every ingredient, including the fraction of a pound of butter you use to grease your cake pan and the cost of power to bake your cake. Breaking costs down to the price per egg and the price per cup of flour is more complicated than it seems at first. And once you’ve figured the exact cost of all the ingredients you’ll probably be surprised to find out how expensive your cake has been, not counting your labor. Now take the cost you’ve arrived at and double it. That will be your selling price. Don’t be shocked to discover that your selling price for one cheesecake could be as high as $6 or more, and don’t be discouraged. People expect to pay more for homemade baked goods because there is just no commercial product that can compare.
Your objective in selling your baked goods is to line up as many regular customers as possible. This means your primary effort should be directed to local restaurants, delicatessens and small groceries. The idea here is to line up customers who will take a weekly quantity of your product, as opposed to individuals who buy one cake at a time for a special occasion. Once you’ve established your “institutional” buyers then there will be time to think about advertising for direct sales to consumers.