I currently work out of my home, but have an offer from a bakery in my town to start selling my cakes. At first I was really excited about the idea, but now that I am thinking about it, I am not so sure. In the contract, she requires that I bake all my cakes (even ones that are not being sold by the bakery) in her kitchen. For using her oven, she is going to charge me $10/hr. Then, any cakes that she sells at her bakery and I make, she is going to take a 25% commision! So I figured this out on an 8" layer cake:
Retail Price $32.00
Bakery Commission -$8.00
Baking fees -$5.00
Ingredient Costs -$10.00
My Profit $9.00 (?!?!)
I don't want to crazy on my (retail) prices or no one will buy the cakes, but it isn't worth my time to only make $9.
Does anyone else have this kind of set-up with another business? How does it work for you? Does this sound like a fair deal or not?
what kind of a bakery doesn;t already sell cakes? this is a great deal for her, she doesn;t have to pay a baker, an icing maker or a decorator. Its not a good deal for you. just how many cakes do you think you can bake and decorate in one day, you will have more then a full time job if you take this on and you wont be making anything. i dont think she needs to double dip into your profits by charging a commission and an hourly fee, it should be one or the other. step away if the offer doesn;t change.
I think you should show her your figures and tell her why that won't work for you. That is absolutely unfair that she is making more from the cake than you!
Sounds like you're getting the raw end of the deal.
This deal sounds almost like a beauty salon. Where the beautician or barber pays for a booth in a salon.
I made cakes and pies for a diner a few years back and she paid me 20$ per cake and 15$ per pie. I did this twice a week while I worked a full time job in a factory. It was a good side job until she had to close her business. The most I spent on cakes were 5 or 6$, if I was making carrot or italian cream cakes, because I had most of the ingrediants around the house.
I used my own standardized house oven and there were no fees and/or commisions.
To me 25% commision is rediculous, 5 or 10% would be justified considering she's taking 10$ off the top an hour for the use of her oven. Which is a bit too high, maybe 10$ a day would be just. I agree with "sweetcakes", she's saving tons of cash by contracting you than hiring a cake baker/decorator.
You are better off doing word -of -mouth and keeping the sum to building your own home based or store business.
It's what I'm trying to do.
Good luck to you!
Sounds like you can open your OWN shop to make that kind of money. But at least it would be your own!
From what you've said so far about the whole ordeal.....All I can say is ...
RUN...RUN AS FAST AS YOU CAN......Remember that someone who is in business will look out for themselves first and others last.
Doesn't sound good to me,but you have to accept what works for you.
Good deal for her.
VERY bad deal for you.
What's your counter-offer?