Learning how to cost out your recipes isn’t hard. We’ll teach you how-to so you’ll never struggle again.
When I get lazy, I always remind myself about those damn Grand Marnier tarts I sold, and that gets me seriously motivated to figure out my costs! The Grand Marnier tarts I sold for $28.00 each, and didn’t make any money on. After the fact, I calculated my costs and learned my ingredients were over $25.00 per tart, with-out labor, packaging or overhead. By the time I boxed and delivered them, I was paying them to have my tarts. My stupidity still angers me today! I find motivation from that hard-learned lesson every time I think about it.
So let’s get into the details of how to cost out your recipes. I posted a tutorial on how to cost out your ingredients HERE. (You need to have that chart done before you can learn how to do this).
The photo below is what my recipes often look like before I begin.
Surprise, being a professional chef doesn’t mean I’m any different than everyone else. The majority of my favorite recipes come from magazines, online and from baking books that aren’t published for professional use. I have converted many of the recipes I use, into weights, but not all of them.
There are tons of great baking conversion charts available; most baking books include one. Here are some online sources; What’s Cooking America, Info Please. You’ll want to have a chart nearby when you begin breaking down your recipes.
I like to create my recipes in Excel on my computer (pen and paper work fine too) this is what my template looks like:
The “X1” column title means; one batch (times one). At work I bake in bulk, it isn’t unusual for me to multiply a recipe twelve times into one big batch. But when I’m pricing out my recipes I like to keep it the same size as my original recipe and not convert any batch sizes. Most of the time when a recipe doesn’t work it’s because I made a mistake when I wrote it into my recipe file. So keeping your base recipe the same size as your source makes double checking your recipe later, much easier.
Fill in the columns of your recipes ingredients and measurements:
Using the ingredient chart (you already made in this thread) figure out the price of each ingredient line by line. My row “Sour Cream Topping” is a sub-recipe and its ingredients and quantity are included.
What your chart would look like if you were entering my recipe:
Since I’ve made this recipe many times, I know what my yield is for x1 batch of this recipe. If you’ve never kept track of how much your recipe yields; start taking notes on that.
Here’s what my recipe costs, because I know my yield:
My yield is 48 mini cupcakes per x1 this recipe. So I divide the total price ($5.15) by the number it yields (48). I also see that if I used this recipe to bake one 9″ whole cheesecake, my yield would have been 1, so each cheesecake would have cost $5.15 in ingredients.
How to cost out your recipes, my chocolate cake example:
If you make your recipe in many different forms and sizes; layer cakes, mini cupcakes, 9″ round, full sheet pans, etc… try to keep track of what sized batch yielded what specific quantity. Below is an example of what my chocolate cake recipe looks like:
When you know what each component in a recipe costs, then you can begin to calculate your total product cost.
Below are some examples of how I brought all my information together into one price sheet per product. I do figure out the costs for every item I sell BEFORE I put it on my menu (lesson learned, ala Grand Marnier tarts). By costing out the total price of my products I learn which items are the most profitable and which items aren’t.
To me, it just doesn’t make sense to pursue making products that aren’t very profitable. You may laugh and think that’s pretty obvious, but I can tell you for a fact that I have worked at multiple bakeries that sold products that were not worth pursuing. Every one of those bakeries is now out of business.
As a consumer, what do you think this cake (below) should cost?
Do you think the cake above looks like a $12.00 to $18.00 cake? No, sir! If you priced it by guessing at your costs, you’d be losing money every time you sold it.
Have you realized my Mint Chocolate Chip Cake didn’t include labor or the cake board and box? The cake board and box are easy to calculate I know they are $1.39. I also know that it took approximately 40 minutes to make. If I pay someone $15.00 per hour, that’s an additional $10.00 in labor costs.
Here’s my updated wholesale cost, with-out ANY profits or over-head:
$21.71 + $1.39 + $10.00= $32.15 per mint chocolate chip cake
- the cost of the equipment I used
- my business insurance
- a business license
- office expenses
- accountant costs
- all my utilities
- my transportation and labor to deliver this cake
- labor costs
Breaking down your labor and overhead costs will be a separate post/lesson (I’ll post a link to it here). Hopefully after reading this post you’re beginning to see the bigger picture about pricing, and why it’s so important to take your time and figure out your exact costs before you begin selling your product.