How this calculator works
A home baker who charges only for ingredients usually loses money, because the price also has to cover packaging, equipment wear, power, delivery and above all time. This calculator adds those costs into a single total and divides it by the number of servings. The markup is then applied to the total cost, not to the ingredients alone. A 30 per cent markup on a total cost of $100 gives a $130 price and $30 of profit, before any tax or marketplace fee.
Formula
total cost = ingredients + boxes + other supplies + equipment + electricity + (hours x hourly rate) + delivery. cost per serving = total cost / servings. total price = total cost x (1 + markup). price per serving = total price / servings. profit = total price - total cost.
Worked example
A 12-serving cake uses $20 of ingredients, $3 of supplies, $2 of equipment and $1.50 of electricity. The baker works 3 hours at $18, uses one $1.50 box and pays $5 for delivery. The total cost is 20 + 3 + 2 + 1.50 + 1.50 + 54 + 5 = $87. At a 30 per cent markup the price is $113.10, or $9.43 per serving, and the profit is $26.10.
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Frequently asked questions
Should I charge for my own time?
Yes if you are selling. Paying yourself an hourly rate is a cost of the business, not profit. A baker who works for free is effectively subsidising the customer. Choose a rate that reflects the local market and the skill the work requires.
What markup should I use?
A markup between 25 and 50 per cent on total cost is common for home food businesses, but it depends on your market, your overheads and what the cake includes. The calculator lets you test a rate; it does not recommend one. Keep tax and payment processing fees in mind, because they come out of the price after the sale.
Does the calculator include taxes or delivery mileage?
No. Put your own after-tax costs into the delivery and supplies fields, and check whether sales tax applies in your province. Currency is Canadian dollars, with no exchange conversion, so enter every figure in CAD.
How do I estimate electricity for baking?
Multiply the oven power in kilowatts by the hours it runs and by your local rate per kilowatt-hour. A 2.4 kW oven running for 1.5 hours at $0.15 per kWh costs about $0.54. The preheat and cooling time count too, so a small allowance is reasonable.