Pricing Questions .

Business By leannsloan Updated 8 Aug 2008 , 4:26am by leannsloan

leannsloan Posted 6 Aug 2008 , 10:09pm
post #1 of 13

Hi everyone. I finally found a kitchen to use I am in the last stages of opening my business. My question is on cake prices I want to make sure I am charging enough and not to much. It would be easier to change them know. I am in the mid-west what is the going rate for 1/4 sheet,
1/3 sheet, 1/2 sheet and full sheet cakes? 6in, 8in, 10in, 12in, and 14in, round? What is the going rate per servings for weddings? How much more do you charge for fondant covered cakes? Also when doing bc cakes with fondant or gumpaste flower how do you charge for the flowers? Sorry for all the questions. I want to do thing right. Can any one help? Thanks Le'Ann

12 replies
shorty56 Posted 6 Aug 2008 , 10:58pm
post #2 of 13

this might come off as a little harsh, but its not intended to! Its intended to be helpful.

but i think you need to do a lot more prep and research before opening your business if you're still figuring out pricing. you have to do a business plan. figure out, whats your target market, cost out your recipes, factor in your rent, you utilities, your time. thats how you arrive at a price, you can't assume that because the person down the street charges $XX.XX you should too and you'll make a profit. the person down the street doesn't have the same costs or clientele that you have. perfect example: i recently bought a car. there are (seriously) no less than 5 car dealerships on the same street within a very small area. I bought my car from a Honda dealership that is right across the street from a Lexus dealership!! do you think they compared pricing when opening? no, they are attracting way different clientele. i looked at your website, and you plan on selling a 1/4 sheet (10x14, serves 35) for $22.00. sounds like you're trying to compete with a grocery store. thats okay if its your intent, but you should evaluate if you want to be in competition with the grocery store. now, figure out how many $22.00 1/4 sheet cakes you'll have to sell to meet all your expenses. is it realistic? you talk about "creating custom cake art" with "high quality ingredients". thats great, but at less than $0.65 per serving it doesn't sound like high end cake art to me. thats conflicting, is your business model to sell lots and lots of $22.00 cakes (which means high volume, very little custom work) or a few expensive custom cakes.

i just think you need to narrow down your business model and target market before continuing. then, take a look at pricing and compare apples to apples. do some research on the web, and figure out what your competition (either high end custom places, or high volume low cost places) is charging. that will give you a ball park area to stay within. then figure out what YOUR costs are, how much YOU want to make.

hope this makes sense and is helpful

raquel1 Posted 6 Aug 2008 , 11:23pm
post #3 of 13

Shorty56 I obviously can't speak for the OP but your post was very helpful for me. I've been just toying with the whole idea of a serious business and haven't gotten around to doing my research (I work full time at home with my DD AND full time with my husband's business..). I'm figuring out how I could have time for a business of my own doing something I absolutely love. Anyways, thanks for your input. icon_smile.gif

leannsloan Posted 6 Aug 2008 , 11:40pm
post #4 of 13

Shorty56, well I not sure what to say. the prices on my site is what I was doing for friends and family. I do have a business plan and have been doing research of over a year. I never had overhead that is why I was asking in general what do business charge so I am not to low or two high most of my business is cookies and I have that down pat but cakes Is new for me. Everyone tells me that I have a wonderful product but I need to charge more. This is why I am wanted feedback. I do thank you for your advise and checking out my site. Anyone else input will be helpful thanks

shorty56 Posted 7 Aug 2008 , 12:14am
post #5 of 13
Originally Posted by leannsloan

I do have a business plan and have been doing research of over a year. I never had overhead

okay, so now that you have overhead factor that into your pricing.

[/quote]what do business charge so I am not to low or two high [/quote]

so google cake places in your city. that will give you an idea of what your market will bear, but in the end you can't base pricing on what the other guy charges it has to be based on your costs (now that you have overhead) and what you want to make an hour.

Trixyinaz Posted 7 Aug 2008 , 12:25am
post #6 of 13

Le'ann - congrats and good luck to you. I hope some day (once we figure out where we are moving to this year) I can open shop legally and make this my full time career.

I have to agree with Shorty56. You need to determine your target market. For me, I want the higher end clientele. I don't want grocery store buyers. If you are in the last stages of opening your business, you shouldn't be asking these type questions. It's taken me nearly 6 months of research to get my pricing where it is today and I still don't have everything priced out.

First off, how much do you want to pay yourself hourly? I know for me, somewhere between 8 and 10 an hour is okay for now since I work full-time and do this on the side.

Your pricing needs to cover your rent, utilities, gas, your hourly wage, ingredients, supplies, etc. Have you worked out those numbers yet? If not, I would start doing that first.

Do you want to make a profit after you pay yourself? How much are you going to mark-up your cake costs before tacking on your hourly rate to the final cost?

The questions you asked really don't have a simple answer. The two bakeries in my town that I know of charge less than me, but the few bakeries that I know of in the town where I work, charge way more than me - like double my cost and they are only 15-25 miles away from my town. So going off what someone charges in your area, really isn't how you should base your pricing.

