BaketlyThe usual advice for a market is to bake a bit more than you think you will sell, so you never turn anyone away. It sounds like good service. For a micro bakery it is quietly expensive, because the loaves that come home were paid for twice: once in flour, and once in the morning you spent making them.
What does an unsold loaf cost compared with a missed sale?
The loaf costed across this blog takes $1.05 of materials and 24 minutes of work. At $12 an hour the 24 minutes are $4.80, so it costs $5.85 and sells at $9.50. The two mistakes are not the same size:
| Mistake | What it costs you |
|---|---|
| Baked one too many, it came home | $5.85 |
| Baked one too few, a customer left | $3.65 |
Coming home costs 1.6 times as much as running out. That is the reason the instinct to bake extra is wrong, and it is arithmetic rather than opinion. If you are not sure how a loaf reaches $5.85, costing a recipe properly walks through it.
What are the odds an extra loaf has to beat?
Baking one more loaf is a small bet. You stake $5.85 and win $9.50 if it sells. The bet breaks even when the chance of selling is the cost divided by the price: $5.85 ÷ $9.50 = 61.6%, which is 62% in round terms.
So the rule is: bake the loaf only if you think it is at least about 62% likely to sell. Turn that around and it says something that surprises people. If the last loaf you bake is worth baking, then on a typical market you sell out more often than not, roughly six markets in ten. A baker who is never sold out is a baker who baked loaves with worse than 62% odds.
How do I turn that into a number for Saturday?
Use your own history. Here are eight markets for one baker, illustrative figures, in loaves sold, highest first: 52, 50, 49, 47, 46, 44, 41, 38. The question for each candidate quantity is how many of the eight markets reached it. You want the highest quantity that was reached at least 62% of the time, which with eight markets means five of them.
| Loaves baked | Markets reaching it | Average left over | Average profit |
|---|---|---|---|
| 41 | 7 of 8 | 0.4 | $146.09 |
| 46 | 5 of 8 | 1.9 | $150.09 |
| 47 | 4 of 8 | 2.4 | $148.99 |
| 52 | 1 of 8 | 6.1 | $131.61 |
Forty-six wins. The fifth-best market is the line, and the profit curve is flat either side of it and then falls away. Baking 52 so that you never run out is the safe-feeling choice and costs $18.48 a market, about 12% of the profit, to sell out on a single day in eight. Over a 30-market season that is $554.40 spent on reassurance.
Notice what 46 loaves cannot do by itself. It clears $150.09 against a market day that costs $154 once your hours are in, which is the point of the break-even post. Getting the quantity right stops the leak, but it does not make a bad stall good.
What changes if I can sell leftovers?
Everything moves if the loaves that come home are worth something. Say day-old loaves sell at half price, $4.75. Now an unsold loaf only loses $1.10, and an extra one is worth baking at just 23% odds ($1.10 ÷ $4.75). On the same eight markets, baking 52 with that outlet earns $160.71 against $158.99 for 46, a difference of $1.72. At that point the quantity barely matters.
That is the real lesson. Your bake quantity is less important than what happens to the loaves that do not sell. A shop that takes day-olds, a pre-order list, or a freezer box is worth more than a better forecast.
Does the rule change for cinnamon buns?
Yes, and in the unforgiving direction. A bun costs $1.20 and sells at $1.65, so the line is $1.20 ÷ $1.65 = 72.7%. Thin-margin items need to be nearly certain. A tray of buns you hope will sell is a tray you probably should not bake, and cheap does not mean safe. The price you set decides how much slack you have.
One caution about your own numbers
Sales are not demand. If you sold out at 11 o'clock, the figure in your notebook is how many loaves you had, not how many people wanted one. Treat sell-out days as a floor, write down the time you ran out, and nudge the next bake up when you ran out early. If you only sell what you bake, your history will always tell you to bake what you baked.
The short version
Take the cost of the loaf, divide by its price, and bake the quantity you reached at least that often. Run out sometimes, on purpose. The loaf that comes home is the expensive mistake.
Read next
- Did the market day pay for itself?
- What should I charge for a sourdough loaf?
- How to cost a recipe properly, once
Questions
How many loaves should I bake for my first market?
Fewer than feels comfortable. You have no sales history yet, so bake a number you could sell even on a slow day and treat the first few markets as measurement. Write down how many you sold and what time you sold out, because that is the data the 62% rule needs.
Is it bad to sell out early?
No. Selling out costs you the sales you could have made after that point, $3.65 profit each on the sourdough loaf, but baking a loaf that does not sell costs you the whole $5.85. When a loaf is more likely to sell than not, selling out is the cheaper mistake.
What if I can sell leftovers the next day?
Then bake more. If day-old loaves sell at half price, $4.75, an extra loaf only needs a 23% chance of selling at full price to be worth baking. A reliable second outlet, a shop, a pre-order list or a freezer box people will buy from, moves the line a long way.
Does the rule work for cinnamon buns?
It is stricter. A bun costs $1.20 and sells for $1.65, so each extra bun needs a 73% chance of selling. Thin-margin items give you less room to be wrong, so bake them closer to what you are sure of.
How do I know how many I would have sold if I sell out?
You do not, exactly. A sell-out hides demand, so your history understates it. Note the time you ran out. Selling out at 11 means a lot was left on the table; selling out at 1:45 of a 2 o'clock close means you were about right.
Know what each extra loaf costs
Baketly works out what each bake costs to make, your hours included, so you know the odds an extra loaf has to beat before it is worth baking.
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