Pricing labor

[Quesmoy]

I am in the process of trying to set prices for my Truffles, Molded chocolate, caramels, and etc.. I know how to come up with the cost of ingredients and supplies, but I am not sure how to figure out cost of labor. Any suggestions?

Tamara

[TheTInCook]

Time yourself.

[pastrygirl]

Make a couple of batches and time yourself. Example: mixing and scooping one batch of chocolate chip cookies takes 20 minutes and yields 100 cookies. I want to be paid $15 an hour to make cookies, so the batch cost $5 in labor and each cookie has 5 cents labor cost. Maybe there is another 5 cents each when you consider clean up, then baking and putting on display.

You'll want to consider that extra set-up and break down time, as well as allowing for some waste - especially with chocolate. What is the total time you put in vs the total sellable pieces? It seems like a huge part of the time I spend is melting and tempering, cleaning up, and packaging, probably only a third of it is the actual molding or mixing and dipping. I use my 'hours tracker' iphone app to keep track of the time I spend on chocolates. On a recent production day, I worked 8.2 hours and produced and individually wrapped 210 bars. As much as I would love to pay myself $30/hr to do all this, I figure that the market rate is more like $10 - $12 for the less skilled parts and $15-18 for the more skilled parts, and also have to consider what my selling price is. So on that day, if I was paying myself $15 an hour all day, the labor cost on each bar was about 59 cents (8.2 divided by 210 times 15). If I was paying myself $18, labor would be 70 cents. My pricing only allows about 65 cents for labor, so I'd better work faster if I want to make more $$!

Hope that helps.

Edited August 25, 2011 by pastrygirl (log)

[gap]

You can also work backwards for this sort of question.

Start with what you could sell your product for in your area (ie., what is the competition of similar quality selling for?) Then subtract your supplies (ingredients and packaging) and work out the difference. Divide that through by how long it takes you to make the product and you'll get an idea of your hourly rate in labour. Then you need to decide if that is something you can live with.

If it's a business, don't forget to add in fixed costs such as rent, electricity etc

[Quesmoy]

Thank you for your responses. I guess that is logical, and to think I am getting my degree in accounting.

[qrn]

Thank you for your responses. I guess that is logical, and to think I am getting my degree in accounting.

cost accounting is a whole new area....you need the class....

[pastrygirl]

Thank you for your responses. I guess that is logical, and to think I am getting my degree in accounting.

Ah, well then maybe you can teach me how to use quickbooks Or is accounting different from bookkeeping?

I think chocolate can be profitable because you can charge a lot per piece. Even with higher end chocolate, your food cost on a 15 gram bonbon is going to be low just because it is so small, but labor cost is going to be higher. The key seems to be controlling labor cost by making big enough batches and being as efficient as possible in production.

Edited August 27, 2011 by pastrygirl (log)

[Quesmoy]

Accounting is a lot more in depth, but once you add technology into the mix it all gets to be confusing.

The cost of product is pretty low, but since I am not very efficient yet once I have to add in the cost of labor the price can get a little scary . I guess I will just need to practice at becoming more efficient.

[prasantrin]

Related question so I'm tacking it on to this thread. . .

A friend owns a restaurant and I'm encouraging her to add a few desserts to her menu as limited specials. I would likely be making said desserts, but I am not a professional baker, just an amateur and not really even that (they won't be pretty desserts, just simple ones). I will be making the desserts in her restaurant kitchen using her ingredients, so my personal costs will be minimal (I might have to buy some pans and stuff, but I'd be keeping them, so I would not ask her to pay for them).

She is insisting on paying me if we do this. She usually overpays, but I want to be fair. Remember, I'm an amateur so there is always risk that some of the goods might flop (I'm generally sticking to things I've made before, but there is always a chance of failure). That would mean a waste of her money, since I'm using her ingredients and her electricity. I don't really want to charge per hour since, as I said, some hours might be spent making flops. So I was thinking of charging per item.

Like I might charge her $7.50 for me to make a simple cake (10 servings?).

$5 for mango pudding (maybe 10-15 servings?)

