🧟♂️ Cost Creepers - Scary ways you’re losing money.
In this week's Baking it Down Podcast - Episode 278 - Cost Creepers, the Cookie College is comin' up with Blueprints (more on that soon), and the first 14-day Blueprint focuses on accurately pricing your bakes profitably - the key word being: profit.
One of the most insidious threats to your profit margin is sneaky overhead costs (also called indirect costs). These are the line items in your budget that are needed to make the sale but aren't directly related to that specific order - the Canva subscription to make the graphic that you posted to the Facebook ad that brought in the website lead that you added to your CRM software.
These costs are necessary for running a cottage bakery, but they can also grow out of control. That subscription to an STL library you never use can be just as dangerous as that website subscription that just increased in price (lookin' at you, Square).
And we're not telling you to hit the cancel button 100 times. We're challenging you to cut back the creep. What do you really need? What do you use so often that it may be worth the yearly upgrade for the discount? What can you sell to buy back some cash flow? What can you invest in to increase those margins?
💸 Software and Subscriptions
These are the sneakiest overhead costs because of auto-renewals, rate increases, and forgetfulness. That cutter box subscription? Maybe it's not helping you plan a set that resonates with your audience. That graphic subscription? Is there a plan downgrade that still fits the bill? That Canva subscription? Can you join a grandfathered team and get that price down? Always check back on these - I like auditing them at least twice a year and seeing if that subscription still serves my purposes.
💸 Business Expenses
These expenses are required to keep the business above board - your LLC renewal, that CPA's yearly invoice, your PO box, and the farmer's market fee. Don't forget - some of these can still be shopped around. Your insurance could be increasing year over year, and another company would love your money... I mean, business.
💸 Shared Utilities
As home-based businesses, we share the air conditioner literally with our families - some of that needs to be covered by the business and the rest by the home. Same with electricity, water, internet, trash, phone plans, gas - you get the point. These costs can fluctuate, but taking an honest look at whether your pricing covers these types of costs is important for creating a profitable business.
Once you take an honest look at your costs - overhead, labor, ingredients- and add in profit, you can see what needs to give and what needs to double down. And that's what we're doing with the Profit Blueprint - 14-day spreadsheet walkthrough that leaves you with an honest look at what your dozen actually makes you.
👂 Snag this podcast on any major podcast player (Spotify, Apple Music, Audible, Amazon Music, or watch it on YouTube) by searching for Baking it Down Podcast - Episode 278 - Cost Creepers.