Let’s Talk Pricing – Part 2

Posted On : June 19, 2020 By antweb

Hi everyone!

A couple of days back I wrote a post about how to do basic Pricing for small-time Baking Businesses –

Some of you wanted an example so here it is.
This is the costing breakdown of my – EGG FREE FUDGY BROWNIE
The recipe for this is available on my Youtube Channel –
While you’re at it, Subscribe for love! ❤️😁😁

This recipe makes approximately 1 kg Brownie i.e. 16 standard pieces.

Just remember, costing is subjective to each and every person according to a LOT of variables. So, take this as an understanding, NOT as a set price that you should charge.

Cost of ingredients :

₹1245/- per kg
So, cost for 100g = ₹120/-

₹1339/- per Kg
So, cost of 150g = ₹200/-

₹450/- per Kg
So, cost of 100g = ₹45/-

Can of 400g (Milkmaid) = ₹115/-

₹60/- per Kg
So, cost of 40g ~ ₹3/-

₹86/- per Kg
So, cost of 100g ~ ₹9/-

₹600/- per Kg
So, cost of 35g = ₹21/-

₹2300/- per Kg
So, cost of 2 tsp (about 6-8g) ~ ₹19/-

For 250-300g total – ₹60/-

Total Cost of Ingredients – ₹592/-

Wastage Cost – Let’s assume it is 5%
Since this is a Brownie, it’s fairly easy to make with minimum wastage (unlike Carved Cakes, Sugar Flowers, Entremet etc. Which will have a higher waste %)

So, 5% of 592 ~ ₹29/-

Hidden Costs.
If you have a studio or a professional space dedicated to Baking, then you have to consider all expenses.
For home, Let’s assume you live in a rented house with your Partner. And you’re going to split all the bills 50-50.

For ease of Calculation we’ll assume the following monthly –

  1. Rent – ₹20,000/-
  2. Electricity – ₹10,000/-
  3. Water – ₹1000/-
  4. The income of Staff (or Maids) – ₹1000/-
  5. Any other fixed costs that you have monthly – ₹1000/-

Total Monthly Fixed expenditure = ₹33,000/-
You’re bearing half of it, so = ₹16,500/-

Let’s assume you get AVERAGE orders 2 per day.
The word “Average” is very important here because you might get 4 orders one day and 1 order another day. And some orders might take longer than the others. But we have to see average, for ease of calculation.

Fixed Expense per Month = ₹16,500/-
Per Day = ₹550/-
Per Order = ₹225/-

Since Brownie is a simple bake, which doesn’t take a long time, let’s assume you cut down this fixed cost to ₹150/-

Let us presume Cost of your fixed assets (AC, Fridge, Freezer, Oven, Tools, Equipment etc.) = ₹1,25,000/-
Current depreciated Value = ₹1,00,000/-

Now, this is subjective to every entrepreneur. But let’s presume you take 0.1% of this for each order.
i.e 0.1% of 1L = ₹100/-

Your Labour Cost.
This depends on how you value yourself. How much experience and expertise you have. What your skill level is.

Let’s presume your per hour cost = 150/-
And let’s say it takes effectively 4 hours (on average) to make the batter, bake, cool, cut, wrap the Brownies.

So, your labour cost = ₹600/-

Cost of Additional Items.
i.e. cake boards, wrappers, packaging, candles, knife, Ribbon, Tissue Paper, notes, Cake stand… Bla bla bla… everything!

For Brownie, you will have the following –
Cake Box, Cake Board, Note, Tissue.
= ₹150/-

Profit Percentage.
Let us see what the total of the above is.

592 +29 +150 +100 +600 +150 = ₹1612/-

To this, you can put a profit % according to what you deem fit. It can be 50%, 100%, 200% totally up to you.
You can put a % according to your demand, popularity, uniqueness, the value of time and skill etc.

For a Brownie, I would put a lower % than let’s say an Entremet or a Wedding Cake.

Let’s presume we put 50% profit to this ~ ₹810/-
So total cost = ₹2422/-
Rounding off to – ₹2400/-

Over and above this, you will add tax. According to your eligibility and tax bracket.

Let’s assume you don’t have additional tax for now.

Delivery Charge.
Now, this according to me is separately added to the bill IF you’re using a third party service.
You can charge in actual.
If you have a driver or you do deliveries yourself, then you can have a standard cost added to every order according to the distance of delivery.
Let’s say you add 100/-

Final Total Cost for 1 kg of FUDGY EGGLESS BROWNIE (16 Standard Pieces) = 2500/-
Cost Per Piece ~ ₹156/-
Now, this cost will vary according to the recipe, your Art, Skill Level, Market, as per all the variables given in the post.

You can bring your costs down by the following –
1) Work in a rent-free space.
2) Buy ingredients in bulk. Bulk pricing is always lesser than buying small quantities.
3) Use cheaper ingredients. Although I DO NOT recommend compromising on quality.
4) Increase the number of orders per day so the hidden costs get divided.
5) Or you can lower your profit margin on individual orders for the initial time. And increase your price gradually as and when your popularity and demand increases.

Revise your costing every year to ensure you’re on top of your list.
It will help if you have a set menu of Desserts. And Cakes with Fondant and customization like figurines and flowers, have cost for each one (or each type) of these, so you can quickly calculate the cost.

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