LESSON 16: CREATING A PRICING STRATEGY

In-Store Bakery margins range from 35-55 percent.

Applying a flat margin across the board is not necessarily the ideal route – most recommend blending the margins to achieve your desired goal.

Production

• Bulk, raw dough (that requires more labor, resources, and time) justifies a higher margin.
• 45-55% or possibly more for margin
  
  

Baked Bulk

• Baked Bulk (without packaging or labels) requires less labor than raw dough, but more than Thaw & Sell/Retail Ready.
• 45-50% margin
  
  

No Label 

• Thaw & Sell packaged items (without manufacture-provided labels) strike a good balance as they require less labor than Bulk Raw or Bulk Baked but give a “made in-house” feeling.
• 40-45% margin

Thaw & Sell

• Because minimal labor and resources are required, applying a lesser margin percentage is justified.
• 35-50% margin
  
  

Blending Margins

Pricing Example:

• Production: 20% of total Bakery @ 55%
• Baked Bulk: 20% of total Bakery @ 50%
• No Label: 10% of total Bakery @ 45%
• Thaw & Sell: 50% of total Bakery @40%
• In this example, the blended margin then is 48%

Adjusting the product mix will increase or decrease the margin percentage and ultimately your profit.