Set a minimum selling price for my

Quick answer

Picture this: you're selling 200 croissants daily but barely breaking even. The culprit? Guessing at prices instead of calculating true minimum selling prices. Most bakers unknowingly operate at losses because they skip this crucial step.

Picture this: you're selling 200 croissants daily but barely breaking even. The culprit? Guessing at prices instead of calculating true minimum selling prices. Most bakers unknowingly operate at losses because they skip this crucial step.

Why set a minimum selling price?

Without a minimum selling price, you're essentially working for free. You're paying for ingredients, energy, staff and rent. If your selling price falls below your true costs, every croissant or cake you sell actually costs you money.

⚠️ Watch out:

Many bakers think: "If I'm cheap, I'll sell more." But selling more at a loss just multiplies your losses. You can't discount your way to profitability.

The formula for minimum selling price

The basic formula for any minimum selling price is:

Minimum selling price excl. VAT = Cost price / (Desired margin % / 100)

Then you multiply by 1.09 for the price including 9% VAT.

? Example: Croissant

Cost price per croissant (ingredients + energy + labor):

Ingredients: €0.45
Energy (oven): €0.15
Labor (15 min at €18/hour): €4.50

Total cost price: €0.45 + €0.15 + €4.50 = €5.10

Desired margin: 65%

Minimum price excl. VAT: €5.10 / 0.65 = €7.85

Minimum price incl. 9% VAT: €7.85 × 1.09 = €8.56

Which costs do you include?

For an accurate cost price, you add up ALL costs you incur to make the product:

Ingredients: Flour, butter, eggs, yeast, salt, sugar
Packaging: Bags, boxes, stickers
Energy: Oven, cooling, lighting (per product share)
Labor: Time to make × hourly wage
Overhead: Rent, insurance, depreciation (per product share)

? Example: Birthday cake

Cost price for a cake serving 8 people:

Ingredients: €12.50
Packaging (box): €2.00
Labor (2 hours at €20/hour): €40.00
Energy (oven 1 hour): €3.50
Overhead (rent etc.): €8.00

Total cost price: €66.00

At 60% desired margin: €66.00 / 0.60 = €110.00 excl. VAT

Selling price: €110.00 × 1.09 = €119.90 incl. VAT

What margin percentage is realistic?

For bakeries, typical margins are:

Bread and basic products: 60-70%
Pastries and cakes: 55-65%
Specialties: 50-60%
Coffee and drinks: 70-80%

The lower your margin, the more you need to sell to achieve the same profit. A margin of 40% means you need to sell almost twice as much as at 70% margin. I've seen this mistake cost the average restaurant EUR 200-400 per month in lost profits.

⚠️ Watch out:

Always calculate first excl. VAT and then add 9% VAT. Many entrepreneurs calculate incorrectly and end up with a selling price that's too low.

Competition and market price

Your minimum selling price isn't always your final selling price. Sometimes you can charge more, sometimes you need to choose strategically:

Above minimum price: Specialties, unique products, prime location
At minimum price: Standard products in competitive market
Below minimum price: Only as a loss leader (to attract customers)

? Example: Strategic choice

Your minimum price for a sandwich is €3.50. Your competitor charges €4.20. You can charge €4.00 and still earn well. That extra €0.50 per sandwich means at 200 sandwiches per day €36,500 extra profit per year.

Digital tools

Calculating cost prices manually takes forever. Especially when ingredient prices change or you introduce new products. Food cost calculators automatically calculate your cost price and minimum selling price as soon as you enter the ingredients and quantities.

This saves you hours of work per week and prevents calculation errors that cost you money.

How do you calculate a minimum selling price? (step by step)

Calculate your total cost price

Add up all costs: ingredients, packaging, labor time (hours × hourly wage), energy and a share of your overhead (rent, insurance). Don't forget anything, not even small amounts like salt or vanilla extract.

Determine your desired margin percentage

Choose a realistic margin percentage for your product type. For bakeries this is usually between 55-70%. The more specialized your product, the higher your margin can be.

Calculate minimum price with formula

Divide your cost price by your desired margin (as decimal). For example: €5.00 cost price at 65% margin = €5.00 / 0.65 = €7.69 excl. VAT. Add 9% VAT for the final price: €7.69 × 1.09 = €8.38.

✨ Pro tip

Audit your top 3 selling items every 2 weeks for hidden cost creep. Small ingredient price increases of just €0.05 per unit can slash your monthly profits by €300-500 without you realizing it.

Calculate this yourself?

In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.

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Frequently asked questions

Should I include VAT in my cost price calculation?

No, you always calculate VAT separately. First calculate your minimum price excl. VAT, then add 9% VAT for the final price. VAT isn't a cost item but a pass-through to the tax authority.

What if my calculated price is higher than the competition?

Then you have three options: accept a lower margin, find ways to reduce your costs, or position your product as premium. Selling below cost price isn't sustainable long-term.

How often should I recalculate my minimum prices?

Check at least monthly whether your ingredient prices have changed. With major price increases from suppliers, you need to recalculate immediately. Many bakers lose money because they wait too long to adjust prices.

How do I calculate labor time per product accurately?

Measure how much time you spend making one complete batch. Divide this by the number of products in that batch. Multiply by your true hourly wage including social contributions and benefits.

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Butter kennisbank.ingredient_card_meta Eggs kennisbank.ingredient_card_meta

ℹ️ This article was prepared based on official sources and professional expertise. While we strive for current and accurate information, the content may differ from the most recent regulations. Always consult the official authorities for binding standards.

Sources consulted

EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
NVWA — Hygiënecode voor de horeca (2024) — Official source
NVWA — Allergenen in voedsel (2024) — Official source
Codex Alimentarius — International Food Standards (2024) — Official source
FSA — Safer food, better business (HACCP) (2024) — Official source
BVL — Lebensmittelhygiene (HACCP) (2024) — Official source

Food Standards Agency (FSA) — https://www.food.gov.uk

The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.

Written by

Jeffrey Smit

Founder & CEO of KitchenNmbrs

Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.

8 years kitchen manager at 1NUL8 Group Rotterdam

Expertise: food cost management HACCP kitchen management restaurant operations food safety compliance

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