How do I calculate how much I should charge based on servings? I know my costs, but I am stumped as to how I should charge based upon servings.
Not only do you need to know what you spend making the cake, but you need to decide what your time is worth and how much profit you want.
Let's say you spend $10 making an 8in cake.
It takes you 6 hours, and you decide your time is worth $10 an hour.
So that's $70 that you have to make on your 8in cake.
Divide that number by 24 (number of servings for an 8in cake) and you need to charge atleast 2.92 to cover your cost of materials and labor. Of course you'd want to increase that so you are making some profit.
If you charged $84 for the 8in cake or $3.50 per serving, then that is atleast $14 profit.
I just pulled numbers out of the air for the example, you will have to plug in the numbers that fit into your equation.
There are some past posts that have great info on pricing. You can search for them and I'd be sure to read any of IndyDebi's replies as she is always insightful!
Lets say your recipe costs $20 to make an 8" cake which has (24 servings).
At a minimum you need to charge $0.83 to break even on purchasing your supplies to make the cake.
Then you add your overhead expenses: time running the stove, cleaning the kitchen, cake boards, boxes, etc. Lets say these items add up to $15.
This brings your cost up to $35 and your minimum per serving to $1.46.
Now to decorate the cake. Lets say it takes 2 hours to decorate the cake. Labor cost is 10 per hour or $20.
This brings your costs up to $55 and your minimum up to $2.29.
At a minimum you need to charge $2.29 to break even.
Anything over the 2.29 may be your profit.
This example does not include rent, insurance, or the little things that come from running a business. Just a basic example of how to set your price.
Thanks a lot! Your advice was really informative. I think I got it now.