Episode 23: What Are You Actually Worth? How Home Bakers Get Pricing Wrong From the Start.

Are you working hard, making beautiful products, and still not earning what you should be? In this episode, Annie gets honest about the very common — and very costly — ways home bakers get their pricing wrong. Not slightly off. Wrong in a way that keeps skilled, dedicated bakers stuck.

This isn't just a maths problem, and Annie doesn't treat it like one. Pricing is a mindset problem too, and until you address both, the numbers alone won't fix it.

In this episode:

• Why pricing from ingredients alone is always going to leave you short — and what you're missing when you do
• The problem with setting your prices by looking at what other bakers charge
• What "pricing from anxiety" actually looks like, and why it's an emotional decision dressed up as a business one
• How to work out the full cost of an order — including all the time you're not counting
• The hourly rate exercise that changes how bakers see their own value
• Why undercharging isn't generosity — and what it's actually costing you
• A simple three-question framework for approaching your pricing with clarity

If you've been avoiding the calculation because the answer feels uncomfortable — this episode is for you.

For structured support, training and accountability:
Join The Home Baking Business Academy Membership

https://anniebennett.co.uk/the-home-baking-business-academy/

For regular delves into baking business matters, including taking part in podcast episodes:

https://anniebennett.co.uk/#subscribe

For free tips, insight and real-world business talk:
Follow me on social media

https://www.instagram.com/thehomebakingbusinessacademy/

https://www.facebook.com/thehomebakingbusinessacademy

https://www.tiktok.com/@hbbacademy

https://www.linkedin.com/in/annie-bennett-hbba/

For her website with all this and more:

