How Do I Price My Cakes?

Decorating By DivaWeava Updated 24 May 2010 , 6:53pm by nutcase68

DivaWeava Posted 18 May 2010 , 3:09pm
post #1 of 13

I am unsure if this is the best forum in which to post this topic. However, I need some advice about how to price my cakes. Recently I have had many requests for my cakes. I am unsure of just how much to charge. I know that I will figure in the cost of materials, time, number of servings, and how time intensive the design is, but I am just unsure of exactly how much to charge.

Any suggestions any of you may have will be greatly appreciated!

Thanks for your help!

12 replies
Frotusbush Posted 18 May 2010 , 5:30pm
post #2 of 13

This one can be tricky. I am assuming you work from home for the time being. People I have talked to have a couple of methods - one is to charge per cake mix used (ie $15.00 per mix so if you use 5 mixes the cake costs $75.00) and the other is per serving.

If you choose the per serving route, find out what the average cost per serving is in your area and set your price accordingly. Keep in mind that when looking at a supermarket bakery you will not be able to produce your cakes for the same price they do and make any money.

Now to be sure that you are actually making money and just how much:
The next time you make a cake keep track of exactly what it costs you to make it (ie 4 eggs cost -__, 1 cup sugar costs _____) write down exactly how long it takes you to make the cake including setting up and cleaning up.

When you have a total $ figure for the supplies you will probably want to double or triple that figure and then add to that number the "salary" that you will need to pay yourself.

The reason for doubling or tripling the cost of the supplies is that you have to replace them and it will cost at least as much to replace them as it did to buy them. It may cost more when you return to the store and you have to be able to pay the higher cost in order to make more cakes.

Double checking your prices against the actual costs of producing the cakes will help insure that you wouldn`t be making more money working at a fast food restaurant.

TexasSugar Posted 18 May 2010 , 5:40pm
post #3 of 13

Take an average cake and figure out your costs. Then you will take your costs and figure out how much that cake will cost you. Then take that number and divide it by the servings and that will give you a price per serving.

Say an 8in cake costs you $10 in supplies, and you know you will spend 6 hours working on it, so lets say $60 for your time. We will just round it up to $80 to pick up anything else we forget. So you know you need to charge atleast $80 for it. If you divide 80 from 24 (number of servings an 8in round cake serves) you get $3.33. I'd round it up to $3.50 a serving.

I just pulled the numbers out of thin air, so you have to factor in your own numbers and such.

It does help to know what bakeries (not grocery stores) in the area charge, but you can't just use that information alone. They may have more overhead than you and need to charge alot more, or buy in bulk some their material cost isn't the same.

prterrell Posted 18 May 2010 , 10:16pm
post #4 of 13

1 - Determine whether you can legally sell cakes.

2 - Determine your costs. This includes all ingredients, gas & wear & tear on vehicle to purchase ingredients, shipping & handling for any online ingredient purchases, gas/electricity to prepare and bake cake, filling and icing, water & electricity for clean-up, electricity to run refrigerator for storage of ingredients prior, made fillings/icings, and cake (if needed), wear & tear on appliances, pans, and utensils, your time doing everything from consultation and design to purchasing ingredients to making cake to every step of decorating process to clean-up. (which means you need to determine a dollar amount on how much your time is worth).

3 - Determine what profit you would like to make on top of cost-reimbursement, otherwise you are merely breaking even.

4 - Add up everything and that is your price.

JaimeAnn Posted 18 May 2010 , 11:17pm
post #5 of 13
Quote:
Originally Posted by prterrell

1 - Determine whether you can legally sell cakes.



thumbs_up.gif

It is illegal to sell food items made in your home, unless your local area allows licensing of home kitchens. Then you would still have to go by your local laws for home licensing......

So before you sell any cake you need to check with you local Health Department and see what you have to do to be able to sell your cakes Legaly.
icon_smile.gif

leily Posted 19 May 2010 , 1:19am
post #6 of 13
Quote:
Originally Posted by JaimeAnn

Quote:
Originally Posted by prterrell

1 - Determine whether you can legally sell cakes.


thumbs_up.gif

It is illegal to sell food items made in your home, unless your local area allows licensing of home kitchens. Then you would still have to go by your local laws for home licensing......