$7.50 for cheesecake (8 servings)

Does that sound reasonable (even though I just made those numbers up)? Or should I consider charging a fee per serving sold? There's no guarantee that people will buy any of the desserts, and I don't want her to get stuck with spoiled food. So I could ask for something like 50 cents per serving of whatever dessert she sells. I could also ask for a percentage of dessert sales, but that sounds like much too much effort.

This is kind of just a fun thing for me to do; it's not a way to make extra money or show off my non-existent skills. I've been enjoying thinking of ways to help her promote her restaurant and make it different from her competition. I mostly just want to help her, but since she's going to insist on paying me, I don't want to rip her off.

[pastrygirl]

Related question so I'm tacking it on to this thread. . .

A friend owns a restaurant and I'm encouraging her to add a few desserts to her menu as limited specials. I would likely be making said desserts, but I am not a professional baker, just an amateur and not really even that (they won't be pretty desserts, just simple ones).

This is kind of just a fun thing for me to do; it's not a way to make extra money or show off my non-existent skills. I've been enjoying thinking of ways to help her promote her restaurant and make it different from her competition. I mostly just want to help her, but since she's going to insist on paying me, I don't want to rip her off.

Wow, your confidence is underwhelming! I hope you are a better baker than you claim, otherwise how are not pretty and not necessarily successful desserts a boon to the restaurant?

What do you know you make really well? Do you have a great cheesecake recipe that you can make different flavors and change up every few months? Can you make a great pie or ice cream? Nothing wrong with simple, but to has to be GOOD. Dessert is the last course and last chance to make an impression, you want people leaving happy.

You probably wouldn't want to work more than a few days a week, so think of things that keep well. Cheesecake, creme brulee, flourless cake, trifle, ice cream, all keep several days (assuming proper storage). Lighter cakes, many mousses, and fruit tarts will have a shorter life span, as they dry out and shrink and such.

As for pay, if you are not used to production baking it is kind of you to not want to charge your friend top dollar for labor. How about something like minimum wage plus a little bit of trade? Say 10% of dessert sales per month becomes a gift certificate for you, possibly also redeemable in the form of wine from the cellar, if you drink and if your friend has a nice wine list.

Also consider that dessert tends to be lower food cost than other courses. Food cost on 6 ounces of creme brulee and a couple of small shortbread cookies is about $1, and depending on the place you can sell that for $6-8. Of course you don't want to waste ingredients, but remember that wholesale prices are lower than what you are used to paying.

You think this would be fun to do for a while, but what if it gets really popular? Are you willing to put in more time if there is more demand? And what kind of restaurant is it that doesn't have dessert?

Edited March 16, 2012 by pastrygirl (log)

[prasantrin]

I'm Asian--I am inherently self-deprecating.

Thanks for the comments!

Right now I only have three desserts in mind--lemon souffle cheesecake, mango pudding, and that Mexican flan/cake thing. I've made all of them before with great success (my cheesecake and mango pudding are especially popular), but I know none of them are particularly pretty when served as-is; they're all very plain. I'm counting on my friend('s staff) to pretty them up a bit when they serve them, perhaps by adding some fresh fruit or a few sprigs of something. I'm a little wary of the cheesecake because it's very messy to cut/serve, so I might omit that.

My friend's restaurant is an "ethnic" place (Thai), so I'm sticking to things that are Asian-influenced (to me, the Mexican flan/cake thing is Filipino) and that can be flavoured with Asian-inspired flavours. I can add some coconut milk to the mango pudding, infuse the cheesecake with lemongrass or use yuzu juice instead of lemon, etc. etc.

She has a few desserts on her regular menu (which are really just snacks in Thailand, but farangs eat them as dessert), but my plan is to have dessert specials--available until it's gone ( or gone bad). Like the mango pudding--I'll make it on a Wednesday or a Thursday, and it will be available for the weekend, but when the last serving is gone, we won't make more (until a month or so later). The dessert specials will be mentioned on a facebook page as well as in-house, so if people follow the restaurant, they'll know what's available (and when it's gone). And they won't happen weekly, but rather once a month or whenever I have time. She's planning to do a similar thing on the savoury side, too.

