Charging By Hour???

Business By CutiePiesCakes Updated 15 Jul 2010 , 11:12am by cakenista

CutiePiesCakes Posted 17 Jun 2010 , 5:37pm
post #1 of 21

Hi! I am just taking notes right now, I havent looked into laws or anything about starting a business I am just doing my research and taking notes. I make cakes for friends and family and I'm thinking about taking the plunge I just want to know what Im getting into icon_smile.gif I have looked at a couple different price matrixes and created my own, but what I'm wondering is how you tell a customer what the price will be for the work when you havent done the work yet and dont know how long it will take? I know a lot of people charge between 5-10 bucks an hour. Do you tell them the price of materials and tell them your rate and then have them pay when they pick it up?? I just want to be able to actually make money at this and I have no doubt that I will only end up charging for materials which is not how a business survives. Any links or information you have is greatly appretiated!!! Thanks a bunch icon_smile.gif

20 replies
Adevag Posted 17 Jun 2010 , 6:12pm
post #2 of 21

I think that pricing the cakes is based on your estimation on how long it will take you to and not the actual time. If you get two orders from different people of the same cake, they should pay the same amount even if you happen to make one faster than the other.
So before you start baking, you need to have the price.
Why would you want to start a business only making $5-10 an hour? I would base the prices on a higher hourly pay!
good luck!

indydebi Posted 17 Jun 2010 , 6:40pm
post #3 of 21

My husband figured my rate per hour once. He took into account every second I spent on an order ... from talking on the phone to delivering the cake/catering. And he came up with my time was billable at $100 per hour. Would I ever bill my talent and expertise at less than minimum wage? Not on anyone's life, toots! icon_biggrin.gif

If you bill an hourly rate based on "making the cake", you are putting yoruself in the same category as a "bakery clerk" instead of "bakery owner". If the cake is done wrong, it's not the employee who has to return the money out of their pocket ... it's the business owner. The higher the risk, the higher the rate of return should be.

I love how you're "taking notes" before even diving in ... that is such a smart thing! But go into it thinking like a business owner .... not a bakery employee! thumbs_up.gif

$5-$10 an hour for the work we do in designing custom made cakes is ridiculous .... and I tell you that with mom-love!!! Start at LEAST at $25/hour ... and I even consider that cheap.

As you make more and more cakes, you'll get an idea of how long it takes you to make a cake for 50 or a cake for 250. It just comes with experience. However, when I'd get a new designopportunity, I'd give the bride what I called my Proto-Type Price. She'd get it at my regular price if she let me experiment on her for this cake, so I could see what was involved. I never went into the red on any of these cakes. The bride was usually excited to know that no other bride would EVER get the same cake at the same low price she was getting it at! thumbs_up.gif

cai0311 Posted 17 Jun 2010 , 7:08pm
post #4 of 21

Figure all your expenses (and I mean ALL of them), determine what you want to make per hour (I think $5-$10/hour is way too low), add a little wiggle room to that number then divide the total into the number of servings and you now have a standard price to tell customers you charge per slice. Charging per slice is the easiest way in my opinion. Granted there will be extra fees on some cakes (flowers, bows...) but at least the client will know what the base price is and if they want to book with you.

It is also important to know what other bakeries in your area charge per slice. Every city is different, so look online at local ones for prices (not grocery store bakeries).

I chare $2.50/slice. I came up with this price by price comparing with other local bakeries and figuring what I needed to make to make it worth my while.

costumeczar Posted 17 Jun 2010 , 10:30pm
post #5 of 21

You kind of have to wing it if you've never done a specific design before. Just estimate how long you think it's going to take, then add a little for safe measure. Once you do the design you can adjust the price if it turns out that it takes a lot longer than you thought, you'll just have to suck it up for that order that took longer than you estimated! That's always annoying, but it happens.

johnson6ofus Posted 18 Jun 2010 , 9:18pm
post #6 of 21

I guess it is assumed that you have some baking/ decorating experience to base your time estimates on. That is your starting point.... and Maine's minimum wage is $7.50 per hour, so why you would consider $5-10? Unless we are discussing portfolio building or Indydebi's "prototype" scenario... in which case the "practice" is part of the return you receive, along with any payment.

