$31.65 for a loaf of bread baked at home

An article in the ABC demonstrates that whilst you may assume that baking bread at home is cheap, if you put a price on labour, a single loaf of bread baked at home will cost over $30.

 

The ingredients for one loaf costs only $1.15. However, when you include labour of 2.5 hours, you’re looking at a very expensive loaf.

So why is bread so cheap at the supermarket? 

 

The answer is economies of scale. If you were to bake 12 loaves at a time, your home cost would drop to $12.15 per loaf because your labour, ingredients and electricity costs are spread over more loaves.

 

The supermarket bakes thousands of loaves per day. They buy their ingredients in bulk and spread the cost of production over many loafs thereby reducing the cost per loaf dramatically.