I'm trying to work out ALL my costs, not just ingredients, or even time, but things like electricity, wear & tear on kitchen appliances etc. It seems a very difficult job - do you just make an estimate (or best-guess)? When you have a number, do you actually add a dollar figure to the price of each slice/cookie to cover it?
The overhead cost per unit will vary with your volume. There is a minimum base cost, which is why many of us won't turn on the oven for less than $50.
For example, let's say your convection oven has 5 racks, which means you can bake 2 cakes per rack or 10 cakes at one time. Let's say it costs you $20 to run the oven for one hour. Your overhead is $2 per cake. But if you only bake one cake, then your overhead is $20 per cake. Because it costs $20 to run the oven, no matter if you have 1 cake or 10 cakes inside of it.
This is also how you determine volume discount. Since your cost per cake for oven-time is lower with high volume baking, that's how you can offer lower pricing for high volume. If someone orders only one cake, then your costs are higher because you've got $20 wrapped up in oven costs ergo THEIR cost is higher. Lower volume = higher overhead per unit. Higher volume = lower overhead per unit.
Thank you both, and now I feel like crying!
I feel like I cannot win here. Some background: My husband wants me to get a job, now that our kids are all in school full-time. He is feeling the pressure financially and would like some help, which I completely understand. After 7 years of 'kids' I am also very keen to do 'something else', and having recently (re)discovered cookies/cakes, it seemed ideal that I would work from home, be there for the family and make some money at the same time. The problem seems to be the last part - I'm not sure how I can charge enough to make a profit when I will be working from my home kitchen. My aim was to develop part of our basement, which is large and empty and would make a fantastic kitchen, but of course that costs more money, which at the moment I don't feel like we can borrow, since I have no guarantee that I can pay it back.
My overheads, I suppose, are high. I'm just working with my regular oven which can only take one tray of cookies at a time ( 
), although since I have no additional rent, I guess that's a positive. I am already thinking that I must put in place a minimum order amount, but since I'm just starting out and need to get my name around, I was thinking of $35-40.
I think I must work out a breakeven point, taking into account ingredients, supplies, equipment, overheads etc. I still need to buy lots in the way of equipment, but thought I would do that as the need arose (i.e. someone wants a 10" square cake, I go and buy a 10" square pan). I am frightened that if I work all this out, I may find that I can only make a profit if I sell 5,000 cookies per week! Plenty of people on this site make a living from cakes, but I wonder how long it takes to start making a profit? I have until Christmas....
Thanks for listening, I'm not normally this whiney!
Tubbscookies what you wrote, it is everything that I am going through. I just sent my youngest to pre-k a couple of weeks ago. Now my DH wants me to get a job. (same story just different names.) I did luck out in one part. My MIL's friend sent me 50 tips and two sets of pans the petal and heart sets. Plus other character pans. She got them from a lady that has quit decorating. So anyways, I just need the customers. I took a cake to church on Sunday. Everyone loved it. All my neighbors know that I am making cakes. I have made a few, but nothing to make a big deal over.
It's nice to know I'm not the only one having this problem.
Cris
Quote by @%username% on %date%
%body%