August 23, 2010 - 4:26pm
The Cost of Baking Bread
I'm not sure if I am posting this in the right place, but I am trying to figure out how to calculate my expenses for baking one loaf of bread! I am selling some bread right now to a few people, and want to make sure I am charging enough!! Does anybody have some kind of formula they follow that you can share with me to figure out how much it costs me to make my bread?? Thanks~ Chelsea
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Batch costing is fairly easy. Decide on some quantity of bread in pounds (or kilos) that you want to bake. (10 or some multiple is a nice round figure, for example). Take the recipe you wish to use and convert it so that the total weight of all ingredients is equivalent (e.g., 10 lbs). This will tell you the weight of each ingredient in your mix.
Take the weight of each ingredient and multiply it fractionally by the price per pound of that ingredient. For instance, if I need 6 lbs of flour and it costs me .$20 per pound, then the cost for flour is $1.20.
Now comes the critical part: water. Of all ingredients, water is the cheapest. In fact, its cost is probably near zero. And yet it generally accounts for a significant portion of total dough weight. So, add a cost of $0.0 for water.
Total the ingredient costs, and then divide by the weight per loaf you will be selling. Again, sticking with our number of 10 lbs., if you intend to bake 5 x 2 lb. loaves, divide the total ingredient cost by 5. If it's 10 1 lb. loaves, then divide by 10.
What you will get is cost per loaf per batch.
Larry
Thank you Larry for your reply...I will have to get my brain working and figure this out! This does help alot though!!
~Chelsea
If you calculate every detail (rather than using a "general" or "sorta" formula), you may also wish to factor in:
Then round up to a nice amount (one fancy style is to set your price so that one loaf plus your locality's sales tax comes to even dollars with no coins either way).
And of course the obvious: keep in mind where you're selling and who you're selling to. If you're in a high volume grocery store selling to everyman, your sales may be quite price sensitive. If on the other hand you're in a farmers market selling to foodies, you may be able to reasonably charge a considerable premium.
Often a good guide to what price you can get is "what does the competition charge?"
These are great things to take into consideration too...I am just a home baker at this point and only sell to a few people, but I just want to make sure I am charging the right amount! Thanks Chuck for your imput as well!!
~Chelsea
I have(?had) a spreadsheet that I had built for this purpose that covered everything from the cost of tap water & other utilities used at home to the cost of flour, yeast, ect.
I'm willing to either dig through my pc files or build one from scratch. Might be the weekend either way, this being the first week back to work after summer off.
That would be GREAT!! I sent you a message with my email address. Let me know if you need anything else!!
One other expense that I worry about (but haven't calculated) is the cost of air conditioning to get rid of all those BTUs from the oven after a bake.
All things considered, I think it must cost at least $100 per loaf when I make one loaf. Maybe one day I will figure out why I continue to bake my own bread. (There is something intrinscally interesting in creating something.) If I ever get to retire, I'm sure the cost will come down some. Good luck in your efforts.
Paul
You see, you'll be home more, reading The Fresh Loaf more... and yep, baking more bread.
But what fun! :D
Lynne
Greetings!
Standard industry guidelines - find the ingredient cost of your product and multiply by three for wholesale and four for retail. The calculation will include an average percentage to cover all those overhead costs. Since you don't have typical business overhead when baking from home you should definitely make money.
Mimi
www.BakingFix.com