Understanding Floor Price

Your floor price is the total cost for any product you have made, which includes all variable, fixed and labor costs. It is the least you can sell your products for because it includes your time you have spend making the product. It is not ideal at all, because you need not to be paid just for your time, but also for your skill and expertise.


Your aim should be to charge more than your floor price which leads to the next question. How much above my floor price must I charge?


That answer is found in your competitor analysis. If done correctly, it will give you and idea whether you have to charge more or less. This is normally done in a percentage increase of 25 – 30%. 


It is important not to create a price war, but to understand that price is not just determined by the cost of the product but also other factors in your business such as uniqueness, customer service and the value you offer.


Customers do not just make a buying decision on price alone, it is also an emotional decision.


For in-depth understanding on how all these factors influence your business and pricing and how to take your business to another level, you should go join the Cake Warriors. A unique group of people, focusing on the business side of baking and caking!