Cottage food & home bakery pricing

Cottage food laws (in many US states, and similar home-kitchen registrations in the UK, EU, Canada and Australia) let you sell certain low-risk foods made at home. Rules on what you can sell, where, labeling and annual sales caps vary a lot — check your local authority before selling.

1. Know your true cost

Use the calculator for every product: ingredients by actual usage, packaging, labels, a share of utilities and equipment, payment processing fees (often 2.5–3.5%), market stall fees and your wage.

2. Check the local market

Look at bakeries, farmers markets and other home bakers nearby. Your price doesn't have to be the lowest — handmade, local and custom products support a premium.

3. Choose a pricing method

• Cost-plus markup: total cost × (1 + markup). Easy and transparent.
• Target margin: price = cost ÷ (1 − margin). A 40% margin means 40% of the price is profit.
• Ingredient multiplier: price = ingredient cost × 3 or 4. Quick, but can underprice labour-heavy items.

4. Watch your sales cap

If your area limits annual cottage-food revenue, low prices mean you hit the cap having earned less. Fewer, higher-value orders are usually better.

Common mistakes

• Pricing only ingredients.
• Ignoring failed batches and samples (add 5–10% waste).
• Not raising prices when ingredient costs rise.
• Discounting for friends until it becomes the norm.

FAQ