What is Overhead Costs?

Think about your bakery on a slow Tuesday versus a busy Saturday. On Tuesday, you bake 4 cakes. On Saturday, you bake 18. Your rent doesn't change. Your insurance doesn't change. Your monthly software subscription doesn't change. But your ingredient costs do—you use 4x more butter, eggs, and flour on Saturday. That's the difference. Overhead is the cost of the lights staying on whether you're in the kitchen or not. Let's say your bakery has these monthly overhead costs: rent $1,200, utilities $180, insurance $150, equipment lease $200, software $29, vehicle payment $300, and part-time staff $600. That's $2,659 per month in overhead. If you sell 50 cakes a month, you need to add $53.18 in overhead cost to every single cake just to break even on rent, utilities, and staff. If you sell 100 cakes, that number drops to $26.59 per cake. This is why volume matters—overhead spreads across more products. Now imagine a chocolate layer cake with a $7.42 ingredient cost (flour, butter, eggs, cocoa, buttercream, fondant). You price it at $45. The $7.42 is food cost. But $7.42 ÷ $45 = 16.5% food cost. That leaves $37.58. From that $37.58, you must pay your $53.18 share of overhead (if you're selling 50 cakes). That leaves only $4.40 for your labor, packaging, delivery, and profit. If you're making 18 cakes a week like a solo home baker, you're selling roughly 72 cakes a month. Your $2,659 overhead drops to $36.93 per cake. Suddenly that $37.58 margin looks healthier. The trap most bakers fall into is ignoring overhead when pricing. You calculate ingredient cost, add 3x markup, and call it done. But if your overhead is high and your volume is low, you're pricing too cheap. BakeOnyx forces you to see this. You enter your monthly overhead. You tell the software how many cakes you bake per month. It calculates your overhead cost per unit. Now you price with reality, not guessing.