anniebennett.co.uk

Transcript

SPEAKER_00 0:04

Hello and welcome to the Profitable Baker Podcast, the show for bakers who mean business. I'm Annie Bennett, founder of the Home Baking Business Academy, and every week I'll be sharing practical lessons, mindset shifts, and inspiring stories from bakers who are building businesses they love. Because success in this industry isn't about who bakes the fanciest cakes, it's about who builds the strongest business foundations. Let's get started. Hello and welcome back to the Profitable Baker podcast with me, Annie Bennett. Now today I want to talk about something that I know is going to land differently for different people listening. For some of you, it's going to feel like a relief, like someone is finally saying the thing you've suspected for a while but couldn't quite articulate. For others, this is going to feel a bit uncomfortable. And if it does feel uncomfortable, I want you to sit with that because discomfort around this particular topic is usually a signal that something needs to change. So what's the topic? Yes, it's pricing. Specifically, it's about the very common, very understandable, and very costly ways that home bakers get their pricing wrong. Not wrong as in slightly off, wrong as in working hard, making beautiful things, and still not earning what they should be earning. And I want to start by being honest with you. This is not a simple tidy topic with a formula and a happy ending. Because pricing isn't just a maths problem, it's also a mindset problem. And until we deal with both, the maths alone won't save you. So let's get into it. Let me paint a picture that I think a lot of you are going to recognise. A baker gets an inquiry. Someone wants a three-tier celebration cake, flowers, custom colours, specific flavour combination. It's a significant order. The baker sits down to work out what to charge. They add up the ingredients, they think about the boxes and the boards and the ribbon. They think about what her local competition charges and they look up a few prices online and they think about what feels reasonable to ask. They think about what the customer might say if the price seems too high. And they wonder whether they're experienced enough to charge that much. So they round down slightly just to be safe. And they send the quote. Now I want to ask you something about that scenario. At what point in that process did they calculate what their time was worth? At what point did they factor in the hours they'd spend baking, decorating, doing the consultation, responding to messages, buying the ingredients, making the delivery? At what point did they calculate whether they'd actually make money on this order? Not just cover costs, but make a profit that reflects the skill and the labour and the expertise. For most bakers, in most inquiries, the honest answer is they didn't. Not really, not properly. And that is where the pricing goes wrong, right at the very beginning. There are a few very specific mistakes I see home bakers make with pricing, and I want to go through them, not to make you feel bad, but because naming them clearly is the first step to fixing them. So what's the first one? The first one is pricing using just ingredients only. This is the most common starting point, and it makes sense. Your ingredients are a real measurable cost. So you add them up and you might multiply by two or three and you have a price. I've actually seen people give advice with that. Add up your ingredients and times it by three. Now the problem is that ingredients are only one part of what it costs to make and sell a product. They're not even the biggest part in many cases. What about your time? What about the cost of your packaging? What about your tins, your boards, your piping bags, your mixer? What about the cost of running your oven? What about the time you spent on the consultation or writing and sending the invoice or driving to deliver? If you're only pricing ingredients, then you are undercharging. And that's not an opinion, that is maths. Now the second mistake is pricing according to the competition. Here's the issue: you don't know what's behind someone else's price. You don't know their costs, their experience, their overheads, their strategy, their margins. Another baker charging less than you doesn't mean you're too expensive. It may well mean that they're undercharging too. It might mean their costs are genuinely lower. It might mean that they're not yet running their business like a business. If you set your prices by looking sideways at what other people charge, you're anchoring your business to their decisions, including their mistakes. Now the third mistake I see is pricing from anxiety. This one is a bit harder to admit to, but it's incredibly common. And it goes like this I don't want to lose the inquiry. I'm not sure I'm experienced enough to charge that. What if they think it's too expensive? I'll just charge a bit less this time and see how it goes. Now that instinct to soften the price, to make it feel safer, comes from a real place. It comes from wanting to be chosen, from not feeling fully confident in your value yet, from not wanting to seem like you're getting above yourself. But when you price from anxiety, you're not actually making a business decision. You're making an emotional one. And emotional decisions made repeatedly add up to a business that cannot sustain itself. Now I want to talk about something called the full cost of an order. Because I think when bakers genuinely sit down and work this one out properly, not as a guess, it changes things. The full cost of an order is not just the ingredients, it's everything. It's your ingredients, yes, but it's also your packaging, every box, board, ribbon, label. It's your time. And this means all of it. The time baking and decorating, but also the time on the consultation call, time exchanging messages, the time writing the invoice, the time buying the ingredients, the time cleaning up, the time making the delivery or ranging the collection. All of it. It's a proportion of your equipment costs because your mixer, your tins, your tools all wear out over time and need replacing. That's a real cost of your business spread across your orders. It's a proportion of your overheads, your insurance, your subscriptions, your electricity, your phone bill, again, spread across your work. And it's a contribution to your profit. Because profit isn't a bonus to treat yourself to if you have a great month. Profit is what makes your business worth running. And when you add all of that up, really add it up. The number that comes out the other end is often genuinely surprising. And it's often significantly higher than what most bakers are currently charging. And that gap between what things actually cost to make and sell and what bakers are actually charging is the gap that keeps skilled, hardworking bakers stuck. So let's talk about the hourly rate question because I think this is where a lot of bakers get stuck. When I ask a baker what they're paying themselves per hour, I can get one of three responses. Some