First-Year Income Report: A Cottage Food Baker's 12 Months, Priced Out

Most people who start a cottage food business never find out what their first year actually paid. The money comes in through cards, cash and transfers, the receipts land in a kitchen drawer, and by February all you know is that you were busy. This first-year income report builds one year for a home baker in Texas, month by month, with every price and rule checked on October 14, 2026. If you want the bigger picture of market income first, our guide to how much you can make selling at farmers markets covers earnings at every stage.

How Much Does a Cottage Food Baker Make in the First Year?

The baker in this model takes in $12,794 in her first 12 months and keeps $9,116.16 after every cost we could price, or about $760 a month on average. That is 71% of every dollar customers paid. It works out to $16.61 an hour across 548.7 hours, which is about 10.5 hours a week.

The months are nowhere near even. October alone brings in $2,174, January brings in $249, and April loses money. Here is the full year.

Scroll sideways to see every column.

Kept after costs means sales minus ingredients, packaging, card fees, the Homegrown plan, booth fees, driving at the IRS rate, and the gear and insurance bought in March and April. Prices checked October 14, 2026. The sales counts and hours are this article's model.

The three holiday months, October through December, bring in $5,443, which is 42.5% of the whole year. If you start in March like this baker, you are learning the ropes for seven months before the busiest stretch arrives.

Whose Year Is This, and What Is Assumed?

This first year is a model built from prices checked on October 14, 2026, not one real baker's private books. We have no consenting baker's records to publish, and we will not publish a Homegrown vendor's sales. So we built one year that a real person could run, priced every input from a live page, and stated every guess out loud.

Here is what is real and what is assumed:

• Real and checked today: the Texas cottage food rules, every ingredient and supply price, the packaging, the booth fee, the insurance price, the Homegrown, Hotplate and Square plan, service and card processing fees, the IRS mileage rate and the self-employment tax rate.
• Real, from Homegrown's own catalog: the $12 loaf and $19 dozen prices, which are the median prices other Homegrown vendors list.
• Assumed: how many orders came in each month, how many loaves and dozens sold at each market, and how long each job took.
• Left out: income tax, home electricity and gas for the oven, the dishes and mixer she already owns, and any free samples beyond what went home unsold.

The baker sells two products, a sourdough loaf and a box of a dozen chocolate chip cookies. She takes pre-orders on a Homegrown storefront and hands them over at her front door during a Friday pickup window. From May through November she also sells at a Saturday farmers market every other week.

What Does Texas Require Before the First Sale?

Texas asks a cottage food baker for one piece of paperwork before the first sale: a food handler course. The Texas Department of State Health Services cottage food page says an operator "must successfully complete a basic food safety education or training program for food handlers" that is accredited by the state. The baker in this model takes Premier Food Safety's online Texas course, which cost $7.95 on October 14, 2026 and lists DSHS License #51.

What Texas does not ask for matters just as much to a first-year budget:

• No local permit or fee. The same DSHS page says local health departments may not require a cottage food operation to "obtain any type of license or permit" or "pay any fee to produce or sell directly to a consumer."
• A high sales limit. DSHS says the 2025 law raised the annual gross income limit to $150,000, and the text of Senate Bill 541 adds that the state adjusts it for inflation each year. This baker's $12,794 is under 9% of it.
• Labels on everything. Each loaf bag and cookie box carries the business name, an address or a DSHS registration number, the product name, the major food allergens in that product and the required statement that the product was made in a private residence that is not subject to government licensing or inspection.
• Registration is optional for these two products. DSHS lets you register so you can print a registration number instead of your home address. DSHS requires registration from bakers who sell foods that need time and temperature control to stay safe, and a sourdough loaf and chocolate chip cookies are not in that group.

Our step-by-step guide to starting a cottage food business in Texas covers the full label wording and the products Texas does not allow.

What Did the First Year Cost to Get Started?

Getting started cost $577.30 in one-time purchases, split across two months, plus a $10 monthly plan for the order page, billed annually as one $120 charge, so starting took $697.30 in cash. The baker already owns an oven, one Dutch oven, mixing bowls, a printer and a phone, so none of those are counted. If you are starting from an empty kitchen, our breakdown of what it costs to start a food business from home lists the bigger purchases.

