Finance

How to Make Money Selling Baked Goods From Home

Neighbors rave about the spiced nuts you make and give out at Christmas. Friends say all they want for their birthday is a batch of your pimento cheese. Anytime there’s a potluck at the office, co-workers insist you bring your famous coffee cake.

“You could make money selling this,” everyone says. If you’ve heard this compliment five or more times, you need to consider it.

There are plenty of ways to bring in a little extra spending money, seriously supplement your income or even start a business selling homemade specialties. You can sell to friends and friends of friends, try the local farmer’s market or get your delicious specialties placed in restaurants, local grocery stores, gift shops, festivals or coffee shops.

In many cases you don’t need to have your kitchen inspected or licensed to sell to friends and family. If your demand and profits can afford it, you can rent space in a commercial kitchen that does meet all regulations for $15 to $45 an hour, based on where you live.

Pro Tip

How do you even start a business? What do you need to know? Our 10-step guide walks you through everything you need to do to get going.

Taking a Hobby to a Side Hustle

When Nancy Thompson Heathcote started taking her homemade pimento cheese into the school where she worked in Raleigh, North Carolina, everyone suggested she sell it.

“I went over to this women’s clothing store and took them a couple pints and some Triscuits and said: ‘Put this in your breakroom and let me know if you want to order some,’” she recounted. “In a couple days, the orders started coming in and it just picked up from there.”

She now sells 10 or more containers most weeks using Venmo and cash for payments. Pints cost $12 and half pints are $6. She also sells three types of muffins for $15 a dozen.

“I’ll put a photo on my Facebook and say: ‘Who needs pimento cheese for July 4 weekend?’ And people just text me or message with what they want,” Thompson said.  Some customers order as many as 25 pints for holiday gifts.

Sometimes she delivers, but just leaves the food chilling in a cooler on her back porch for neighbors and friends who live close to pick up themselves.

“I started it out as just a hobby and more and more people kept saying: ‘You need to sell this,’” said Natalia Lima, owner of Curious Cat Bakery in St. Petersburg, Florida.

(Are we starting to see a pattern here?)

She makes vegan croissants and desserts for about 10 different coffee shops and restaurants in the Tampa Bay area. She started out selling to friends and friends of friends, but soon saw there was a big demand for vegan treats throughout the area. She made a few visits with samples to retailers and most of them wanted to order.

Pro Tip

If you’re dreaming about starting a business or finding a way to boost your income, here are 49 home business ideas to get you started.

22 Tips to Turn Your Homemade Treats Into Extra Cash

1. Many States Allow the Sale of Food Made in a Home Kitchen

It varies from state to state, but many have “cottage food” guidelines for selling food made in a home kitchen that does not have to comply with stricter food and safety regulations. Florida, for example, allows residents to sell food made in a home kitchen directly to consumers if sales don’t exceed $250,000 annually.

California allows two types of cottage food operations. Class A operators can sell directly to the public if sales don’t exceed $75,000. Class B operators can sell to the public and through third parties such as restaurants if sales don’t exceed $150,000.

Search the term “cottage food” to learn your state’s guidelines or find information posted by your state’s department of public health or agriculture.

2. Farmer’s Markets May Have Their Own Guidelines

Farmer’s markets are a great place to sell homemade goods, but each one has different guidelines. Check with your market’s website to find requirements.

3. How to Set Your Prices

Thompson looked at her fixed costs, then calculated from there.

“I bought all the ingredients and figured out how many half pints I could get out of one recipe and what that cost,” Thompson said. “Then I doubled what it cost to make one pint for my selling price.”

4. Always Attach a Business Card or Sticker

Whether state rules require labeling or not, you should always brand your products.

“I don’t let anything leave my house without my card or a sticker on it with my number and email,” Thompson said. “That’s how they order more.”

A woman cuts cake at the office.
Getty Images

5. Office Opportunities

Give samples to your co-workers and your family members’ co-workers.

6. Hit the Hood

Hang a goodie bag on neighbors’ door knobs in your building or up and down your street.

7. Party Favorites

Offer a plate of your treats or small individually wrapped samples for friends’ birthday parties, bridal showers or any type of celebration.

8. Breakroom Tasting

Drop samples at nearby businesses, schools or retail shops where staff can enjoy a treat in the breakroom.

9. Use Social Media

When you need a boost in sales, post photos to social media of a fresh batch of signature muffins coming out of the oven or your delicious salsa in a bowl between two glasses of wine. Remind people to order around times they take a vacation.

Pro Tip

Social media can be a powerful tool for your fledgling business, but where — and how — to start? Check out our best tips to promote your business on social media.

10. Promote Your Products as Gifts

Also turn to social media to tell folks that your signature creation makes a perfect gift for the holidays or for teachers at the end of school. Remind them three weeks ahead to place orders so you can plan for your busy rush.

11. Sales Beget Sales

When current customers give your products to friends, you are reaching new potential customers.

