Understanding Labor Costs

To calculate labor costs, you will need to include a figure that reflects the time you have spend making the product. You have to include all the time, even when you went shopping for special ingredients, invoicing and the consultation. 


The part that most bakers struggle with is to decide how much they value their time and what their rate per hour should be. 


Before deciding your value, you need to take into consideration that  the baking industry is a labor-intensive business. Lots of new bakers give up early in their start up because they fail to charge for their time, because they feel that they need to charge less so they too can have some business.


The problem with this is the fact that you will not get a realistic idea of your business viability and will eventually give up, because you are not making money, and your passion for something you enjoyed will diminish over time! 


Deciding on a rate per hour, you should include various factors that you will need to look at again over time, as your skills increase. The bigger the demand for your product and expertise, the more you can charge per hour. It works the same way in any industry!