If I asked you right now:

How much money does your business need to make TODAY just to break even?

Could you tell me? TRUTHFULLY?

What about:

What’s your average order value?

What percentage of your revenue is going toward labor?

How many inquiries are actually turning into paying customers?

Which product has your highest profit margin?

How many hours of production time have you already committed to this week?

Because friend… if the answer to most of those questions is “I have no idea”…

THAT is a problem.

Not because you’re bad at business. But because you’re trying to run a business without the information you need to actually manage it.

And there’s a HUGE difference between being good at baking and being good at running a BAKING BUSINESS.

One makes you a talented technician. The other makes you the CEO.

And if you want a profitable, sustainable business that doesn’t require you to work yourself into the ground, you have to start paying attention to the NUMBERS.

Not feelings. Not guesses. Not vibes.

Actual FACTUAL numbers.

Here are the ones I believe every baker should be tracking that most aren’t!

1. Your three basic business health numbers

Before we get into the BIG terminology, start here.

If I were auditing your business TODAY and only had 15 minutes, there are THREE numbers I’d want to see first:

Total revenue

How much money did the business actually bring in during a specific period?

This could be:

• Yesterday
• This week
• This month
• This quarter
• This year

Revenue doesn’t tell me whether you’re profitable. But it gives me our starting point.

Total customers or transactions

How many people actually purchased from you during that same period?

Because $10,000 in sales from 500 customers tells me something VERY different than $10,000 in sales from 50 customers.

Which brings us to…

Average Order Value

Your average order value is:

Total Revenue ÷ Number of Transactions

If you made $10,000 from 200 transactions:

Your average order value is $50.

Why does this matter? Because sometimes you don’t have a “get more customers” problem.

You have a get the customers you already have to spend more problem.

What can you do to UPSELL or INCREASE the average transaction of every order?

Could you add cupcakes to a cake order?

Can you offer delivery?

Can you create bundles?

Can you offer upgraded packaging?

Can you increase quantity?

If you increase your average transaction without adding a single new customer, your revenue goes UP. THAT’S why we wanna track this number.

2. Your gross profit margin

Revenue is cute. But how much of it are you actually keeping after the cost of producing your products?

For specialty and custom baked goods, I generally want bakers aiming for roughly a 50%–60% gross margin. And PLEASE understand the difference between margin and markup. Because they are not the same thing.

If something costs you $17 to produce and you add a 50% markup, you’d sell it for $25.50.

Sounds great, right? Except your gross margin would only be about 33%.

To earn a 50% gross margin on a product that costs $17 to produce, you’d need to sell it for $34.

That difference matters. A LOT. Because confusing markup with margin can leave you thinking you’re making way more money than you actually are. See how that could be a problem?

3. What your products ACTUALLY cost

And when I say cost, I don’t mean:

“Well, I already had the flour.”

You still paid for it.

Your product cost needs to include ALL the variable required to make and sell that product.

That means things like:

Ingredients, packaging, cake boards, boxes, labels, ribbons, cleaning supplies, fondant, sprinkles, ALL OF THE THINGS! Even the ones that “don’t cost that much.”

That Oreo on top of the cupcake might only cost $0.15.

But if you sell 5,000 cupcakes? That’s $750.

Pennies become dollars REAL QUICK when you scale them.

You also need to know how many items one recipe actually makes.

Here’s an example:

If one batch of cupcake batter costs you $24 to make and you get 24 cupcakes from it, the ingredients cost you about $1 per cupcake.

But if that same batch only gives you 18 cupcakes, now each cupcake costs you about **$**1.33 in ingredients.

That may not sound like a huge difference…But if you’re selling hundreds of cupcakes, those extra pennies add up FAST. This is why you can’t just know what the whole recipe costs.

You need to know how many sellable items that recipe gives you, because that’s what tells you what EACH item actually costs to make.

This is why recipes should be treated like financial assets in your business - not random notes in your phone.

4. Your labor cost

This is the one I see bakers ignore ALL. THE. TIME.

You calculate the butter, sugar, flour, all the packaging and somehow the HUMAN BEING spending six hours making the product costs $0.

Make it make sense.

Your labor belongs in your product cost. PERIOD.

That includes the labor you pay employees AND the labor you perform yourself.

You need to track:

• Prep time
• Mixing
• Baking
• Decorating
• Packaging
• Cleanup
• Order correspondence
• Shopping
• Delivery
• Other active production-related work

Passive time- like a cake cooling while you’re doing something else - isn’t treated the same way as active labor.

But the hours you’re actually WORKING?

Those matter.

For bakeries with employees, labor is often one of your largest expenses.

A useful benchmark is to aim for total labor around 18%–30% of revenue, with roughly 20%–25% being a healthy target for many businesses.

And if your labor is running 40%?

Don’t panic, but investigate first.

Are you overstaffed?

Underpriced?

Scheduling poorly?

Producing inefficiently?

Selling products that take WAY too much labor relative to what they bring in?

The number isn’t there to make you feel bad. It’s there to tell you where to LOOK.

5. Your production capacity

Here’s another number almost nobody tracks until they’re completely overwhelmed:

How many labor hours do you actually HAVE available?

Let’s say you realistically have 30 production hours available this week.

But you’ve accepted 47 hours worth of orders.

You don’t have a motivation problem. You have a MATH problem.