Swipe left on a phone to read the whole startup list.

All prices loaded October 14, 2026. The Homegrown plan, $10 a month billed annually, is counted month by month in the table above rather than here.

Insurance is the biggest single line. The Mansfield market's vendor page does not list an insurance requirement, so this is a choice, not a rule. The model buys it anyway and counts the full $299, so you can see what it does to the year. Our guide to farmers market vendor insurance explains what a policy like this covers.

How Were the Loaf and Cookie Prices Set?

The baker charges $12 for a sourdough loaf and $19 for a dozen cookies, the median prices other Homegrown vendors list. She does not undercut, and she does not charge a premium she has not earned yet.

Price matters more than almost anything else in a first year. Charging $10 a loaf instead of $12 would cut this baker's year by $1,364.81, because she sells 702 loaves and almost none of that $2 comes back as lower costs. Our guide on how much to sell sourdough for walks through setting a loaf price for your own area.

What Does One Loaf and One Dozen Cost to Make?

A sourdough loaf costs about $1.05 in ingredients and packaging, and a dozen cookies costs about $3.69. That leaves $10.95 on a $12 loaf and $15.31 on a $19 dozen before card fees, booth fees and time.

The loaf follows King Arthur Baking's naturally leavened sourdough recipe, which makes two loaves from 600 g of all-purpose flour, 85 g of whole wheat flour, 454 g of starter, water and salt. At Walmart.com prices on October 14, 2026 (Great Value all-purpose flour at $10.82 for 25 pounds, King Arthur whole wheat at $5.98 for 5 pounds), the flour in the dough and in the starter, plus the salt, comes to $1.03 for two loaves, or about 52 cents a loaf. The model rounds that up to 75 cents a loaf to cover starter feedings, dusting flour and parchment.

The cookies follow King Arthur's classic chocolate chip recipe, which the recipe says makes 36 cookies. The baker portions each batch into 24 larger cookies, two dozen, because a $19 box should hold cookies that look like $19.

On a phone, slide this table to see both products.

Ingredient prices from Walmart.com and packaging from WebstaurantStore, both loaded October 14, 2026. Recipes from King Arthur Baking, loaded the same day.

Chocolate chips are the costliest ingredient in either recipe. The 340 g of chips in one batch cost $3.13 of the $6.32 batch total, about 49%, at $9.38 for a 36-ounce bag of Great Value chips. The vanilla, at $9.76 for a 4-ounce bottle, is the next biggest line at 81 cents, then the butter, at $3.06 a pound, at 76 cents.

How Did Orders Grow From March to February?

Orders grew in four stages, and each stage had a different job. Across the year the baker filled 382 pre-orders at 46 Friday pickups, with an average order of $20.94, and sold at 15 market Saturdays.

• March and April: friends and neighbors first. The storefront opens with two products and a Friday pickup window. Eight orders come in at two pickups in March and 20 at four pickups in April, $560 in all, almost all from people who already know her.
• May through September: the market season starts. She sells at the Mansfield market every other Saturday, 11 times in these five months, and hands out her order link at the booth. Pre-orders climb from 30 in May to 34 in September. July dips to 21 orders and $859 in total sales, because she runs three Friday pickups instead of the usual four and the July markets sell fewer loaves.
• October through December: the holiday stretch. Pre-orders jump to 45, 60 and 64 a month, with an extra pickup the week of Thanksgiving and another the week of Christmas. December has no market at all and still brings in $1,538, with 38 dozen cookies going out as holiday boxes.
• January and February: the quiet months. The market season is over, she takes two weeks off after the holidays, and January brings in $249 from 14 orders. February recovers to 30 orders and $629.

The pattern to expect is slow, then steady, then a holiday rush, then a cliff. If January feels like failure, look at what October paid before you decide. Our guide to food vendor off-season income has ideas for the slow months.

Why Did April Lose Money?

April lost $145.93 because the baker bought her market gear and a year of insurance, $472.93 in all, a month before her first market. Without those one-time costs, April would have kept $327. With the plan counted at $10 a month, as in the table, she was $127.16 behind for the year at the end of April. Billed annually, the $120 plan is one charge when the 7-day trial ends in March, so in cash she was $227.16 behind at the end of April, and the first market month, May, put her $745.24 ahead.

