A sourdough loaf is mostly flour, water and salt, so the ingredients are cheap and the time is the cost: shaping, scoring, baking and bagging. A home micro bakery's margin turns on how many loaves an hour it can bake and where they sell. Margin = (price − cost) ÷ price. In the example below, a loaf costs $6.15 to make and sell at market and goes for $12.00, a 48.8% margin. A month of four ways of selling brings $6,680 of sales and about $3,150 of gross profit.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- Count your time as a cost, even if you don't pay yourself yet.
- A loaf at market: $6.15, $12.00, 48.8%.
- Flour is cheap; the hours are the cost.
- Subscriptions trade a little margin for sales that are paid ahead.
- Focaccia and bagels use the same oven time.
- TaroStack costs each loaf from what each batch used. More below.
A loaf, costed
Prairie Hearth Bread, the made-up home micro bakery in Fargo, North Dakota, I use in these examples, bakes on a countertop deck oven:
| A sourdough loaf, at market | Cost |
|---|---|
| Flour, water, salt, starter | $1.96 |
| Bag and label | $0.50 |
| Labor: 10 minutes a loaf at $20 an hour | $3.33 |
| Card fees, 3% of $12.00 | $0.36 |
| Cost | $6.15 |
How the loaf's price was set is in how to price sourdough bread, and the business year in sourdough business plan.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Sourdough loaf | Saturday market | $12.00 | $6.15 | $5.85 | 48.8% |
| Subscription, 4 loaves | Monthly, paid ahead | $44.00 | $24.49 | $19.51 | 44.3% |
| Focaccia | Market and preorders | $16.00 | $7.51 | $8.49 | 53.1% |
| Bagels, half dozen | Market and preorders | $12.00 | $7.06 | $4.94 | 41.2% |
The subscription earns 44.3% against 48.8% for a market loaf, and is paid at the start of the month.
A month's numbers
A month at Prairie Hearth Bread:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Sourdough loaf, saturday market | 250 | $3,000 | $1,462 |
| Subscription, 4 loaves, monthly | 40 | $1,760 | $780 |
| Focaccia, market and preorders | 60 | $960 | $509 |
| Bagels, half dozen, market and preorders | 80 | $960 | $395 |
| Month | $6,680 | $3,147 |
Market loaves bring the most gross profit; the 40 subscriptions bring the steadiest. North Dakota's cottage food rules, which cover the bread, are in North Dakota cottage food laws.
Get the calculator
Download the sourdough margin calculator. One sheet: one line for each product and channel, with its price, materials, packaging, labor and fee rate; the cost, gross profit, margin, markup and the price your target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator holds one cost a loaf. A bake that runs long, flour bought at a new price, and loaves left after a slow market change the month's real margin.
How TaroStack does it
TaroStack costs each loaf from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes flour at the price of the deliveries they came from, so a price rise shows in the next batch's cost.
Labor on the batch. The minutes a batch took are recorded on it, so the hours behind each product are on record.
Margins by product. Margins are reported per product on that actual cost, and a price-creep report per supplier shows whose prices moved.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What a loaf cost | One price from last season | Cost from the batch's deliveries |
| The hours behind a batch | Remembered | Labor minutes on the batch |
| An ingredient creeping up | Noticed late | A price-creep report |
| Margins by product | Re-worked by hand | Margins on real cost |
Recipes, batches, costing and margin reports are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.