TheChocolateLife Releases Updated Version of its Unique Costing Workbook
The updated version of the workbook contains ten worksheet models that can be used by bean-to-bar chocolate makers, confectioners, and others to calculate the costs of a number of important aspects of their production, from the cost of beans to the cost of wrapping, to calculating distribution and sales margins. “These models are key to understanding how these different aspects of key processes contribute to the retail price of finished products,” says Clay, ”which is necessary for the creation of profitable, sustainable, businesses. Developing a solid understanding of these costs is more important than ever during these trying times where so many are confronting the impact of the coronavirus on their businesses.”
New to this update is a worksheet dedicated to calculating how much of the final retail cost of a chocolate bar is represented by the farm gate price paid for beans. Says Clay, “Some of the things that surprised me about this model is that the farm gate price paid for beans is not as significant a factor in the retail cost of a chocolate bar as many believe.” Far more important, Clay continues, ”Are the percentage yield of usable nib (roasted, cracked, and winnowed beans) from a kilo of beans, the cost and amount of all of the ingredients in a recipe, and especially the cost of labor that goes into a finished product. Most small makers have no idea what it actually costs them to produce the products they sell and which aspects of their business processes contribute most to their cost structures.”
Another factor that led to the development of this specific model was that many chocolate makers imply that the farmers they buy their beans from receive a higher percentage of the retail price of finished products for their beans compared to industrial chocolate makers. Which turns out not necessarily to be the case. “This surprised me at first and I thought the model might be wrong. But as I worked through the logic of it I realized that the comparatively high retail prices, coupled with the lack of economies of scale in many if not most small chocolate manufacturing operations, means that a farmer’s percentage of the retail price is often lower than it is with industrial chocolate. No one has to take my word for it, they can model it for themselves, and know what it is for their products and production situation.”
Clay’s motivation to create the first version of the workbook over five years ago was as a business process management tool for his consulting clients. The original workbook served as a foundation that Clay modified to fit the particular needs of each client. This version of the workbook is generic and is designed in a way that enables its users to modify the variables and extend the models to fit their specific needs. “This version of the workbook is released on an as-is basis.” says Clay, “I’ve done a lot of work over the years to make sure the models actually do what they say they do, but it’s up to users to understand them and use them properly.” TheChocolateLife offers consulting services to those who want help in applying them to their own business.
A prior update, made available at the Chocolate Makers’ Forum during Chocoa (www.chocoa.nl) in Amsterdam this past February, included two new worksheets. The first is for calculating tempering and molding capacity for bean-to-bar makers and the second is for calculating how big (belt width and speed) an enrober is needed to meet specific production demands.
This update also includes a modified Machine Capabilities worksheet that enables makers to more easily model the costs of different approaches to manufacturing chocolate, taking into account capacity, price, processing times, CapEx to reach a certain capacity, and other factors.
The Microsoft XLSX updated workbook has been zipped and is available now for download by clicking here.
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