How To Determine Costs (Electric, Etc?)

Business By madicakes Updated 7 May 2011 , 6:29pm by Annabakescakes

madicakes Posted 3 May 2011 , 2:34pm
post #1 of 16

Okay, to you home-based bakers out there....how in the world do you determine how much to add to a cake cost to account for the electricity you use to make said cake? I'm sure there's some sort of mathmatical equation using square footage of home and kilowatt hours, etc....I don't want to undercharge but I am stumped on this one icon_smile.gif

Thanks!

15 replies
crushed Posted 3 May 2011 , 6:49pm
post #2 of 16

I'm going to watch this one because I'm curious about this too. Everyone says to remember to add this to the cost of your cakes, but I have no idea how to calculate it.

ineedahol Posted 4 May 2011 , 12:29pm
post #3 of 16

My dad is an electrician and tried to explain this to me when we got an oil filled radiator for our conservatory, I think I understood!
Kilowatt hour is used by your electricity supplier to charge you, your bill from them should show the rate you pay per Kilowatt hour (or unit).
Our radiator was a 2 kilowatt model, so running it for an hour would be charged as 2 kw hrs (2 units). So if you can work out the usage of your oven (maybe from the instructions or manufacturer) then multiply by no of hours used and by cost per unit you should have an accurate cost.
Lots of suppliers now offer electricity monitors, ive not used one but i wonder if some might show usage per appliance?
Sorry but i have no idea for gas!
Hope this helps and is right! If anyone knows different then please correct me! icon_smile.gif

VickeyC Posted 4 May 2011 , 1:15pm
post #4 of 16

This is a really good question madicakes. ineedahol I think I will try to locate an online owners manual to my oven and see if I can find the info needed for the calculations and see what it comes out to. This will be interesting to find out. Thanks for the info.

madicakes Posted 4 May 2011 , 1:21pm
post #5 of 16

ineedahol.....that makes sense. I will have to see if I can get that information from the manufacturer of my stove. Thanks for your help!

BakerAnn Posted 5 May 2011 , 5:22am
post #6 of 16

This calculator might help you out:

http://www.electricity-usage.com/Electricity-Usage-Calculator.aspx

I've tried unsuccessfully to find one to use for my propane oven and just have to estimate it. icon_sad.gif If anyone out there knows an accurate way to figure propane usage I'd love to hear it!

indydebi Posted 5 May 2011 , 11:49am
post #7 of 16

monthly electric bill divided by 30 days = cost of electricity per day.
Daily cost of elec divided by 24 = cost of elec per hour.
Number of hours working in the kitchen = cost of elec per cake.

NOT just the number of hours your oven is on. There are base costs that need covered REGARDLESS. You are in the kitchen so you need elec for the mxier, the lights, the water heater, the refrigerator.

As a prev shop owner, I had to pay the lights and the heat regardless of whether I had a cake in the oven or not ..... a running refrigerator is part of the overhead. I couldn't call the light company and tell them "I only baked 4 hrs this week so you should reduce my electric bill."

Its not exact .... but its a start, covers ALL elec usage .... and helps you track/account-for spikes in your baking schedule. thumbs_up.gif

KASCARLETT Posted 5 May 2011 , 1:11pm
post #8 of 16

Thanks for this thread! Awesome advice indydebi! Thank you! icon_biggrin.gif

sugarcheryl Posted 5 May 2011 , 3:00pm
post #9 of 16

Thank You indydebi.

BakerAnn Posted 5 May 2011 , 4:40pm
post #10 of 16

Indydebi, you are absolutely right. Thank you for pointing out the obvious! icon_biggrin.gif

MimiFix Posted 7 May 2011 , 12:24am
post #11 of 16

The baking industry uses a standard mark-up to find wholesale and retail prices. Figure out the cost of your ingredients and multiply three times for wholesale and four times for retail. (Currently, the mark-up is moving toward four times and five times, respectively.) All your other costs - overhead (including rent and utilities), labor, packaging, advertising, etc. - is covered in the mark-up. This method works well for most bakery products except the labor intensive products such as custom cakes. With cakes it's necessary to add for additional labor. I used this method for my entire career and found it the best solution.

Restaurants and eateries use the percentage approach; I've seen the range go from 20-33% of final customer cost. I have no idea how the catering industry works. Indydebi?

indydebi Posted 7 May 2011 , 12:46am
post #12 of 16

the problem with the "times three" theory (and to me, its just a "theory") is that ingredients are not the most expensive factor in our product. Our time is.

Here is a thread where I quote a sam's club flyer on how to do the times-three method .... and no, it does not include overhead. This thread also includes my numbers on how I would go bankrupt if I had used the times-three theory. http://cakecentral.com/cake-decorating-ftopict-688450-sams.html+club

In the above link is another link in which a CCer shares the difference between figuring price based on times-three, and figuring it based on ingredients AND labor/time. (After she did the comparison, she said, and I quote, "The cost is not even close!") icon_wink.gif

Here is a thread in which leah, a culinary school graduate, states it should be times-five (cost is 20%) and its backed up by the RBA: http://cakecentral.com/cake-decorating-ftopic-662035-0.html

MimiFix Posted 7 May 2011 , 2:04am
post #13 of 16

It's not perfect, but it definitely works for many in the bakery industry. And "times three" is for wholesale only, higher for retail. It surely wouldn't work for any labor intensive products. When the formula is applied to the majority of retail bakery products - cookies, muffins, brownies, breads - products which can be mass produced, it's a workable method. What I don't understand is how restaurants use the percentage method and constantly adjust the percentage of food cost. I suppose we each find what works for us and then stick with it.

indydebi Posted 7 May 2011 , 4:37am
post #14 of 16
Quote:
Originally Posted by MimiFix

I suppose we each find what works for us and then stick with it.


Absolutely! thumbs_up.gif that's why I like threads like this, where we get a lot of different ideas because then we can try multiple things to find the one that is a good fit for each situation or circumstance.

In my case, my "cost" to make a wedding cake for 100 is about $35. Times three means I'd be selling that cake for $105.00, or $1.05/serving. As I mention in the above referenced thread, you guys would run me out of town on a rail if I sold cakes at a price that low! icon_lol.gif

cakeladyatLA Posted 7 May 2011 , 6:37am
post #15 of 16

cool!

Annabakescakes Posted 7 May 2011 , 6:29pm
post #16 of 16
Quote:
Originally Posted by indydebi

Quote:
Originally Posted by MimiFix

I suppose we each find what works for us and then stick with it.

Absolutely! thumbs_up.gif that's why I like threads like this, where we get a lot of different ideas because then we can try multiple things to find the one that is a good fit for each situation or circumstance.

In my case, my "cost" to make a wedding cake for 100 is about $35. Times three means I'd be selling that cake for $105.00, or $1.05/serving. As I mention in the above referenced thread, you guys would run me out of town on a rail if I sold cakes at a price that low! icon_lol.gif




I agree with this. Our costs are right about the same. But I need to be compensated better for still being up at 9am and hoping in the van and delivering a cake 40 miles away with the"shakes" from not sleeping all night.

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