Someone Clear It Up For Me?

Business By pipe-dreams Updated 22 Apr 2009 , 9:53pm by Solecito

pipe-dreams Posted 21 Apr 2009 , 10:01pm
post #1 of 10

Say someone wants a cake for 20 people. You charge $3.50 a serving. So the total is $70 (3.50 x 20). Now, say your time is worth $10/hour. And the cake takes 2 hours total. That's $20 for your time. So, does the total (not including taxes) for the customer equal $70 or $90. What I mean is, does the per serving price include YOUR time/ a portion of your overhead? Or do you add that on top of the per serving cost? Does that make sense to you?

9 replies
snarkybaker Posted 21 Apr 2009 , 10:08pm
post #2 of 10

Both are correct here. Our base price includes 20 minutes of "decorating time" per $50 of cost, so if you want cake for 50, but it is very complex, first we charge for the servings 50 X $4.50 plus $25 per hour for extra decorating time.

redpanda Posted 22 Apr 2009 , 1:03am
post #3 of 10

Since you're paying yourself, if you are in business for yourself and aren't paying any employees, to me it seems like anything above your costs for ingredients, supplies, utilities, and other similar items would be your "pay". Therefore, if you charge $3.50/serving for a cake that serves 20 ($70), and your ingredients, supplies, etc. come to $50, then there would be $20 left. If the cake takes a total of 2 hoursr, then you get "paid" at a rate equal to $10/hour.

I think you'd need to know the costs of supplies, etc. in order to even begin to set prices. and that you would probably need to have either a different per serving rate or an additional labor cost for extremely complex cakes, but that in general you should not add the labor onto the per serving for basic cakes.

Just my 2 cents.

indydebi Posted 22 Apr 2009 , 1:18am
post #4 of 10
Quote:
Originally Posted by redpanda

Since you're paying yourself, if you are in business for yourself and aren't paying any employees, to me it seems like anything above your costs for ingredients, supplies, utilities, and other similar items would be your "pay".



If I can add to this ....

I'm in "business for myself" and I think this depends on what level of "business for yourself" you're at.

"other similar items" includes the multiple business insurances, company delivery vehicle (purchase, interest on the loan, insurance, maintenance, operational expense), rent, annual accountant and attorney fees, memberships in prof. orgz's, training/educ/classes, and so on.

Anything above these expenses is not my "pay" ... it's my company profit. That's something totally different from my "pay".

redpanda Posted 22 Apr 2009 , 3:37am
post #5 of 10
Quote:
Originally Posted by indydebi

Quote:
Originally Posted by redpanda

Since you're paying yourself, if you are in business for yourself and aren't paying any employees, to me it seems like anything above your costs for ingredients, supplies, utilities, and other similar items would be your "pay".


If I can add to this ....

I'm in "business for myself" and I think this depends on what level of "business for yourself" you're at.

"other similar items" includes the multiple business insurances, company delivery vehicle (purchase, interest on the loan, insurance, maintenance, operational expense), rent, annual accountant and attorney fees, memberships in prof. orgz's, training/educ/classes, and so on.

Anything above these expenses is not my "pay" ... it's my company profit. That's something totally different from my "pay".




You're right, it does depend on the scale of your business, and I was making certain assumptions about the original poster's (OP's) situation.

When I said a person in business just for herself, I meant somebody that has a SMALL, one-person business, quite likely in-home. I based my response on what I interpreted to be the OP's situation, but maybe she really runs a fairly large business with multiple business insurances, a separate delivery vehicle, an accountant and an attorney. If so, then I apologize for that misinterpretation.

It seemed like the OP was asking whether you include all of your overhead--including pay for yourself--in the per-serving price, or if you start with a per serving price and than ALWAYS include an additional amount for your time/labor. That just seemed odd to me, and overly complicated. What if you estimate your time to be one thing and it takes less...do you charge less than you quoted? If it takes longer because you had unanticipated problems, do you send an additional bill? Or, do you build the basic, normal case into your per-serving charge and add on an extra charge for special circumstances? That is what I was addressing.

Out of curiosity, what is your "pay", or what do you consider your "hourly rate"?

indydebi Posted 22 Apr 2009 , 12:19pm
post #6 of 10
Quote:
Originally Posted by redpanda

Out of curiosity, what is your "pay", or what do you consider your "hourly rate"?




We figured it up one time. On average, my time is billable at $100/hour.

Solecito Posted 22 Apr 2009 , 5:32pm
post #7 of 10
Quote:
Originally Posted by indydebi

Quote:
Originally Posted by redpanda

Out of curiosity, what is your "pay", or what do you consider your "hourly rate"?



We figured it up one time. On average, my time is billable at $100/hour.




Wow!! icon_surprised.gif , But do you collect it??? icon_wink.gif

pipe-dreams Posted 22 Apr 2009 , 6:04pm
post #8 of 10

I'm looking into renting out space in a caterer's kitchen, so I would be the sole employee. I will have insurance(basically liability, I'll have no storefront), as well as added vehicle insurance for deliveries. I have sold a few cakes, and I feel I need to raise my prices when I get all of that overhead. I'm not making a lot for my time now, since I was basically seeing how thins would go for me. I love it, and am making sure I'm pricing right, in reference to the per serving and paying yourself/overhead. I can technically do it from home, but HD said no advertising. So I'm looking into a few spaces. I wouldn't have a seperate delivery car, just mine with added insurance. Plus most likely an accountant! Thanks for the help!

indydebi Posted 22 Apr 2009 , 6:29pm
post #9 of 10
Quote:
Originally Posted by Solecito

Quote:
Originally Posted by indydebi

Quote:
Originally Posted by redpanda

Out of curiosity, what is your "pay", or what do you consider your "hourly rate"?



We figured it up one time. On average, my time is billable at $100/hour.



Wow!! icon_surprised.gif , But do you collect it??? icon_wink.gif




Wedding cake for 200 @ $3.50/serving = $700. Takes me about 4-5 hours to make. Yeah.... I collect it.

Solecito Posted 22 Apr 2009 , 9:53pm
post #10 of 10

Can I work for you??? icon_lol.gif (Just Kidding)

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