Those extra 17 hours have to come from somewhere.

Your evenings, sleep, family time, employees working overtime, or your personal life.

This is why being “booked” isn’t automatically a good thing.

You need to know:

Available labor hours vs. committed production hours.

Because if your calendar says YES to more work than your capacity can physically produce, eventually your body is gonna pay the bill.

6. Your inquiry close rate

How many people ask for pricing versus how many actually BOOK?

If 100 people inquire and 25 purchase, your close rate is 25%.

Now we have something useful to investigate.

Maybe your prices are wrong.

Maybe they aren’t.

Maybe your response time sucks.

Maybe your inquiry process is confusing.

Maybe people are ghosting because your website doesn’t clearly explain how to order.

Maybe you’re attracting people who were never your ideal customer in the first place.

Without tracking inquiries AND closed sales, you’re guessing.

And I don’t want you immediately lowering your prices every time someone doesn’t buy.

We need DATA before we start fixing imaginary problems.

7. Customer frequency

How often are people coming back?

Because getting a customer once is GREAT. Getting them to buy from you again and again?

That’s where things get interesting.

Look at:

How many unique customers did you serve?

And:

How many of those customers purchased more than once?

A customer who buys a birthday cake from you every year has value.

A customer who buys cupcakes every Friday has even MORE value.

Your business shouldn’t constantly require a brand-new stranger to discover you before you can make another dollar.

Track repeat purchasing.

8. Your year-over-year growth

One of my FAVORITE business mistakes?

“We did $30,000 this month! That’s amazing!”

Okay…Compared to WHAT?

If you did $25,000 during the same month last year?

Great. You grew.

If you did $40,000 during the same month last year?

Different conversation.

Track comparable periods:

September this year vs. September last year.

Mother’s Day this year vs. Mother’s Day last year.

This week vs. the same week last year.

That’s how you know whether your business is ACTUALLY growing instead of reacting emotionally to one big sales number.

9. Your daily break-even number

This number should probably be written on a Post-it somewhere you can SEE IT.

Add up your operating expenses.

Things like: rent, utilities, insurance, software, licenses, permits, payroll, and any other recurring expenses required to keep the business operating.

For annual expenses, divide them by 12 so you can account for them monthly.

Then take your monthly operating costs and divide them by the number of days you’re open.

THAT is your daily floor.

If your bakery needs $18,000 every month just to operate and you’re open 24 days:

You need approximately $750 PER DAY before you’ve created additional profit.

That’s powerful information.

Because instead of your team thinking:

“Hopefully today is busy…”

You know:

Our first target is $750.

Now we’re running a BUSINESS.

10. Rent as a percentage of revenue

If you have a storefront, your occupancy costs matter BIG TIME.

As a general benchmark, I want rent or occupancy expenses somewhere around 10%–15% of gross revenue or lower.

So if your rent is $6,000 a month but the business only generates $20,000?

We need to have a conversation.

Because that facility is eating 30% of your revenue BEFORE ingredients, labor, insurance, utilities, marketing, software, taxes, or anything else gets paid.

Sometimes the problem isn’t your products. It’s where you’re operating out of.

11. Your hourly sales goal

This one is especially important for storefront owners!

Take your monthly sales goal and divide it by the number of hours your store is actually open.

Let’s say your target is $50,000 this month and you’ll be open 200 retail hours.

Your average target becomes:

$250 per retail hour.

Now your team has something tangible to work toward.

If you’re currently doing $175/hour, how do we close the gap?

Increase average ticket?

Improve upselling?

Adjust merchandising?

Create a better add-on?

Drive more traffic during specific hours?

Again…NUMBERS give you somewhere to look.

12. Inventory levels and waste

Two more numbers I want you tracking:

Par levels

At what inventory level do you reorder? You shouldn’t realize you’re almost out of butter WHEN YOU’RE ALREADY OUT OF BUTTER.

Create minimum inventory levels for your key supplies so when your stock reaches that number, you know you have to reorder.

Waste and leftovers

What gets thrown away every night?

Write it down.

If you consistently bake 48 cookies and throw away 14? Your customers are telling you something. Adjust how much you make because waste is MORE than just the number of physical products you throw away at the end of the night.

Waste can be found in your ingredients, labor, utilities, packaging, and MONEY.

You don't need MORE numbers. You need the RIGHT ones.

I’m not telling you to create 87 spreadsheets and spend your entire Monday staring at dashboards. That will just make your life miserable.

The point is to stop making important business decisions using sentences like:

“I FEEL like…”

“I THINK we’re doing okay…”

“We seemed really busy…”

“I’m pretty sure we made money…”

Your job as the BUSINESS OWNER is to KNOW.

Start with:

Your revenue, your customer count, average order value, product costs, labor, gross margin, break-even point, capacity, close rate, repeat customers, growth percentage, inventory, and wast.

Because when you can SEE what’s happening inside the business, you can actually DO something about it.

And THIS is exactly why I built Costli.

Bakers shouldn’t need six spreadsheets, three calculators, four different apps, and handwritten recipe cards just to figure out whether they’re making money.

Costli brings your ingredient costs, recipes, labor, overhead, pricing, and profitability into one place so you can stop running your business on guesses and start making decisions using REAL numbers.

Because being talented got you into business.

But learning to think like a CEO?

That’s what will keep you there!

Learn more about Costli →