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How to Raise Your Microbakery Prices Without Losing Customers | Episode 30

  • Nov 12, 2024
  • 7 min read

Updated: 4 hours ago

Listen on Apple Podcasts or watch on YouTube


You bake two or three days a week, your pre-orders sell out, and somehow there is never anything left in the account by the end of the week. You buy next week's flour, you set aside a few dollars if you are lucky, and you start the whole thing over again.


Selling out is not the same as making money. When the money is gone before the next bake, your prices are the first place to look.


A couple of months into my own bakery I hit exactly that wall. I was pouring my heart into a brand new business, working long hours, and the income coming in did not match the work going out. I was nervous about changing my prices, I will be honest with you. It turned out to be one of the best decisions I have made, and not only for my income. It changed my confidence, and it changed the way my customers saw the value of what I make.


So let me walk you through how to know when it is time, what has to shift first, and exactly how to make the change.


What underpricing is actually costing you

The fears around raising prices are real, and you are not the only one feeling them. You worry you will lose customers, or that people will think you are greedy. Sometimes the biggest hurdle is the one you put there yourself, the feeling that you do not have the standing to ask for more.


Here is the other side of it. Underpricing is costing you more than a few lost customers ever would, because when your prices are too low you pay the difference somewhere else:

  • You pay it in burnout and stress.

  • You pay it in hours you do not get back.

  • You pay it in the energy you bring to your own business, because it is hard to show up excited for work that is not paying you back for the ingredients, the equipment and the time you are putting in.

You deserve to be compensated fairly for your time, your energy and your skill.


Your bread is a handcrafted product, and the price should say so

Before we get to tactics, we have to deal with the mindset piece, because that is where most bakers get stuck.


You are not just selling bread. You are selling something handcrafted, made with intention and with skill you spent a long time building. The quality of the ingredients you chose and the care you put into every loaf has value that no grocery store can replicate, no matter how nice the store is.


I am drinking my tea right now out of a stoneware mug that somebody made by hand. I paid a lot more for it than I would have paid for a mug at Target, and because of that I cherish it. I am grateful for the skill the potter had to learn to make it.


Your bread is no different. It is perishable, and the people who value it will still happily pay a premium for something handmade by someone who spent years learning the craft.


Two more things have to shift alongside that.


The first is believing there are enough customers to go around. Even in a small community, there are people who will value what you offer. The ones who want the cheapest bread on the shelf are not your customers, so speak to the people who already care about handmade food and let the rest shop where they want to shop.


The second is taking the emotion out of it. Many of us, and I think especially women, read our prices as a statement about our own worth. Once pricing feels personal, it gets very hard to change. Pricing is a business decision, and an important one. Separate the two and it gets so much easier to set a number that reflects what your product is worth.


Three signs it is time to raise your prices

Any one of these is enough on its own.

  1. You are in survival mode. Your bank account is nearly drained every week before the next round of orders comes in, and all you can do is buy next week's ingredients. If there is nothing left to pay yourself or put into savings, your prices are too low.

  2. People push back on your prices and you still sell out. That is a sign you have room, and raising your prices will move you toward the customers who value what you make.

  3. You are the lowest priced baker in your area. Go look at the menus of the other bakers near you. If everyone is above you, that is your answer.

That last one matters more than bakers expect, because people read price as a signal of quality. Think about Walmart and Target. Target prices higher and most people assume the quality is better. Whether that is true does not really matter, because the perception is doing the work.


So speak the language of the customer you actually want. You are not trying to be the affordable option unless affordability is genuinely at the heart of your mission. If it is, make it real by simplifying your inclusion flavors or sourcing your flour somewhere that lets you hold a lower price.


How to actually raise your prices

Start with one product. You do not need to overhaul your whole menu overnight. Pick one item and add a dollar to it. Most of the time your customers will not even flinch. Prices have gone up everywhere, and the people who buy from you are buying because they love what you make.


Price new products higher from day one. This is how I have raised my average price over time with almost no friction. My original artisan loaf has stayed the same size and price since I started, and I raised my inclusion loaves by two dollars at the beginning of the year. Every time I add a new flavor, I price it higher to reflect what those ingredients cost me. Nobody has an old price in their head to compare it to, so it just lands.


Tell the story of what is inside the loaf. The organic flour, the overnight fermentation, the years you spent getting it right. When customers understand the care that goes into your product, paying more for it feels good to them instead of feeling like a loss.


Do not apologize. A price change is a decision that keeps your business healthy so you can keep feeding your community. When I made my change, I was straightforward about rising ingredient costs and got zero negative feedback. A few people told me flat out that I needed to be charging more!


Then set the new price and move on. The worst that happens is you lose a couple of people who were never your ideal customer anyway.


If you are a year or two in, do a full pricing audit

Once you have real volume, a one dollar bump on one loaf is not the whole job. Sit down with your actual menu and check three things.

  • Does every product carry its own weight? Calculate the cost of your ingredients for each item, including the packaging and the label. If a product is priced within pennies of what it costs you to make, either the price goes up or the product comes off your menu.

  • Do your prices reflect real differences? If you offer an organic loaf with freshly milled grain and a standard loaf, the freshly milled one should be priced clearly higher. Bakers often build a premium product and then forget to price it like one.

  • Are you priced for the business you want in two years? Your prices have to leave room to pay yourself, take a day off, buy better equipment and eventually bring in help. Numbers that only cover next week's flour will not carry a bigger business.

If you want the math done for you, my Profit & Pricing Calculator walks you through the cost of every recipe and shows you your margin on each product.


Final thoughts

So many bakers get excited about selling their sourdough, sell for a month or two, and then fizzle out. Almost every time it comes back to not charging enough to make the work worth it. I want you to still be baking in five years, with money in the account.


Go look at your prices this week with fresh eyes. Ask whether they reflect what you provide and whether they can carry your business for the long haul. If the answer is no, pick one product and change it. That is the whole first step, and you deserve to be paid fairly for the work you do.


Cheering you on,


Caroline


Keep going

If this one hit home, these three go well with it.


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