“One person ordered 25 pints to give as Christmas presents and then a lot of those people started ordering from me,” Thompson said.

12. Individually Wrap Items You Are Shipping

If you are shipping food that isn’t perishable, items stay fresher if each one is wrapped and sealed individually. And be sure you charge extra for the shipping cost.

This grid of images shows a woman baking cinnamon rolls.
Lima prepares cinnamon rolls for a client. “When I started, I had a really long menu,” Lima said. “The more things you make the more time it takes and it’s not cost effective to buy a whole bunch of different ingredients.” Chris Zuppa/The Penny Hoarder

13. Keep Your Product Line Narrow

It can be exciting to dream up new ideas or maybe you think offering only a few items isn’t enough. Not true.

“When I started, I had a really long menu,” Lima said. “The more things you make the more time it takes and it’s not cost effective to buy a whole bunch of different ingredients.”

She went from offering more than 10 different products to four.

14. Don’t Sell Items with a Small Margin of Error

It may still taste delicious, but you can’t sell something that’s lopsided or browned in the wrong places.

“I decided I’m not making lemon tarts anymore. If anything leaks out the edge of the pastry it caramelizes and browns. They come apart when I take them out of the pan,” Thompson bemoaned. “I’d have to make two or three dozen just to come up with a perfect dozen. It was stressful. Not worth the money even though people loved to order them.”

15. Have a Set Time Frame for Completing Orders

Don’t fall into the habit of scrambling to fill orders within a few hours or within a day if you have other demands on your time, such as a day job or family. Make sure clients know you need 48 or 72 hours notice or longer.

16. Keep Improving Your Production Process

Keep a critical eye on your process. You may notice that a time saver actually costs you in other ways.

“I was using a food processor but then at the end of a block of cheese it gets slimy and balled up and I was losing about two ounces of cheese I couldn’t use because it lost the texture,” Thompson said. “So I hand grate everything now. I can’t afford to lose that cheese.”

17. Keep Ingredients on Hand But Not Finished Products

Save yourself the hassle of rushing to the store each time someone asks for your specialty. Keep ingredients on hand so you can make it within your set time frame. But don’t make items in advance anticipating sales, unless you are going to alert your customer base that you just made a big batch.

18. Track Sales and Costs

Even if it’s a side hustle, you should still know how much you’re selling and how much it’s costing you to make those sales.

“Baking is a very small part of my business. You need to get comfortable with QuickBooks,” Lima said.

You don’t have to use specific software but find and use a tracking method — i.e. notebook, Excel spreadsheet — that works for you.

19. Stipulate a Minimum Order

It may make sense to sell single items or smaller quantities at a farmer’s market but set a minimum for orders. Baking a single cupcake isn’t very cost effective.

“I sell everything by the dozen and they have to buy a certain (dollar) amount to place an order,” Lima said.

20. Commercial Kitchens Are a Great Resource

If you need a fully stocked kitchen that’s licensed and inspected to sell at a market or in stores, you can rent space in a commercial kitchen for $15 to $45 an hour. Users usually sign a six-month contract at the minimum, but can change the hours and times they use the kitchen each week.

21. Business Incubators Are Another Option

Some counties and cities have “business incubators” that offer small spaces for lease by the month or even hour with approved food preparation facilities. Check with your local government, chamber of commerce, Small Business Administration office or department of economic development.

A woman makes cinnamon rolls in a rented commercial kitchen.
Lima does the majority of her baking during off hours in a rented commercial kitchen. Chris Zuppa/The Penny Hoarder

22. Use Commercial Kitchens in Off Hours

You may have to — or want to — work some off hours when you rent a commercial kitchen but there is a bonus.

“I prefer it when it’s quiet and less crowded, so I usually schedule for weekends and overnights. I’m more productive then, I think,” Lima said.

Frequently Asked Questions (FAQs) about Making Money from Homemade Food

We’ve rounded up questions to the most commonly asked questions about how to make money from food made in your own kitchen.

Is it Legal to Sell Food I Make in My Own Kitchen?

In most states, it is legal to sell food prepared in your home kitchen. Cottage food guidelines allow residents to sell homemade foods directly to consumers up to a certain amount of sales from around $75,000 to $250,000 in various states.

Can I Sell Food I Make to Restaurants, Coffee Shops or Other Retailers?

Some states allow home cooks to sell to restaurants and other retailers and some don’t. Look up the “cottage food” restrictions for your state or check with the department of agriculture or health.

How Do I Get People to Buy My Homemade Goodies?

Hand out free samples of your goods for workplace breakrooms like offices, schools and stores. Give individually wrapped items for parties. Use your social media to promote your item for holiday gifts for friends, family members, teachers and other people.

How Much Does it Cost to Rent a Commercial Kitchen?

Renting a commercial kitchen to prepare your goods will vary from around $15 to $45 an hour.

Katherine Snow Smith is a freelance writer and editor in Chapel Hill, North Carolina, and author of Rules for the Southern Rulebreaker, Missteps & Lessons Learned.


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