Back to labour--minimum wage sounds good. I was thinking it might be too much since I'm very much an amateur, but she does pay her staff quite a lot, so minimum wage really isn't much for her. She already feeds me for free, or when I insist on paying, I pay a much reduced price, so while the gift certificate is a great idea, it might not work in this case. I could ask for unlimited Thai tea, though. She knows how much I love it!

I would like to do a coconut ice cream, but I've had a difficult time finding a reliable recipe. Maybe I could find a lychee ice cream recipe. I like lychee a lot!

[runwestierun]

Just a note about ice cream, because you say you are new to this. Ice cream, even though this might not be intuitively obvious, is one of the 10 largest sources of food borne illnesses in America. It is very easy to make someone sick or worse with ice cream. In fact, where I live, I can get a catering licence and a food handler's licence, but it excludes making ice cream. I am not allowed to make it for public consumption without specific licencing. You must be sure you know what you are doing, you can't just throw a recipe together. Just so you know.

[pastrygirl]

OK, that makes more sense. As for presentation, a little caramel sauce or fruit puree plus a tuile or other small cookie instantly adds value. Caramel sauce keeps for weeks in the fridge, and you can freeze fruit sauces in pints or smaller so you don't have to make it fresh every time. I think individual desserts also tend to look more expensive, so if you could do the mango pudding in individual cocktail glasses, maybe even layer it with something for contrast, it will look great (or at least fancier than a scoop out of a big bowl of pudding). Fresh fruit or berries, or large flakes of coconut tossed in simple syrup and toasted until crunchy would be nice on the pudding (keep the crunchy stuff separate and add just before serving).

It sounds like you have a great relationship with your friend and really are doing this out of love for her and for baking. That's awesome!

Westie, I'm curious about the ice cream thing. I'm in WA state, and I have heard that there are weird/strict rules about ice cream production and getting certified as a commercial dairy, BUT this does not seem to apply to restaurants who make ice cream in-house, only when it is packaged and intended for retail sale. I've made ice cream and sorbets at all my restaurant pastry gigs here and in CA over the past decade plus and no health inspector has ever even blinked about it. Heck, I'm not sure they even bothered to look inside the freezer.

How does ice cream end up carrying food borne illness? And since you can buy pasteurized liquid egg yolks and dairy, shouldn't that be pretty easy to prevent?

Edited March 17, 2012 by pastrygirl (log)

[prasantrin]

@runwestierun--thanks for the tip. For the coconut ice cream, I was hoping to use one of the Thai recipes I have that don't use eggs or dairy--that would help with the food poisoning thing, wouldn't it? But those recipes just don't seem to come out the way I remember Thai coconut ice cream to be. For lychee, I think I'd prefer to have it as a sorbet. It would make a great summertime dessert special, I think!

@pastrygirl--coconut flakes on the mango pudding are exactly what I was thinking! She usually has toasted grated coconut for other dishes, but I think flakes would be better. I usually do raspberries, but it's not very Thai. I might still do raspberries, though. Or maybe strawberries. I like the red of the berries on the orange of the pudding.

I was thinking of doing the mango pudding in ramekins, so it would be easier to serve and would help with controlling portion sizes, but I'm not sure they'll have the space to store them. My friend and I will have to talk about the small details a little more before this really happens.

I do really enjoy helping her out. Her restaurant is very successful, but she's always looking for ways to improve things and to differentiate her place from the plethora of Thai restaurants in town (most of those are really Laotian, so her place really is different just based on that. On the other hand, most farang don't know or care about the differences).

I probably should have started a new thread--sorry to Quesmoy for hijacking this one!

[pastrygirl]

I searched a little about ice cream last night and it appears that contamination after it is made is the most likely source of illness. Salmonella is of course something to be aware of, but if you don't cook your custard to 175F it's not going to thicken anyway. I get pasteurized egg yolks by the quart, but only for convenience. You might want to use a thermometer to make sure you get up to the right temperature if you use fresh eggs.