I don't really know much about the pretzel making business, but one of the things you can do to set a price is to find out what others in the industry would charge.

Things like the cost of employees, insurance, etc should be a fixed cost for the most part so you should be able to determine how much you actually spend for each on the product.

For example you can determine how many pretzels you produce in a month (let's pretend it's 1000) and since you should know what you spend on all those other fixed cost items in a month you would just have to divide by 1000 to know how much employees and insurance and overhead costs per product.

Alright, let me give you a bit more info to work with. I have done quite extensive research on other "gourmet" pretzel businesses on the web. I have ordered from probably 6-8 different places to check packaging, quality, shipping methods etc.

My business is this: I take a pretzel rod, dip it in caramel, roll it in a variety of ingredients, dip all that in chocolate, and then top with even more ingredients. I have over 50 flavors including junior mint, cheesecake, red hot chili pepper, candy cane, pumpkin pie and banana nut bread.

What I've learned is that I don't have an exact standard to copy from. Some places have 5 flavors but don't have caramel on them. others have caramel but only offer maybe 3 different flavors. I have such a unique product, do I mark my price up for that? Also, I have more ingredients packed per pretzel. Mine are about 2 inches wide, where as most that I've seen are only 1 inch. I'm assuming that counts for something too.

So, what I have done so far is determine that, say, I have $1.00 worth of ingredients per pretzel including packaging, but not including salary, rent etc., I charge $1.95 for retail and $1.25 for wholesale. That doesn't seem like enough. But if I charge more, do I lose customers?

I was told by one of my stores that they typically expect to buy wholesale at 50%. If I did that, then their cost would be $1.00 and I get no profit, or I charge $4 for a small pretzel that no one will buy retail, just so that i make money wholesale.

Am I making sense? Can you help me with that info? thanks again...

I've found wholesaling to be a whole different ball game. Many people don't purchase wholesale solely on pricing. There are MANY other factors to justify your pricing and keep your profit levels where you feel comfortable.

Retailers will buy your product based on:
Marketability
Terms
Sellability
Price
Product reliability
Quality

Probably not in that order, but your retailer has already put them in order in his mind. If you cannot compete on cost, then sell him on something else.

Bottom line, the retailer is buying based on SELLING, not consuming.

Christy I see what you mean. I would guess that as you raise prices you would lose some customers, but that doesn't mean you're losing money. At $1.95 you make $0.95 per pretzel. Let's just round everything up to make the math easier. And let's say that at that price you sell 10 pretzels so you've made $10 profit on the product.

If you sold the pretzels for $3 instead of $2 maybe you only sell 5 pretzels, but you would still make the same $10 on the retail sales. Since your production time is cut down in having to make less though you might be able to spend that time marketing your product which might end up leading to more sales.

It's hard to say what a chocolate covered pretzel is worth to me without actually seeing one and eating it. It does sound pretty good though. I've been accustomed to thinking gourmet foods will cost more than non gourmet foods and I think most people would be willing to spend a little more too.

The only way to know is probably to test and see what happens. You could raise the price a little and see how many people are still buying and how much proift you're still making.

You mentioned having done research and purchasing similar products from other businesses. How much did they cost? Is it the same $1.95 you're charging? Are those pretzels as good as yours? If yours taste better I'd pay more.

Mystery shopping your competitors is always a good idea.