So before you sell any cake you need to check with you local Health Department and see what you have to do to be able to sell your cakes Legaly.
icon_smile.gif




This is mostly true in most states JaimeAnn. In some there are what is called "Cottage laws" which you don't have to be licensed to sell from home as long as you don't sell anything that has to be kept refrigerated. Iowa and Ohio are two that have these, and i'm pretty sure PA does also.

dalis4joe Posted 19 May 2010 , 1:41am
post #7 of 13
Quote:
Originally Posted by TexasSugar

Take an average cake and figure out your costs. Then you will take your costs and figure out how much that cake will cost you. Then take that number and divide it by the servings and that will give you a price per serving.

Say an 8in cake costs you $10 in supplies, and you know you will spend 6 hours working on it, so lets say $60 for your time. We will just round it up to $80 to pick up anything else we forget. So you know you need to charge atleast $80 for it. If you divide 80 from 24 (number of servings an 8in round cake serves) you get $3.33. I'd round it up to $3.50 a serving.

I just pulled the numbers out of thin air, so you have to factor in your own numbers and such.

It does help to know what bakeries (not grocery stores) in the area charge, but you can't just use that information alone. They may have more overhead than you and need to charge alot more, or buy in bulk some their material cost isn't the same.




Love your explanation... very easy to understand for newbies...... thanks for sharing! thumbs_up.gifthumbs_up.gifthumbs_up.gif

JaimeAnn Posted 23 May 2010 , 5:20am
post #8 of 13
Quote:
Originally Posted by leily

Quote:
Originally Posted by JaimeAnn

Quote:
Originally Posted by prterrell

1 - Determine whether you can legally sell cakes.


thumbs_up.gif

It is illegal to sell food items made in your home, unless your local area allows licensing of home kitchens. Then you would still have to go by your local laws for home licensing......

So before you sell any cake you need to check with you local Health Department and see what you have to do to be able to sell your cakes Legaly.
icon_smile.gif



This mostly true in most states JaimeAnn. In some there are what is called "Cottage laws" which you don't have to be licensed to sell from home as long as you don't sell anything that has to be kept refridgerated. Iowa and Ohio are two that have these, and i'm pretty sure PA does also.




Yes, You are right, I am aware of the Cottage law states but I beleive that even those states require certification by the health department... Like I said it is just best to check with your local laws and the best place to start is the local health department..., Better to be safe than Sorry thumbs_up.gif

sweettreat101 Posted 23 May 2010 , 7:59am
post #9 of 13

Or you can just stick to making cakes for friends and family. That is what I do. They still have to pay of course I am not going to cover the cost myself. My friends try to give me business via their friends and I just have to politely tell them that this is a hobby and I only make cakes for friends or family.

DivaWeava Posted 23 May 2010 , 5:50pm
post #10 of 13

Thank you all for your suggestions. A lot of great information. Like sweettreat101 said, I am only making cakes for family and friends at this time. I have been researching commercial kitchen costs, and licensing with my state. I am working towards getting my cake business off the ground! (0:

Mama_Mias_Cakes Posted 23 May 2010 , 6:45pm
post #11 of 13
Quote:
Originally Posted by JaimeAnn



Yes, You are right, I am aware of the Cottage law states but I beleive that even those states require certification by the health department... Like I said it is just best to check with your local laws and the best place to start is the local health department..., Better to be safe than Sorry thumbs_up.gif




FYI - in Ohio, you do not have to be certified by the health department. You have to label your items and sell non-perishable fillings.

leily Posted 24 May 2010 , 2:21am
post #12 of 13
Quote:
Originally Posted by sweettreat101

Or you can just stick to making cakes for friends and family. That is what I do. They still have to pay of course .....




You will have to be careful in some states even if all they do is pay you for ingredients. This still constitutes business and can be illegal in states that do not allow home bakeries, or require a license for a home bakery. You are still receiving compensation for your product (whether you make money or not, it doesn't matter to the health department)

nutcase68 Posted 24 May 2010 , 6:53pm
post #13 of 13

My rule of thumb is 3 or 4 times the cost of my materials. Fondant figures $20.00 an hour. Don't want to do the cake because the customer is a peach, something really high, likee double normal cost. That usually scares the pain in the neck customers somewhere else.

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