How To Determine Costs (Electric, Etc?)
Business By madicakes Updated 7 May 2011 , 6:29pm by Annabakescakes
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 
Thanks!
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!
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.
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. 
If anyone out there knows an accurate way to figure propane usage I'd love to hear it!
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. 
Thanks for this thread! Awesome advice indydebi! Thank you! 
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?
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!") 
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
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.
I suppose we each find what works for us and then stick with it.
Absolutely! 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! 
I suppose we each find what works for us and then stick with it.
Absolutely!
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!
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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