The price you charge a café for your bread or pastries has to cover four things: your loaded cost per unit, the delivery round, whatever comes back unsold, and the time they take to pay you. If you only look at the cost of baking, the wholesale price seems comfortable. Once you add the morning round and the returns, the real margin is usually a lot thinner. The right number is the real cost per unit the café pays for, not per unit you bake.
What changes when you sell to a café
At your own counter you sell one item at a time, at full price, and get paid on the spot by card or cash. With a café or deli it works differently.
- The price is lower, because the café needs its own margin. If it sells your cinnamon bun at $4.50 and buys it from you at $2.00, it keeps more than half the shelf price.
- You deliver. Fuel, parking and your time, every morning.
- There may be returns. Many cafés want to send back what they did not sell. That is close to selling on consignment, and the risk moves to you.
- You get paid later. Weekly, fortnightly or at month end, not on delivery.
None of that is bad. A café that takes 20 buns a day gives you steady volume and saves you hours behind a counter. But each of those four things has a cost, and it has to be in the price. The guide on selling wholesale to shops and cafés covers how to pitch and negotiate; this one is about the sums.
The four things your wholesale price pays for
- Loaded cost per unit. Ingredients, your time, the oven, any packaging and production waste. It is your loaded cost, the same one you use at the counter.
- Delivery. What the round costs (travel and your time) divided by the units you drop off. The guide on delivery cost explains how to measure it.
- Returns. Units that come back, minus whatever you recover by selling them as day-olds.
- Payment terms. They do not change the cost per unit, but they change how much cash you have to put up front.
Worked example: cinnamon buns for three cafés
You bake cinnamon buns. You have already measured your loaded cost: $0.90 per bun. At your market stall you sell them at $3.75, a margin of (3.75 − 0.90) ÷ 3.75 = 76%.
Three local cafés want 60 buns a day between them and offer $2.00 a bun. They want to be able to return what they do not sell.
The round: each morning costs $12 in fuel and parking plus 30 minutes of your time, which you value at $18 an hour, so $9. That is $21 a round, or 21 ÷ 60 = $0.35 per bun delivered.
Returns: for the first month you wrote down what came back. Out of every 60, 10 return. You sell those the next day at $0.60 as day-olds.
Real cost per bun paid for:
| Item | Calculation | Amount |
|---|---|---|
| Bake 60 buns | 60 × 0.90 | $54.00 |
| Delivery round | $21.00 | |
| Recovered from returns | 10 × 0.60 | − $6.00 |
| Net cost for the day | 54 + 21 − 6 | $69.00 |
| Buns the cafés pay for | 60 − 10 | 50 |
| Real cost per bun paid for | 69 ÷ 50 | $1.38 |
Your margin at $2.00: (2.00 − 1.38) ÷ 2.00 = 31%. You make 50 × 0.62 = $31.00 a day across the three cafés.
Compare that with 76% at the stall. The bun is the same; what changed is everything between your oven and the café counter.
The price you would need for a 40% margin: 1.38 ÷ (1 − 0.40) = 1.38 ÷ 0.60 = $2.30.
If you sell firm, with no returns: the cafés order 50 instead of 60. Cost: (50 × 0.90 + 21) ÷ 50 = 66 ÷ 50 = $1.32 per bun. At $2.00 your margin rises to (2.00 − 1.32) ÷ 2.00 = 34%.
The example does not say $2.00 is a bad price. It says what it really leaves you and which levers you have: raise the price, cut returns, or make the round cheaper. To go from a margin to a price without slips, use the markup and margin calculator.
Returns: set the rules before the first drop
Returns eat margin quietly, because they never show up on a receipt. Agree in writing, even by message:
- Whether there are returns at all. If there are, a cap: for example, up to 10% of what you delivered.
- When they come back. The next morning, on your next drop, not at the end of the week.
- In what state. Anything squashed or out of its bag cannot be resold.
Log every day how much you drop and how much comes back, by café and by product. If one café returns 25% of the brownies and 5% of the buns, send it fewer brownies. The guide on unsold bread and pastries has ideas for what comes back.
Payment terms cost you too
Say the cafés pay 30 days after invoice and you deliver five days a week. That is about 22 deliveries waiting to be paid at any time: 22 × $100 (50 buns at $2.00) = $2,200 out in the world. You have already spent it on butter and flour.
Before you accept the terms, ask whether your cash can carry a month of ingredients. If not, negotiate weekly payment, or start with one café and add the next once the first pays on time. The guide on payment terms with shops covers setting terms and chasing payment without falling out.
Minimum orders and the round
An extra stop does not cost the same for 12 buns as for 36. If a detour to a fourth café costs you $6 in fuel and time:
- With an order of 12 buns: 6 ÷ 12 = $0.50 per bun. Most of your profit per unit.
- With an order of 36: 6 ÷ 36 = $0.17 per bun.
That is why a minimum order per stop makes sense, or grouping customers in one area into a single round. You can also charge a higher price for small orders. The guide on wholesale and retail prices for the same product shows how to build that price ladder without your counter customers feeling overcharged.
Do it with the calculator
Put the recipe, the units per batch, your time and the oven into the food cost calculator to get your cost per unit. Then fill in the table above with your own round and returns before you agree a wholesale price.
Frequently asked questions
How much of a discount should I give a café off my counter price?
Do not start from a discount; start from your cost. Work out what each unit the café pays for really costs you, including delivery and returns, and set the wholesale price that leaves the margin you need. Whatever discount that implies is the discount.
Do I have to accept returns of unsold items?
No, it is something you negotiate. If you accept them, cap them and build them into the cost. If you do not, the café will order fewer and more carefully, and your price can be a little lower.
Is it worth delivering to a café that orders very little?
It depends on what that stop costs you. Divide the cost of the stop by the units in the order: if it eats most of your profit per unit, set a minimum order or combine it with another delivery in the same area.
Should my wholesale price include sales tax?
Quote wholesale prices before tax and work out your margin on that figure. Whether you need to charge tax on top depends on where you are, so check your local tax rules or ask an accountant.