A cupcake business plan sets out what you'll bake and who buys it, what a cupcake costs with your time in it, the kitchen and the rules, and the year month by month. Cupcakes sell four ways, and each earns differently: singles at markets and a counter leave the most on each cupcake; preorder dozens for birthdays and offices are the steady core; café wholesale brings volume at a thinner margin; and event orders of a hundred at a time make a month. The plan balances them. In the example below, a baker in a shared kitchen in Huntsville, Alabama, makes a profit from the first month and ends the year about $27,700 ahead on $79,800 of sales, after paying $20 an hour for the baking. Below is a description example, each part of the plan, the year, the startup budget, and a free template.
The short version
- Describe the business in a paragraph: the cupcakes, where you sell, the kitchen, the goals.
- Cost a cupcake with your time in it: batter, frosting, liner, box, oven, card fees.
- Price singles, dozens, café wholesale and events separately; they leave different margins.
- Café wholesale is volume at 42%; singles and preorders carry the plan.
- Buttercream that's shelf-stable may fit your state's cottage food rules; cream cheese frosting generally doesn't.
- Project the year month by month, and keep working cash for the slow start.
- TaroStack turns the preorders into what to bake and buy. More below.
Part 1: the business description
Cotton Row Cupcakes, a made-up cupcake bakery in Huntsville, Alabama, I use in these examples, writes:
Cotton Row Cupcakes bakes classic and seasonal cupcakes in a shared commercial kitchen, sold at two farmers markets and a Saturday counter, by preorder dozen for pickup and delivery, wholesale to four cafés, and by event order. In our first year we plan to reach 600 single cupcakes and 80 preorder dozens a month.
Part 2: what a cupcake costs
| Per unit | Single cupcake | Preorder dozen | Café dozen | Event, 100 |
|---|---|---|---|---|
| Batter and buttercream | $0.47 | $5.64 | $5.64 | $47.00 |
| Liners | $0.02 | $0.24 | $0.24 | $2.00 |
| Clamshell, box or trays | $0.18 | $1.50 | $1.00 | $7.25 |
| Hands-on time, at $20 an hour | 2.5 min, $0.83 | 30 min, $10.00 | 30 min, $10.00 | 4.2 h, $84.00 |
| Oven | $0.12 | $1.07 | $0.52 | |
| Card fees, 3% | $0.13 | $1.35 | $9.75 | |
| Variable cost | $1.75 | $19.80 | $17.40 | $150.00 |
Batter is 20 cents a cupcake and buttercream 27 cents; the time is more than both. Cafés pay by invoice, so there's no card fee. How a cupcake is priced on its own is in cupcake pricing.
Part 3: customers and prices
| Product | Price | Variable cost | Contribution | Margin | A month at full speed |
|---|---|---|---|---|---|
| Single cupcake, markets and counter | $4.25 | $1.75 | $2.50 | 58.8% | 600 |
| Dozen, preorder | $45.00 | $19.80 | $25.20 | 56.0% | 80 |
| Dozen to cafés, wholesale | $30.00 | $17.40 | $12.60 | 42.0% | 60 |
| Event order, 100 cupcakes | $325.00 | $150.00 | $175.00 | 53.8% | 4 |
The café dozen leaves half what a preorder dozen does, but four cafés take 60 dozen a month without a market day. How a wholesale price is set is in how to price baked goods for wholesale.
Part 4: the kitchen and the rules
Cotton Row bakes in a shared commercial kitchen, which lets it sell to cafés and use any frosting. A home baker can often start under a state cottage food law, which generally allows baked goods that don't need refrigeration, such as cupcakes with a buttercream that's safe at room temperature, sold directly to customers; cream cheese frosting and fillings that need refrigeration generally fall outside it. Alabama's rules are in Alabama cottage food law, and how a home food business starts in how to start a cottage food business. This is general information, not legal advice.
Part 5: the year, month by month
Fixed costs are $1,270 a month: shared kitchen time ($800), insurance ($55), market fees ($140), the website and preorders ($40), software and card fees ($35), marketing ($120), and a share of the car for deliveries ($80). Sales start at 35% of full speed and reach it in month 11:
| Month | Singles | Preorder dozens | Café dozens | Events | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|---|---|
| 1 | 210 | 28 | 21 | 1 | $3,108 | $400 | $400 |
| 2 | 252 | 34 | 25 | 2 | $4,001 | $882 | $1,282 |
| 3 | 294 | 39 | 29 | 2 | $4,524 | $1,163 | $2,445 |
| 4 | 336 | 45 | 34 | 2 | $5,123 | $1,482 | $3,928 |
| 5 | 378 | 50 | 38 | 3 | $5,972 | $1,939 | $5,866 |
| 6 | 420 | 56 | 42 | 3 | $6,540 | $2,245 | $8,112 |
| 7 | 462 | 62 | 46 | 3 | $7,108 | $2,552 | $10,664 |
| 8 | 504 | 67 | 50 | 3 | $7,632 | $2,833 | $13,497 |
| 9 | 540 | 72 | 54 | 4 | $8,455 | $3,275 | $16,772 |
| 10 | 570 | 76 | 57 | 4 | $8,852 | $3,488 | $20,260 |
| 11 | 600 | 80 | 60 | 4 | $9,250 | $3,702 | $23,962 |
| 12 | 600 | 80 | 60 | 4 | $9,250 | $3,702 | $27,664 |
The year's sales are $79,816 and the profit $27,664, on top of $20 an hour for the baking. Event orders are lumpy in practice; the template spreads them evenly, so move them to the months your area's weddings and graduations fall in.
Part 6: the startup budget
| Item | Cost |
|---|---|
| Stand mixer, commercial | $1,100 |
| Pans, racks and piping tools | $450 |
| Boxes and display, first order | $500 |
| Label design | $250 |
| Permits | $350 |
| Market tent and display | $450 |
| Website with preorders | $300 |
| Working cash | $2,500 |
| Total | $5,900 |
What a bigger cake business looks like is in cake business plan.
Get the template
Download the cupcake business plan template. Four sheets: products with price, variable cost and units at full speed; the year month by month with a ramp you can change; fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
A plan is a forecast. Once the preorders come in, each week is a list of dozens due, flavors to bake, cafés to deliver, and butter, sugar and boxes to buy, and the plan's averages don't tell you what to bake on Thursday.
How TaroStack does it
TaroStack turns the preorders into what to bake and buy.
Recipes and true cost. Each flavor is a recipe with sub-recipes for the batter and the buttercream, so a batch carries its true cost, and margins show by product and by customer.
Orders into a bake. Preorders and café orders are sales orders by day, and TaroStack's planning turns them into what to bake and what to buy, as drafts you approve.
Lots and dates. Each batch gets a lot with its dates, and each order records the lots it got.
| The job | Notebook | In TaroStack |
|---|---|---|
| What a dozen really costs | Worked out once | Each batch's true cost |
| What to bake this week | Added up from messages | Planning: what to make, when |
| Which café earns most | A guess | Margin by customer |
Recipes, batches and true cost are on every plan, from $49 a month, and planning is on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.