How come the bread costs what it does?

This was originally posted on 24 September 2023. I provided some updated details in a blog post called more on costs on 7 February 2024.

I make artisan bread at a very small scale. This is not great business because you need to sell a LOT of bread to make any money.

In the interests of transparency what follows is a breakdown of the costs of making a loaf of Merton simple. I sell the Merton simple for £4 at COGS although I get £3.30 of that and COGS gets 70p.

Each loaf weighs 680g before it is baked and about 590g after — they lose a lot of water as steam during the baking process.


Ingredient Quantity Cost
Strong white flour 313g 40p
Wholewheat flour 52g 6p
Rye flour 17g 2p
Salt 7g 1p
Brown rice flour 5g 1p
Polenta 5g 2p

That’s a total of 52p per loaf.

It gets a little trickier from here as what follows are estimates.

Energy (electricity) 2p per loaf. This is based on 20p per hour, 1.75 batches of bread per hour, and 6 loaves per batch: 0.20/1.75/6. My oven only takes 6 loaves at a time and, along with kitchen space, oven size is one of the major limiting factors of the economics.

Active production time (labour) £1.81 per loaf. Active production time refers to time spent producing the bread that I can’t spend doing other things. Sourdough is not particularly labour intensive and in a regular bakery I’d be able to spend time inbetween turning and shaping the dough doing other bakery things! The calculation of £1.88 per loaf is based on paying myself £15 per hour with each batch taking a total of 1.45 hours active production time (Therefore: (15 x 1.45)/12 loaves per batch). This is an underestimate. Hand-mixing a batch takes about 20 minutes, and even cleaning up takes at least 30 minutes. Note that I made the batch size 12 because I normally mix 12 loaves at a time. The active production time is the value that I have the most control over but in such a small kitchen it’s very difficult to adjust this time … although I am getting quicker.

Other costs 20p per loaf. These costs include water, rent, equipment, equipment repair, packaging, other energy costs, wastage, water disposal. Etc. 20p is more or less a guess.

In summary (per loaf):

Ingredients 52p
Energy 2p
Active production time £1.81
Other costs 20p
Total £2.55
Sale to COGS (30% margin) £3.31

The economy of scale is very difficult at the level I am operating. With more space, bigger equipment, easier access to facilities (etc) I could keep bringing that active production time down. But for now, I’ll keep finding ways to make the process at home in my kitchen more efficient.

Jerry “Woody” from Edmonton, Canada, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia CommonsJerry “Woody” from Edmonton, Canada, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

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