A bakery is run just as any other business, with prices being determined by overall operating costs. Wholesale pricing is significantly lower than retail pricing, but still provides some profit for a baker. The key is accurately accounting for the cost per unit to determine the correct wholesale price.
Calculate the cost of manufacture per product with the equation: (Cost of raw materials+transportation and/or shipping)/total units produced. So, if you make 24 cookies and the raw materials cost you $5.00 total plus 50 cents in gas money, your equation is (5+.50)/24 equaling roughly 23 cents per cookie.
Add in your labor expenses with the equation: hourly wage + (yearly employment tax + yearly benefits/total hours worked per year). For the sake of simplicity, we’ll assume that you are self employed and you’ll consider your time equivalent to minimum wage and the cookies took 1 hour to make, so your labor expense was roughly $7.00.
Add up your total costs and combine for the break even cost. So, the break even cost for a single cookie would be roughly 52 cents.
Multiply your break even cost by your desired profit margin. Typically wholesale profit margins are double the break even cost, so the total wholesale cost per cookie would be $1.04.
Steven White is a privately contracted software engineer and efficiency analyst. He has more than five years of experience providing technical support for AT&T broadband customers. Along with his technology background, White enjoys carpentry and plumbing.