That dip is normal, and it is the month most likely to make a new baker quit. It helps to know it is coming. Plan to fund your startup purchases from savings, not from your first month of sales.

A slow first two months is also when the order system matters most. If you are taking your first 28 orders through text messages, a simple order page with a Friday pickup window keeps the count straight from day one. You can set up your Homegrown storefront before your first pickup and send the link to the friends who already asked.

What Did the Farmers Market Season Add?

The market brought in $4,796 over 15 Saturdays, an average of $319.73 a day, and it cost $525 in booth fees plus $182.40 in driving. The baker sold 254 loaves and 92 dozen cookies at the booth and took home 58 loaves and 28 dozen that did not sell.

The model uses the Mansfield Farm & Cottage Market in Mansfield, Texas, because its vendor page lists cottage foods as a vendor type and lets vendors come every other week. Here is how its fees compare with two other Texas markets, all read from each market's own page on October 14, 2026.

Slide sideways for the rest of the market rules.

Fees from each market's 2026 vendor page or application, loaded October 14, 2026. Driving in this model is 16 miles round trip per market at the IRS business rate of 76 cents a mile.

Each market Saturday counts as 7 hours in the model: loading the car, a 20-minute drive each way, setup, four hours of selling and teardown. The driving uses the IRS standard mileage rate for business, 76 cents a mile from July 1, 2026, which is the rate on the IRS page today. The same page lists 72.5 cents for January through June 2026; the model uses today's 76-cent rate for every market to keep the math simple.

Which Paid More Per Hour, Pre-Orders or the Market?

Pre-orders paid about $21.05 an hour and the market paid about $11.01 an hour. If the baker had skipped the market and filled the same 382 pre-orders, she would have kept $6,447.48 in 306.3 hours. The market added $2,668.68 on top, but it took another 242.4 hours to earn it.

Three things pull the market's hourly number down:

• The day is long. Seven hours for about four hours of selling, every time.
• Bread goes home. Every unsold loaf was paid for, packed and driven both ways.
• The booth fee and the drive come first. $35 and $12.16 of driving at the IRS mileage rate are spent before the first customer walks up.

There is one thing the model cannot measure: how many of those 382 pre-orders came from people who met her at the booth first. For many new bakers, the market is where strangers become regulars. Our breakdown of whether selling at farmers markets is profitable goes deeper on a single market day's math.

How Much Did Card and Platform Fees Take Over the Year?

Card and platform fees took $643.12 over the year: $346.53 in Homegrown card processing on the pre-orders, $176.59 in Square card fees at the market, and $120 for the Homegrown plan. That is about 5% of sales. The model counts every market sale as a card tap, so cash at the booth would lower the Square line.

The table compares what the pre-order side would have cost on other ordering tools, using the same 382 orders and $7,998 in sales.

Scroll right to see every fee column, plan to processing.

Fees from Homegrown's signup page, Hotplate's pricing page and Square's pricing page, all checked October 14, 2026. Hotplate's own post "What Hotplate does" says the service fee is charged to the customer by default and that 80% of its chefs keep that default. Card processing is figured on the order price. For the market, Square's in-person rate is 2.6% + 15¢, which is $0.67 on a $20 sale.

On this year's numbers, the cheapest pre-order tool for the baker is Hotplate's default, because her customers pay its 5% + $0.55 service fee and she pays the same 2.9% + $0.30 card processing either way. Homegrown costs her $120 more than that for the year, and her customers pay $610 less. Which one is right depends on whether you want your $12 loaf to show up as $12 at checkout.

Run Friday Pickup From One Order Page

A $10-a-month order page, billed annually, is the part of this first year worth getting right, because pre-orders brought in 62.5% of the money and paid about twice what the market paid per hour. Homegrown is $10 per month billed annually ($12.50 billed monthly) with no percentage fees beyond standard payment processing (2.9% + $0.30 per order, paid by you), and customers see your price with no service fee added on top.

