To cost estimate bakery products, it is necessary to add up the total cost of production and then add in the desired profit margin. This can be a somewhat tricky process because some of the costs may not be direct to any one bakery good but may be a large overhead expense for a bakery business as a whole. For example, the cost of a new oven.
There are several categories of expenses that must be factored in to determine the total cost of a bakery business, according to the Houston Chronicle. Before a good cost estimate on a bakery product can be made, this total cost needs to be determined. First, start-up costs need to be calculated. This includes tools, construction costs, rental fees and start-up inventory. A share of this number should be factored into each bakery product sold. Next, the operating expenses (usually monthly) of the business need to be calculated, such as labor, electricity bills and ingredients used for multiple products. A share of this cost needs to also be factored into the cost of each bakery product. Finally, there are the direct costs of a particular product, such as special ingredients or packaging. The tally of these numbers is the break-even point. The final step is to add the profit margin.