people have genuinely never thought about it in those terms. Some people have thought about it and feel vaguely embarrassed by the answer. And some people will tell me a number and then, if we work it out together properly, discover that the real number is quite different to the one they thought. So here's an exercise for you. Get your pen and paper. You can do a pause on this podcast and do it in real time, or you can do it afterwards. But I want you to do this. Take an order you completed recently, something that felt fairly typical for your business. Now, honestly and generously estimate how many hours it took you total. Everything I listed a moment ago: baking, decorating, admin delivery, shopping, consultation, every touch point that took your time. Now look at what you charged. Subtract your ingredient costs, your packaging costs, uh, your overheads. What's left? What does that work out to per hour? For a lot of home bakers, that number is somewhere between concerning and genuinely eye-opening. I've had this conversation with bakers who've done this exercise and realize they were effectively paying themselves less than minimum wage for highly skilled work that takes years to develop. I've also had bakers tell me that if they charge for their time, they'd price themselves out of the market and never get any customers. Right. To those bakers, I say this. One, would you apply for a job that offered a wage of less than a pound an hour? Of course you wouldn't. So stop running an expensive hobby. And two, yes, you might price yourself out of the market of people who want cheap cake. So make your business known in the market of people that are happy to pay for quality bespoke cake. Those people are out there. You just need to find them. And here's the thing I want you to really hear: you are not a factory. You are not a supermarket bakery with economies of scale and automated production lines. You are a skilled individual making bespoke handmade products that require expertise, creativity, and care. The hourly rate you're paying yourself should reflect that. So let's talk about the mindset, because I promised I would, and because I genuinely believe it's the root of most pricing problems in the home baking world. Somewhere along the way, a lot of home bakers absorb the idea that charging properly is somehow greedy or unkind, or that it'll put people off, that there's something slightly uncomfortable about valuing your own work highly. But I want to gently but firmly push back on that. When you undercharge, you are not being generous. I know it feels that way, but what you are actually doing is subsidizing your customers with your time and energy and expertise. And doing it in a way that isn't sustainable and that quietly diminishes the value of what you do. Charging properly is not arrogant, it is not greedy. It is the basic act of respecting your own expertise and running your business in a way that can actually last. I also want to address the fear of losing the inquiry directly because I know that fear is real. And here's what I've found consistently. When bakers raise their prices, they don't lose all of their customers. They do lose some inquiries, but those are usually the ones who are never really going to value your work appropriately anyway. They keep and then attract customers who understand what they are getting. A higher price is also a signal. It signals quality, it signals professionalism, it signals that you know what your work is worth. And the customers who want those things, the customers who will treat you well, refer you on, and come back again, those customers are actively looking for those signals. So I want to give you a framework for thinking about your pricing, a way of approaching it that I think is genuinely useful. There are three questions I'd encourage you to work through. The first is, what does this order actually cost me? Not just the ingredients, everything. Use the list I went through earlier as a starting point. Write it down. Actually add it up. Don't estimate, or if you have to estimate, estimate generously. The point is to get to a real number, not a comfortable one. The second is, what do I need to earn from my baking business? Now this is a question about sustainability, not luxury or greed, sustainability. What hourly rate would make this business worth running? What do you need to earn over the course of a month or a year? What would feel fair given the skill and time and effort you're putting in? Start there and work backwards into your pricing. And the third question: who are you pricing for? And I mean this genuinely. Are you pricing for your ideal customer, the person who values handmade quality expertise, or are you pricing for the customer who wants the cheapest option available? Because those are two completely different markets. And if you try to compete on price with supermarkets and must producers, you will lose every time. The home baker's competitive advantage is not low prices, it is skill, personalization, quality, care, and the experience of working with a real human being who loves what they do. So price accordingly. And before I close, I want to say something to the baker who's listening to this and feeling a slight sinking feeling. The one thinking, I know my prices are too low and I don't know what to do about it. Well, first of all, well done for knowing. Honestly, a lot of bakers don't let themselves know. They avoid the calculation because the answer feels scary. You already being honest with yourself is the hardest part. Second, this doesn't have to change overnight. If raising your prices feels terrifying, you don't have to just double them tomorrow. You can start with new inquiries, you can increase for a specific product line, you can take one order and price it properly and see what happens. What I'd encourage you to avoid is the idea that you'll sort the pricing out when you feel ready, or when you're more experienced, or when you have a more established customer base. Because that day has a way of not arriving. The bakers I know who charge properly didn't feel completely ready. They just decided that their work was worth it and acted on that decision. And you can absolutely do that too. Now, pricing is one of the things we go into in real depth inside the Home Baking Business Academy membership. Not just the maths of it, but the whole picture, the costs, the mindset, the practicalities of raising your prices, how to handle inquiries with confidence, and how to communicate your value in a way that feels natural rather than defensive. And if today's episode has made you feel like it's time to look at this properly, I'd love to see you inside the membership. All the details are in the show notes. And if you found this episode useful, please do share it with a baker you know. Pricing is one of those things that affects every single person in this industry. And the more bakers who approach it with clarity and confidence, the better for all of us. Thank you so much for listening. Take care of yourselves, take care of your businesses, and I'll see you next time.