bake - April 2013 - 37

“We were able to get a portioning machine to speed that up
so that suddenly we could do the same thing with one man
in an hour that used to take three hours to do with two men.”
Dennis Stanton, owner of Swedish Bakery, Chicago, IL

Premium pricing strategies

Numbers then market

Sometimes when a product doesn’t do well, a bakery

Pricing products correctly starts with your cost to

needs to consider whether or not it’s time to drop the

make them. “You have to start with the numbers

product. However, dropping something temporarily

themselves, the initial cost,” Merritt says.

and then bringing it back for a special occasion, can
get customers excited again, and pricing that product

Once you have this ﬁgured out, you can begin to set

higher is a must. “That’s what we’ve done several

up your pricing structure. “If you can ﬁgure out the

times, is bring it out for a certain holiday. Maybe the

ingredients and the labor, I wouldn’t stray from 50%

anniversary of the bakery or a certain season and say,

gross proﬁt,” Sapienza says. However, every bakery,

‘Oh we’ve got these back for now!’” Merritt says.

area and market differ. You must ﬁgure out your own
market.

Give the product enough time back to see the
response from your customers. If customers receive

Shop products from other bakeries in your area, liter-

the product well and buy it, it’s worth continuing it.

ally, and bring them back to your shop for a side by

“But always re-price it,” Merritt says, “and it will shock

side comparison. While some competitors offer better

and amaze you. When you’ve re-priced it, you’ll think,

pricing and will most likely sell more, if your product

‘Oh I did not have the right price on that before.’”

is a higher quality, then it’s okay to charge more.

If your product sells and you feel that it’s priced right,

Your customers will notice the difference. “Are you

but you still have trouble making a proﬁt on it, there

going to sell as many as they are? No,” Merritt says.

are alternative methods you can use. If you’d rather

“But if you price it so that you’re still making a proﬁt,

simply not charge more for an item, there are ways

you’ll be okay on that product.”

to raise your prices without raising the dollar amount
the customer pays. “You can take a different formula-

A unique business

tion that’s cheaper, you can take a different method

A retail bakery both manufactures and sells its

that’s cheaper,” Merritt says. By lowering your cost of

product. “Everybody else either buys a widget, a cake

production, you’re essentially raising your price. Merrit

in a box, and sells it, or they make that widget and

uses cookies as an example.

they sell it to some other guy that’s going to sell it,”
Sapienza says. “But we have to do both. There is a

“We used to make cookies in an old-fashioned way

whole extra set of things that can go wrong and extra

by scooping them out and things like that, and that

costs associated with that.”

just wasn’t efficient enough. It was raising the labor
cost higher and higher, until we could not keep up

Retail bakeries offer specialized and artistic products.

with the lower-priced market,” Merritt says. “We

Pricing needs to reﬂect this. It’s okay to lose a few

were able to get a portioning machine to speed that

bargain shoppers to higher pricing on your products

up so that suddenly we could do the same thing with

because customers who understand the high quality

one man in an hour that used to take three hours to

and customer service of a retail bakery will pay for

do with two men.”

those things.

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bake - April 2013

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