Estimating Expenses

Business By clovely Updated 14 Apr 2009 , 6:26pm by clovely

clovely Posted 14 Apr 2009 , 3:31pm
post #1 of 5

I'm not in business - I can't be in Florida (from my home). But dh is convinced I'm not being reimbursed enough and I'm lowballing people when I just guess what I'm spending to make cakes for them. So I am trying really hard to track accurately (to show him) for a cake I'm working on for this weekend. This is what I think is going into this cake in materials:

CAKES - 3.5 mixes* (altered, doctored, and extended), 1 c oil, 14 eggs, 3.5 c sour cream, 2.5 pudding mixes*, 6 c flour and sugar, 3.5 T extracts. (*half of one recipe was used for a small cake last weekend.)

ICING/DECORATING - 1/2 recipe of Sugarshack's buttercream, 1/2 recipe gumpaste, 1 recipe MFF

There will be about six colors, boards, dowels, foil, etc.

This is going to be a barbie cake (she's bringing me the Barbie). But there need to be about 70 servings so I'm going to make a "table" beside Barbie (3 layer 5"x10" rectangles). I'm making a mini sheet cake, gifts, and a vase with flowers and balloons to go on Barbie's table.

That's the plan anyway. Adding all that up, I came to about $36 spent. That's 50 cents/serving strictly in ingredients and supplies. If that's correct, I've not been lowballing people or "eating" my costs nearly as badly as dh thinks I have.

Two questions - does that sound about right? And, if you were in a legal business making this cake, what do you think you would charge? Thanks for your help!

4 replies
HeidiCrumbs Posted 14 Apr 2009 , 6:10pm
post #2 of 5

I'm a cookier first of all, but here's what I think. Even though all of your expences are just .50 cents a serving, did you factor in gas of going to the store, running your oven/appliances and then most of all, your time?

I figured out each of my cookies cost .12 cents to make including frosting, but that's not ANY of my time. If I figure I want to get at LEAST $15 an hour to make any profit and I can only decorate 1-2 dozen per hour, that ups the price a lot.

It sounds like this is an elaborate cake that is going to take a lot of time so even though your cost of ingredients is low, it's all about your time. IMHO of course.

indydebi Posted 14 Apr 2009 , 6:16pm
post #3 of 5

LEt me say again ..... your ingredients is/are not your major expense. Your biggest expense is the labor.

How much time did you spend on this cake? Making shopping list, driving to the buy the supplies (cost of gas?), coming home, unloading, putting away, then pulling everything out, mixing everything up, baking, leveling, cleaning, crumb coating, cleaning, icing, cleaning, decorating, cleaning. And at the end ... cleaning.

My guess is that you have AT LEAST 7 hours in this cake. At only $10/hour, that's $70 in labor plus the $36 in raw materials = $106 invested in this cake. This is not including paper towels, electricity to run the oven, the mixer, the water heater; soaps, etc. And were you too busy to make dinner so hubby had to run to KFC?

At 70 servings x my $3.50/serving BC rate, I'd sell this cake for a minimum of $245. You will look at "$36 vs $245" and think that's way too much money. I'm looking at ALL expenses.

And even tho' you don't pay "rent", the disruption to your normal living has a cost to it. I remember way back when and hubby would say, "....we have an 8 room house but we only get to use 6 of them to live in" because of the storage and use of biz stuff. So understand that from a "business" perspective, out of that $139 ($245-$106) I would have to pay comm'l car insurance, shop rent, utilities, liab insurance, etc.

If you are preparing to be a business, you might find it interesting to set a rent and utility "bill" and maybe even a payroll for yourself each month. "If I owned a shop and had to pay rent 'n stuff, how would I price this cake?"

If you're selling a cake like that right now for, let's say, $100 and then open a shop, you'll go under in no time with pricing like that. Because you're already $6 in the hole.

CakeDiosa Posted 14 Apr 2009 , 6:25pm
post #4 of 5

I just LOVE that Indydeb and her sound pricing advice!!!! All well put and things I didn't think of until she squared me away on such matters. It is all of those other expenses and considerations that people don't think about when it comes to price consideration. I know I sure didn't prior to getting sucked into the cake decorating vortex.

Price it right. If it's too high they will tell you and you can offer to scale down the design to fit in their budget. That's what I do anyway....

Thanks again to Indydeb for planting the seed of confidence when putting monetary value on my time and labor. Take her advice...even if it hurts a bit in the beginning to hear those prices come out of your mouth. Tell them to price it elsewhere if they think you are too high and they'll come running back to you.

clovely Posted 14 Apr 2009 , 6:26pm
post #5 of 5

indydebi, you give me lots to think about! Legally, I can't "charge" so how detailed could I get in expenses - gas, electricity, wear and tear on my appliances, paper towels, etc? I don't know.

The reality is that I'll never be able to do this as a business. Even if it were financially feasible, the notion of renting commercial kitchen space is problematic - I can't do my cakes in the middle of the night! I love to fantasize about actually breaking even - getting something for my time and effort - IMAGINE THAT! But I guess my main concern should be to not just be subsidizing other people's fun and not break any laws.

Maybe I should just resort to giving people a grocery list.

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