To start a cookie business from home, check your state's cottage food law first: cookies that don't need refrigeration are among the products many states allow from a home kitchen, usually with a label, a sales cap and direct sales only. Then choose your kind of cookie business, because it decides your costs: drop cookies sold by the dozen are mostly ingredients and oven time, while decorated sugar cookies are mostly your hours with a piping bag. Cost every cookie including your time, price for the margin you want, and start with a small budget. In the example below, a drop cookie costs $1.08 all in and sells for $3, while a decorated cookie costs $3.13, mostly labor, and needs $5 to $6 to be worth making. A home cookie business can start for about $2,750. Below are the rules, both kinds costed, prices, the budget, and a week of sales.
The short version
- Check your state's cottage food law: what you can sell, where, the label, the cap.
- Choose drop cookies, decorated cookies, or both; they cost differently.
- Cost each cookie with ingredients, packaging, your minutes and a share of overhead.
- Decorated cookies are labor: price the minutes each one takes.
- Start with markets, preorders and a few custom orders; add cafés if your rules allow.
- Keep a simple record of batches, ingredients and sales from the first week.
- TaroStack keeps doughs and icings as recipes, costs every batch, and dates every custom order. More below.
Step 1: the rules
| Check | Why |
|---|---|
| Is your kind of cookie allowed? | Cookies with cream cheese frosting or fillings that need the fridge often aren't |
| Where can you sell? | Often direct only: markets, your home, events, sometimes online with local delivery |
| What goes on the label? | Often a statement that it was made in a home kitchen, plus ingredients and allergens |
| Is there a sales cap? | Many states cap yearly sales; plan for when you'd outgrow it |
| Do you need a permit or registration? | Some states register cottage food businesses; some inspect |
How cottage food works, and how to start one, is in how to start a cottage food business. This is general information, not legal advice; your state's rules decide.
Step 2: what a cookie costs
Windward Roots, the made-up taro business I use in these examples, sells both kinds:
| Per cookie | Drop cookie | Decorated sugar cookie |
|---|---|---|
| Ingredients, dough and icing | $0.40 | $0.45 |
| Bag or box share, label | $0.15 | $0.15 |
| Labor, at $20 an hour | $0.33 (1 minute) | $2.33 (7 minutes) |
| Overhead | $0.20 | $0.20 |
| Full cost | $1.08 | $3.13 |
The drop cookie's minute is mixing, scooping and baking a sheet of 60. The decorated cookie's seven minutes are mostly outlining, flooding and detail work, and a complex design can take twice that. How to put a number on your baking time is in how to compute labor cost in baking.
Step 3: the price
| Cookie | Price | Margin | What each one leaves for your hours, beyond $20 an hour |
|---|---|---|---|
| Drop cookie | $3.00 | 64.0% | $1.92 |
| Decorated, simple | $5.00 | 37.4% | $1.87 |
| Decorated, custom design | $6.00 | 47.8% | $2.87 |
| Decorated dozen, custom | $66.00 | 43.1% | $28.44 |
A decorated cookie at $3 would pay you less than $20 an hour for those seven minutes. Price custom orders by the design's minutes, take a deposit to hold the date, and charge for rush orders. How to price baked goods in general is in how to price baked goods.
Step 4: the startup budget
| Item | Example |
|---|---|
| Cottage food permit or registration | $150 |
| Stand mixer | $450 |
| Sheet pans, racks and tools | $300 |
| Cutters, piping bags, tips and decorating tools | $150 |
| Boxes, bags and labels | $250 |
| First ingredients | $200 |
| Market tent and table | $300 |
| Product liability insurance, first year | $400 |
| Website or online order page | $100 |
| Working cash | $450 |
| Total | $2,750 |
If you already own a good mixer and pans, the start is closer to $2,000.
Step 5: a week of sales
| A week | Quantity | Sales | Cost | Left |
|---|---|---|---|---|
| Drop cookies at a Saturday market | 300 | $900 | $324 | $576 |
| Decorated custom dozens, preordered | 4 dozen | $264 | $150 | $114 |
| Total | $1,164 | $474 | $690 |
That $690 is after paying yourself $20 an hour for about 11 hours of baking and decorating, $211 of the cost, and before the market fee and card fees. The drop cookies leave more per hour, because a sheet of 60 bakes in the time it takes to decorate eight. Whether a home bakery pays over a whole month is in is a home bakery profitable.
Where this stops working
At one market a week, a notebook holds it all. Then there are six flavors, two icings, custom orders for four dates next week, and a flour that's gone up twice. The notebook can't say what a decorated dozen costs now, which orders need which cookies by Friday, or how much butter to buy, and the custom orders live in your messages.
How TaroStack does it
TaroStack keeps the doughs, icings and orders straight, and the cost of every cookie real.
Doughs and icings as recipes. A cookie's recipe contains its dough and its royal icing as sub-recipes, so the icing is written once and used in every design. Units convert: buy flour by the 50 lb bag and butter by the case, use them by the gram. Each batch takes the ingredients off stock from the lots used, at what you paid, and divides by the cookies that came out good, so the cost of a dozen is this week's, not last spring's.
Custom orders with dates. Each custom order is a sales order for its date, so what's due when is in one list, and planning, on Standard, works out what to bake and what to buy for the week. Margins are reported by product and by customer, so you can see whether decorated dozens earn what you priced them for.
And the stock stays right. The reorder list shows flour, butter and boxes in days of cover at the rate you use them, and counting works on a phone at the market with no signal. If a flour you bought is ever recalled, one report shows which batches used it.
| The job | Notebook and messages | In TaroStack |
|---|---|---|
| What a decorated dozen costs | Worked out once | Every batch, at what you paid |
| Which orders are due Friday | Scroll the messages | Sales orders by date |
| When to buy butter | When it runs out | Days of cover |
| Which cookies earn | A feeling | Margins by product |
Stock, counts, lots, recipes, batches, sales orders and margins are on every plan, from $49 a month; 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.