Do you have a job and work for free then?
To be fair to him, if he makes the bats himself, then the cost of his labour is the money he gains from making the bat - you could look at it as profit. However, if you are employed, you are paid a wage and that is your profit.
The component missing from all of these is:
Please tell me more of this magical workshop with free electricity/water/gas/other business overheads where I can start my own cricket company!
This "£12.50 Labour Charge" must include overheads, and I'd hazard a guess that once you take out these + depreciation on the tools you need, you'll find that the £12.50 "Profit" amounts to a lot less. Quite what those overheads are per bat is very dependent on the volume you produce...
And even then, I still want to know where I can get Clefts at £5! I'll start my own business at that price!