If you are running a bakery business, you’ll need supplies to make your products. When you are purchasing baking supplies, it’s critical to understand the difference between retail versus wholesale baking supplies pricing. This will help you when you are determining your prices and ensure that you make a profit on your products.
In this article, we’ll understand the key difference between retail and wholesale pricing when it comes to sourcing baking supplies.
Defining Retail vs. Wholesale Baking Supplies
First of all, you must define retail vs. wholesale pricing:
Retail
Retailers, or B2C companies, sell products directly to customers for a profit. The customer interacts directly with the company and prices are higher than they would be from a wholesaler.
Wholesale
Wholesalers, or B2B companies, sell products in bulk to retailers at a reduced price. Companies offering commercial baking supplies wholesale typically require larger orders but may take on smaller ones as well.
Retail vs. Wholesale Pricing: What’s the Difference?
Typically, wholesale pricing is lower than retail pricing, which allows businesses to purchase and resell the items for a profit. Retail prices are higher because the business must factor in costs such as labor, advertising, and other overhead expenses.
In order to optimize the difference between the two, you must take the time to do your research and find the best price for both. Think about your competitors and what their prices are and regularly review your prices to stay competitive.
How to Set Your Bakery Prices
The first step to determining your bakery prices is to track the cost of your ingredients by making a master list. Be sure to list the cost of the entire package as well as the cost per unit. You’ll want to update this every few months and take note of ingredients that have increased in price. This will help you keep your prices where you can still make a profit.
The next step is to factor in your labor costs based on a realistic hourly rate.
Third, you’ll want to consider your overhead costs, such as your website, business insurance, etc. These costs are fixed. Some of your overhead costs are variable such as cupcake liners, parchment paper, etc. These costs also need to be factored into your pricing.
Wholesale Baking Supplies or Retail Ingredients?
If you are just starting out, you may find that it’s easier to purchase retail baking supplies because you may not be doing the volume to make it worth the wholesale purchase. On the other hand, purchasing wholesale will increase your bottom line.