The tools this baker would otherwise weigh each fit a different kind of seller:

• Hotplate has no monthly plan and adds 5% + $0.55 to each customer's order by default, and the baker pays 2.9% + $0.30 card processing. On this year's 382 orders, customers would have paid $610.00 in Hotplate fees, or the baker would have paid it herself.
• Square Free has no plan and works well as the card reader at the booth. For online orders it charges 3.3% + 30¢, $378.53 on this year's pre-orders.
• Instagram and text messages cost nothing, but at 382 orders a year you are counting loaves by scrolling back through threads every Thursday night.

What Homegrown gives a baker running a year like this one:

• A pickup schedule you set once, with a Friday window and the days and times you choose.
• Order prep time, so orders close before bake day instead of arriving while the loaves are in the oven.
• Market locations as pickup spots, so a regular can pre-order and pick up at the booth on market Saturday.
• Your customer list, with each regular's name, email and past orders, belongs to you.

Homegrown also has limits worth knowing before you pick it. It has no in-person card reader, so the baker still uses Square at the market. A first-time customer makes a Homegrown account before that first order goes through. There is no drops feature for releasing a limited batch at a set time. Shoppers can find your storefront on the Homegrown marketplace, but plan on most of your orders coming from people you send to your own link. You can start your storefront with a 7-day trial, with no charge until day 8.

Does a Texas Cottage Baker Owe Sales Tax or Self-Employment Tax?

For this baker, sales tax is not due, but self-employment tax is. The Texas Comptroller's guide to restaurants and sales tax says tax "is not due, however, on bakery items (regardless of size, whether whole pies, for example, or individual portions) when sold without plates or eating utensils." A boxed loaf or a dozen cookies handed over at the door or the booth fits that. Homegrown's signup page says it calculates sales tax at checkout and treats qualifying foods as exempt.

Self-employment tax is the bigger number. The IRS self-employment tax page sets the rate at 15.3% and says you file Schedule SE once your net earnings from self-employment reach $400. Schedule SE applies that rate to 92.35% of your net profit.

• This baker's estimate: $9,116.16 x 0.9235 x 0.153 = $1,288.07.
• What is left after it: $7,828.09, or $14.27 an hour.
• Not included: federal income tax, which depends on the rest of your household's income.

Set aside about 15% of what you keep each month so April does not hurt twice. That 15% covers the self-employment tax (about 14.1% of what this baker keeps) and nothing for income tax. The IRS estimated taxes page says sole proprietors generally have to make estimated tax payments if they expect to owe $1,000 or more when they file, and this baker's self-employment tax alone is $1,288.07, so plan on quarterly payments with Form 1040-ES, or, if you have a paycheck, ask your employer to withhold more on a new Form W-4, which the same IRS page names as the other way to cover it. Our guide to cottage food taxes and Schedule C walks through the forms, and a tax preparer can tell you what applies to your own return.

How Does This Compare With Bakers Who Published Their First Year?

Real bakers who have published their first-year numbers land all over the map, which is the honest answer to "what will I make." Three examples, in their own words:

• Sarah's Sourdough (Oklahoma): in her post "From $42 to $37k: My First Year Income Breakdown as a Cottage Baker," Sarah Grunewald reports 2023 revenue of $37,000: $13,000 wholesale, $9,000 from porch pickups and $15,000 from sourdough workshops. She says about $12,000 went back into equipment and that her margins were "roughly 75% on baked goods."
• The Pink Crumbb: in "18 Months to a Multi Six Figure Income," the owner describes her first phase as "Average Weekly Income: $0-$40," and a later phase of $600 to $900 a week while she attended her local farmers market twice a week for six months.
• Chocolate for the Teach: in "Can a Home Bakery Be Profitable? My Experience," the author writes, "I have no idea whether the home bakery made a profit," and lists the costs she never counted: her time marketing, shopping, baking and delivering. Her prices, she writes, "were random."

This model sits close to Sarah's pickup line. Her porch pickups brought in $9,000 in her first year, and this baker's pre-orders bring in $7,998. Before the $577.30 of one-time purchases, the model keeps about 76% of sales, close to Sarah's "roughly 75% on baked goods," which she gives separately from the $12,000 she put into equipment. Most of the gap between this model and Sarah's year is what she sold besides porch pickups: workshops were 41% of her year and wholesale another 35%.

What Would Change the First-Year Total the Most?

Price and the market decision move the year far more than fees do. This table changes one thing at a time and leaves everything else in the model the same.

Swipe to see the difference column.

