Cost Vs Value

Cost Vs Value

I am currently doing a job I dislike.  A lot.  As someone who is self-employed, I have to make sure that my costs are covered in the prices that I charge for my goods. I love Christmas baking, but loathe the Christmas costing exercise.  It’s difficult.  Not the arithmetic – I can add up as well as the next person – but the pricing.  Take the classic Christmas cake:  it takes kilos of fruit, sugar, butter, spices, citrus fruit, whisky and flour to make it.  It takes an hour or two to weigh out the ingredients and mix it, and the best part of 6 hours to cook a larger cake.  Once that’s done, there’s the feeding with alcohol at regular intervals and the decorating: a coating of jam, almond paste and icing.  Each layer has to dry before the next is added and then the cake must be finally pimped and pampered for display, on a board and in a box.

I’ve done the costings for a large cake today and it’s frightening. I can’t even bring myself to put it on paper. For a small cake, without marzipan or icing, the basic cost is £15. Owing to the fact that organic almonds have gone up substantially this year, the cost of marzipaning and then icing the cake really bumps up the total cost.  The basic price alone, without adding any margin for profit, is eye-watering.  I could buy the almond paste, aka marzipan, and the icing for around £4 a packet, adding a total of £8 per cake, but this is only marginally cheaper than making it myself at a cost of £9 per cake.  The big difference is I am using organic almonds and organic sugar, so for an extra £1 the customer gets a fabulous handmade organic product.  In conscience, I am unable to buy commercial marzipan and fondant icing because of the palm oil content*.  Palm oil is destroying rain forests and habitats and this shows no sign of easing.  I boycott palm oil products at home and it seems only natural, and right, to boycott them in my business products too.

In real terms, this means that I will make very little profit on my Christmas cakes this year.  It’s a perennial problem for the small business, and especially bakers.  Last year a lady delightedly informed me that she could buy a cake from Lidl for less than half the price I was charging.  I wanted to give her all the reasons why the cake was not anywhere close to the cake that I was selling, for lots of reasons, not least it was made in a factory, and not lovingly handmade and decorated in an actual kitchen.  I refrained from elaborating, but it does highlight the issue for people who make ‘real’ food.  People are used to buying cheap, pseudo food, and for the most part, can’t see the point of spending two or three times the amount for something made well, with good quality ingredients.

Using organic ingredients in my bakes may put me in a ‘niche’ market, where only people who share my ethics and can afford to put their money where their ideals are, will purchase my produce, but for me there is no choice.  I produce high quality bakes made with the best ingredients – food grown without the input of pesticides, herbicides and fertilizers.  I would find it impossible to sell food that I would not eat myself.

I will not be able to charge for my time, my labour, my fuel costs; I will not be able to earn anywhere near the minimum wage.  To do so I would be adding a price tag way above anything which anyone, no matter how well off, would be willing to pay. So, I will charge a fair price and cover my costs, with maybe a bit on top.  My cakes will still be way more expensive than shop bought Christmas cakes, but there really is no comparison with factory made cakes bulked out with cheap ingredients, including many ingredients you would not find in your cupboards at home. If you buy one of my Christmas cakes you will be getting a bargain. It’s not a good business model.  My husband will lecture me.  Thank goodness I don’t have a business advisor to go on at me as well.

I hope one day we will move towards more realistic food pricing, which takes into account the impact of production methods, ecological impact, carbon footprint; that we will move away from ‘cheap’ food and be more concerned about buying good, wholesome, well produced food.  That way that the true cost of ‘factory food’ will be revealed and business who are making real food will look like a much better financial proposition.

In the meantime, please support your local producers for your Christmas purchases, whether they are craft makers or food producers.  They are not ‘expensive’, they are not trying to ‘rip you off’, they are selling you good locally produced items, usually at a fair price, and often at a price which is failing to make them a decent living.





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