Why the 4× rule underprices your sourdough

If you have looked up how to price baked goods, you have met the rule. Add up what the ingredients cost for a batch, divide by how many it makes, multiply by four. Sometimes it is stated as a sanity check instead — your ingredients should be 25% to 35% of what you charge — but it is the same arithmetic wearing a different hat.

It is popular for a good reason: it is one multiplication, it needs no spreadsheet, and it is roughly right for the products it was invented on. For a micro bakery selling bread, it is not roughly right. It is wrong in a direction that costs you money every single week, and the arithmetic below shows exactly where.

The rule, stated fairly

We will take the generous reading throughout: the multiplier applies to ingredients plus packaging, not ingredients alone. That is the version most favourable to the rule. The stricter reading — ingredients only — comes out worse everywhere, and we will note where.

A sourdough loaf, costed properly

Here is one loaf, with everything in it, including the baker's own time at $12 an hour:

Materials — everything you can hold — come to $1.05. Your time is $4.80, which is to say 82% of what this loaf costs you is you.

Now apply the rule. Four times $1.05 is $4.20. The loaf cost $5.85 to make. The rule has priced it $1.65 below its own cost.

Put more usefully: at $4.20 you take $4.20, spend $1.05 on materials, and keep $3.15 for 24 minutes of work. That is $7.88 an hour, before the market's booth fee takes its cut. On the stricter reading — four times the $0.70 of ingredients, so $2.80 a loaf — it is $4.38 an hour.

A standard farmers-market sourdough loaf is commonly quoted in the $8–$14 range in the US. The 4× rule would have you undercut the bottom of that by half, and call it a method.

The same rule, on cinnamon buns

Now the same baker, same hourly rate, a batch of twelve buns that needs 36 minutes of hands-on time — three minutes a bun, because the oven does twelve at once where it did four loaves.

Four times the $0.60 of materials is $2.40. You keep $1.80 for three minutes, which is $36.00 an hour.

The same rule, two answers

Nothing changed but the product. The rule paid one job four and a half times better than the other, and it has no way of noticing, because the number of minutes a bake takes appears nowhere in it.

This is not a rounding problem that a 5× multiplier fixes. Raising the multiplier raises both numbers and leaves the gap exactly where it was. The rule is not mis-calibrated; it is measuring the wrong thing.

What to measure instead

The number that holds still across a whole product list is margin per hour of your time: what a product leaves you after materials, divided by the hours it took.

(price − materials) ÷ hours of your time = what this product pays you per hour

Price the loaf at $9.50 and it leaves $8.45 after materials, for 0.4 hours: $21.13 an hour. Want the buns to pay the same? They need to leave $1.06 after materials, which means $1.66 — call it $1.65.

Set side by side with what the rule produced, the damage runs both ways:

The rule underprices the thing you are known for by more than half, and overprices the thing that subsidises it by nearly half. If your loaves sell out and your buns sit there, this is the likeliest reason, and it is not your baking.

Doing this without a spreadsheet

Three things have to be true before margin-per-hour means anything:

1. Your pantry is priced per unit, not per shop. A 16 kg sack of flour at $19.60 is $0.00123 a gram. Until a recipe can draw on that number, costing is guesswork with decimals.
2. Your time is recorded per recipe, honestly. Including the proving you walked away from, if that time blocks the oven or the morning.
3. Prices move when your suppliers move them. Flour and butter have had double-digit years recently. Costing done once, in January, is fiction by March.

That third one is where most spreadsheets die. Not because the arithmetic is hard, but because repricing fifty recipes by hand after one sack changes price is a job nobody does twice.

What the options actually do

Four ways micro bakers handle this, and what each is genuinely good at:

A spreadsheet

Free, yours, and as detailed as you care to make it. It will do margin-per-hour perfectly well if you build it. The failure is maintenance: when a price changes you have to remember which recipes touch it, and the honest answer is that after a few months most people stop updating it.

A free online pricing calculator

Good for one decision — what should I charge for this cake. They are single-shot by design: you type numbers in, read a price out, and nothing is kept. Ask what your margin per hour was across last month and there is nothing to ask.

Subscription inventory platforms

Tools built for makers who sell across several channels and need stock, batches and cost-of-goods for accounts. They are thorough and they do track cost changes over time. They are also built for a business with inventory to manage and a monthly fee to justify, which is a different animal from one person with a market stall on Saturday.

Baketly

Built for the micro bakery specifically, and narrower than any of the above on purpose. The pantry is priced per gram from a photo of the label. Recipes cost themselves from it and move when the sack price moves. Your hourly rate is set once and lands in everything. Market days are costed against the booth fee, so a $40 table has to earn its place before anything counts as profit. And it will tell you which product makes the most per hour of your time, because that is the question this whole article is about. It is free, on iPhone, with nothing to subscribe to.

It is not accounting software and it is not a shop till. If what you need is one of those, one of the other three is your answer.

The short version

Multiplying ingredients by four prices your ingredients. It does not price your morning. For a micro bakery, where a slow loaf can be 82% labour and a fast bun 50%, that is the difference between a stall that pays you and one that pays for itself — and you will not see which from the rule, because the rule cannot see time.

Read next

• How to run a micro bakery by the numbers
• How to cost a recipe properly, once
• What should I charge for a sourdough loaf?

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