Every row uses the prices checked October 14, 2026. Dropping insurance saves money only until something goes wrong, so it is listed here as a number, not a suggestion.

A $2 drop in the loaf price costs more than four times what dropping the insurance saves. If you are nervous about your price, hold it and add a product instead.

How Do You Keep Your Own First-Year Income Report?

You keep your own first-year income report by closing each month in about 30 minutes: total the sales, subtract the costs, and divide by the hours. Start the day you buy your first supplies, not the day of your first sale, or the startup months will be missing.

• List every startup purchase with its date. The course, the pans, the canopy, the insurance. This baker's list came to $577.30, and it is the reason April showed a loss.
• Pull each sales channel's monthly total. Your order page, your card reader and a count of the cash box. Write them as separate lines so you can see which one is growing.
• Keep ingredient and packaging receipts in one place. A photo in one phone album is enough. Add them up once a month.
• Write down your hours by job. Baking, packing, pickups, market days and admin. Without hours you cannot tell a $21 hour from an $11 one.
• Close the month. Sales minus costs is what you kept. Divide by hours for your pay per hour, and keep a running total for the year.
• Move the tax money. Set aside about 15% of what you kept into a separate account the same day.

Our guide to tracking income and expenses for a cottage food business sets up a simple spreadsheet for exactly this. In Texas, also watch your running sales total against the cottage food revenue cap, even though a first year rarely comes close to $150,000.

Frequently Asked Questions

How much money does a cottage food business make in its first year?

It varies widely, from almost nothing to tens of thousands of dollars. In this first-year income report, a part-time Texas baker selling sourdough loaves and cookies through pre-orders and a farmers market every other week takes in $12,794 and keeps $9,116.16 before taxes. Sarah's Sourdough reported $37,000 in her first year, $15,000 of it from workshops.

Is a cottage food business profitable in the first year?

It can be, but expect at least one losing month. In this model, April loses $145.93 because the canopy, table and insurance are bought before the first market, and the year still ends $9,116.16 ahead. A home baker who never prices her time can finish the year with no idea whether she made money, as one baker wrote about her own first year.

How much does it cost to start a cottage food business in Texas?

Texas does not require a permit for a cottage food operation selling foods like these, and local health departments may not charge a fee, so the main required cost is a food handler course, $7.95 from one DSHS-licensed online provider on October 14, 2026. This model spends $577.30 on one-time costs, including a second Dutch oven, a canopy, a table and $299 of liability insurance, plus $10 a month for an order page.

What is the cottage food sales limit in Texas?

The Texas health department (DSHS) says the 2025 law raised the annual gross income limit for a cottage food operation to $150,000, and the bill adjusts it for inflation each year. The limit counts sales, not profit. The baker in this first-year income report sells $12,794, under 9% of the limit.

Do I have to pay taxes on cottage food income?

Yes. Once your net earnings from self-employment reach $400 in a year, you file Schedule SE, and the IRS self-employment tax rate is 15.3% on 92.35% of your profit. In this model that is about $1,288.07, before income tax. In Texas, baked goods sold without plates or eating utensils are not subject to sales tax, according to the Texas Comptroller.

Should a new cottage food baker start with pre-orders or a farmers market?

Pre-orders paid about twice as much per hour in this model: $21.05 against $11.01 at the market. The market still added $2,668.68 to the year and puts you in front of strangers who can become pre-order regulars. This model starts with pre-orders for friends in March and adds the market in May, once there is a steady weekly bake.

Related Reading

These posts pick up where this first-year income report stops, from market income at every stage to the bookkeeping that turns a model into your own numbers. Each one is live on the Homegrown blog.

• How Much Can You Make Selling at Farmers Markets shows what vendors earn at each stage, with USDA figures.
• Why Most Home Food Businesses Fail in the First Year covers the mistakes that end a first year early.
• Is Selling at Farmers Markets Profitable? (We Did the Math) breaks down a single market day.
• How to Track Income and Expenses for Your Cottage Food Business sets up the monthly spreadsheet behind a report like this one.
• How to Start a Cottage Food Business in Texas lists the labels and products Texas allows.

Your first-year income report starts with an order page that keeps count for you. When you are ready, open your Homegrown storefront and set up your first Friday pickup.