I know, I probably wasnt much help.

leannsloan Posted 7 Aug 2008 , 1:21am
post #7 of 13

Trixyinaz thank you You did help. It is just some people tell me my prices are way to low but other say My prices are way to high and I will never sell anything at that price. for the most part 1/4 sheet cake I charge $26.00 my site says $22.00 and up there is only two real bakeries and they don't really do much with fondant or gumpaste I don't want to be like walmart or donut bank. I figured I would not be able to pay myself for awhile I will be paying rent monthly to use a local caters kitchen I know I am not making any sense I feel like pulling my hair out. thanks for the info

poshcakedesigns Posted 7 Aug 2008 , 12:20pm
post #8 of 13
Originally Posted by leannsloan

Trixyinaz thank you You did help. It is just some people tell me my prices are way to low but other say My prices are way to high and I will never sell anything at that price.

This is something you will have to get use to hearing. Those that tell you that you are to expensive are your typical WM shoppers. You don't want those shoppers anyways. They will always expect more for less.

The ones that say you don't charge enough are the ones that appreciate a custom made, one of a kind fresh cake. These are the customers you want to attract (these customers tend to associate with people of the same mindset) when your cakes are displayed at their parties their friends will ask who made the cake and the referrals will start coming in. No it want be overnight but it will happen.

You have to do your research, figure your cost and come to a price that you feel is fair to you and will pay the bills. If you are good at what you do the quality customers will come.

Good luck - it'll all start coming together. icon_smile.gif

foxymomma521 Posted 7 Aug 2008 , 12:33pm
post #9 of 13

What serving chart are you using to figure pricing?

leannsloan Posted 7 Aug 2008 , 9:16pm
post #10 of 13

Thanks Poshcakedesigns I am not good with numbers. I just get overwhelmed. You are so right I don't want WM I want clients who appreciates my time and talents. I have been going over all my paper work and costs my eyes are crossing. Gotta get back punch more numbers.

Foxymomma521 I am using wilton party size chart I want to make sure there is enough cake. thanks Le'Ann

Trixyinaz Posted 8 Aug 2008 , 12:29am
post #11 of 13
Originally Posted by leannsloan

Foxymomma521 I am using wilton party size chart I want to make sure there is enough cake. thanks Le'Ann

I took the advise of IndyDebi and used the wedding sizes (1x2x4). As she said (I think it was her), cake is meant to be a dessert, not a main course. If they want bigger slices, then they need to take that into account and get a bigger cake.

To make a 10" round double layer cake with filling and BC icing costs me about $30.00 (for my more expenisve basic cake - scratch - with a fresh raspberry filling). That cost includes the ingredients, supplies, electricity, water, gas, etc. It takes me about 4-5 hours to do, which includes mixing, baking, cool down, decorating, cleaning, etc. I want to make $10.00 an hour so that would be $45 on avg. So for me to cover my costs and pay myself an hourly wage and make a profit (we'll say 20% of my cost - not including wages), I need to sell this cake for no less than $81.00 (cost + markup + salary). I figured on $2.50 per's how it works pricing out your way vs. my way....

Pricing A = Wedding Size = 10" = 35 srvgs @ $2.50 = $87.50
Pricing B = Party Size - 10" = 28 srvgs @ $2.50 = $70.00

If I went with Pricing B, I'd only make $7.55 per hour as opposed to $11.44 per hour using Pricing A. Or, if I used the party size guide, I would need to charge more per serving to make what I need - it's just a matter of how you look at it ($2.50/srvg vs. $2.90/srvg).

Honestly, there is only a 1/2" difference between Wilton's party size (1.5 x 2 x 4) and wedding size (1 x2 x 4). For me personally, I would rather keep my per serving price lower as to be competitive with the other home bakers and bakeries in my area and educate my customers on how to cut the cake to get the maximum number of servings each cake is designed to serve.

I hope that made sense. So I would start with your most expensive basic cake cost to try to figure out what you need to sell your cakes for to make it worth your while.

Again, you need to factor in the following:

Supplies (boards, bags, icing color, etc)
Utilities (electricy, water, gas, phone, internet)
Overhead (rent, employee wages)
Your mark-up before your salary
Your salary

I'm sure I'm missing some things, but you get the gist of it. I hope that helps.

And by the way, if I sold a 9x13 for $26, I wouldn't even cover my costs to make the dang I'd be in the hole and working for nothing.

indydebi Posted 8 Aug 2008 , 12:48am
post #12 of 13

Trixy, I couldn't have explained this better! thumbs_up.gif

leannsloan, I use the wilton wedding chart to determine pricing, not necessarily to determine the number of servings (although they are ironically the same, but don't confuse it). I kinda explain this in the first link below.

It is not your job to make sure there is enough cake ... it is the client's job to be sure to purchase enough cake for their event. Yes, sometimes we have to educate them on what a serving is, and we have to guide them to show them what a cake generally serves, but if they are going to cut it bigger, then they need to plan on buying a bigger cake.

Here are some threads where the cake size and pricing are discussed:

This one has my famous KFC analogy! (be aware there's a typo in the post, which I correct later in the thread):

leannsloan Posted 8 Aug 2008 , 4:26am
post #13 of 13

I just want to say THANK YOU SOOOO!!!! much.
I never thought about it that way Trixyinaz. I have agonized over this long enough and made it out harder than it is. Indydebi after seeing your kfc I get it! My family is large and when we get food out that says it feeds 4 we know it will feed 1-2 so we order more. I also just saw a post about serving size where you had a link to show what a serving looks like that is plenty of cake. I also love the way you cut your cake. I am all smiles! Thank all of you for all your valuable info. I have learned that I am worth it. Le'Ann

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