Understanding and Managing Overhead Costs in Home Baking As a home-based baker, it’s easy to focus solely on the ingredients that go into your delicious creations. However, to run a successful baking business, it's crucial to understand and account for your overhead costs. Overhead costs are indirect expenses that don't directly contribute to the product but are necessary for the business to function. These can include utilities, packaging, and miscellaneous costs such as cleaning supplies, insurance, or licensing fees. Properly accounting for these expenses ensures that you price your products accurately to maintain profitability. What are Overhead Costs? Overhead costs are expenses that cannot be directly linked to the production of a specific item. In the context of a home baking business, these are the costs incurred to support the overall baking process but aren’t part of the direct material or labor costs. Let’s break down the key components of overhead costs for a home-b...