When figuring cost of goods, is there a formula or standard percentage added to ingredients and labor costs to account for other expenses....such as: janitorial, kitchen supplies, electricity, insurance, etc.

We are pondering how to price certain products but also how to recover these costs that run half the bakery.

thanks!

simple way to ROUGHLY estimate:

add up all "those" expenses of one year

divide by 12 to get monthly average

do same for number of servings you sell year & avg./month.

divide average expenses by average servings for a rough idea of how much of the overhead each serving supports.

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so....PLAY numbers here:

let's just say that rent, utilities, insurance, etc.

ran an average of $3,000 / month.

and that in the "average" month you did 4,000 servings. (that's about 1k/week or 4 -250 serving cakes)

then 3k/4k = 75cents per serving just for the overhead.

now add the ingredients

your per hour charge (PAY YOURSELF and your assistants if any)

mark up, etc. (aka your PROFIT)

to get your final price

this website has several excel template (cash flow, balance sheet, break even) that will help you do this

http://www.score.org/template_gallery.html

That is so interesting and refreshing...this is a very great way to figure these costs!

thanks a bunch!

Ingredients should be about 25% of your expenses. So take your recipe cost and multiply x4 for what you should be charging.

That is intersting too. So do you just estimate things like saran wrap, dish soap, paper towels, pan spray, and things like that into the lump x 4 price, or do you add a actual amount for each into the price of your ingredients for each cake? It's easy to figure out the cost of actual ingredients to make the cake, but there are all the other little things that aren't so easy to determind. It's easy enough to just not add it in because it's just a little amount, but someone has to buy the soap, etc! I'm just at loss to figure out how to break it all down.

In culinary school, I was taught to multiply just the ingredients x4 to get a sales price. The other 75% of the money made off of that product goes towards all of your other expenses, profit, etc.

i reiterate my advice to make use of the templates at Score.com...

the cash flow one especially.

it has spaces labeled for nearly everything

remember: some things just get "lumped" together.

thus "supplies" is a catch-all category -- stick anything and everything here you consider a supply and that would include the soap, the towels, the mops, etc. as well as the boards, the parchment paper, etc.

professional services is another -- this includes accountant, lawyer, janitor, web designer, etc.

advertising includes yellow pages, signs, fliers, business cards, web site hosting fees, etc.

just start filling it out --clumping together things as necessary.

then play w/ the income side to see what you have to make in $ to break even and then how much more to make a true profit.

If I took my cost of cake ingredients times 3 or times 4, I'd be selling wedding cakes for under $1.50/serving and then you'd all be going down my throat for downgrading the market.

My baking powder cost per tsp is so small I can't really even calculate it. So I enter ten cents. 7 paper towels, 4 squeezes of dishsoap, 9 toothpicks ..... you can't calculate a "per unit" price on those, so I add $5 for misc. and that pretty much covers it.

Hubby works in a car dealership. They've pretty much done what Doug said above ... they calculated the cost of all of their misc supplies (shop rags, paper towels, seat protectors, a little dab of power steering fluid to top it off, lube grease, etc.), then did a little math to find an average cost per car that was run thru the service garage over that year. Each repair bill has a flat "supplies fee" on each invoice to cover these costs. It is not reasonable to expect them to calculate the cost of 4 paper towels and 2 Tbsp of power steering fluid ... so it's just an average "general expense" charge. Doesn't matter if you aren't getting your power steering fluid topped off ... it's a general expenses charge that's billed to everyone.

When I worked for the largest power cord mfg'r in the world, we also had "general misc costs" included in our costing calculations at the plants.

It's pretty standard.

**indydebi**

If I took my cost of cake ingredients times 3 or times 4, I'd be selling wedding cakes for under $1.50/serving and then you'd all be going down my throat for downgrading the market.

My baking powder cost per tsp is so small I can't really even calculate it. So I enter ten cents. 7 paper towels, 4 squeezes of dishsoap, 9 toothpicks ..... you can't calculate a "per unit" price on those, so I add $5 for misc. and that pretty much covers it.

Hubby works in a car dealership. They've pretty much done what Doug said above ... they calculated the cost of all of their misc supplies (shop rags, paper towels, seat protectors, a little dab of power steering fluid to top it off, lube grease, etc.), then did a little math to find an average cost per car that was run thru the service garage over that year. Each repair bill has a flat "supplies fee" on each invoice to cover these costs. It is not reasonable to expect them to calculate the cost of 4 paper towels and 2 Tbsp of power steering fluid ... so it's just an average "general expense" charge. Doesn't matter if you aren't getting your power steering fluid topped off ... it's a general expenses charge that's billed to everyone.

When I worked for the largest power cord mfg'r in the world, we also had "general misc costs" included in our costing calculations at the plants.

It's pretty standard.

Sorry Debi - I gave a generalization. I didn't factor in the extra labor necessary for specialty cakes (i.e. wedding cakes). This formula applies for baked goods, basic cakes, etc. I read the same information online recently, but they gave a much higher percentage... stating that ingredients should be about 30 or 33% (can't remember the exact number). I'll have to find that article again.

Obviously, my prices for wedding cakes change according to the labor involved (even though the ingredient costs remain the same). But for other items (cookies, scones, etc.) I pretty much stick to the 25% rule (with a little bit of rounding up or down for easy pricing).

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