Certainly detailed work should be experimented with to guesstimate time- both for your profit margin and your scheduling purposes.

After 5 million of these pricing threads... everyone does it differently and learns from their mistakes. Some undercharge a bit to get practice... but first I would price out local just so I knew my market and competition.

Good luck on the research.

CutiePiesCakes Posted 18 Jun 2010 , 9:25pm
post #7 of 21

Thank you all VERY MUCH. i found this tool at cakeboss.com?? it looks AWESOME. I dont know if anyof you have heard of it you should check it out.

thecakeprincess Posted 18 Jun 2010 , 9:51pm
post #8 of 21

All good advice!

mamawrobin Posted 18 Jun 2010 , 9:55pm
post #9 of 21
Quote:
Originally Posted by indydebi


$5-$10 an hour for the work we do in designing custom made cakes is ridiculous .... and I tell you that with mom-love!!! Start at LEAST at $25/hour ... and I even consider that cheap.





I agree. thumbs_up.gif

catlharper Posted 18 Jun 2010 , 11:18pm
post #10 of 21

It can be confusing to figure out a price per slice when you have no idea what it will cost for your labor. I started at $25 per hour and add in the cost of what it will take me to make the cake from supplies to the rental kitchen and then came up with a "standard" price. Depending on the cake I may make a bit under that $25 an hour (especially since sometimes things don't go as smoothly as others and I spend a whole lot more time making up for issues that have come up along the way) but then there are those cakes that go like clockwork smooth and you are done in half the time it usually takes...on those days you are making more. In the end I just wanted to be making enough to help support my family (I'm still part time) and cover my expenses to allow me to make cake art. It's still the biggest pay off for all my work when the client just goes ga-ga over the cake!

Cat

cakenista Posted 15 Jul 2010 , 1:50am
post #11 of 21

Ok what if you are only making like sheet cakes and round cakes no wedding cakes.I charge ten dollars an hour but I can see from the posts that maybe I need to re think but even the problem that Im running into is the people that want a quote laugh in my face when i tell them the price of the cake and then they say Ican go to Giant eagle for less than that .If I charged them 25 an hour They would probably swear at me i bet.Im confused helllpppp.

indydebi Posted 15 Jul 2010 , 2:01am
post #12 of 21
Quote:
Originally Posted by sweetcheeks1

Ok what if you are only making like sheet cakes and round cakes no wedding cakes.



cake is cake, I dont' care what the occasion is. A 2-tiered Dora the Explorer themed cake is WAY more work than a 2-tier wedding cake with ribbon wrapped around the bottom. Are you saying that the Dora cake "isn't worth" the same as the "just wrap a ribbon" cake?

In whatever you do .... caking, woodworking, babysitting, lawn mowing, etc. ..... remember that $10/hour is your GROSS pay. If you're doing things right and reporting all income, then you have to pay federal and state income taxes, self-employment/social security taxes, etc.

I don't do ANYTHING for what equates to minimum wage. If I wanted to make that little, I'd get a job at McDonalds' and let someone else worry about the "running the business" part. I'll just collect my paycheck and go home.

"It costs what it costs". You're not a bakery who is capable of baking 16 cakes at one shot in your double stacked commercial oven. Because of that, your overhead is higher, ergo your price per unit is higher.

As I mentioned in another post: I don't have walmart pricing. But you're also not getting a walmart cake." (I used to have that right on my website.)

cakenista Posted 15 Jul 2010 , 2:12am
post #13 of 21

believe me i agree 100 percent.I keep losing customers because they just dont want to pay me.what I meant about the sheet cake thing is that Im not that experienced yet to do the wedding thing.So I guess I was trying to say maybe people just want the cakes that u see on the shows on cable.THey probably think that if they are going to pay that much I better start carvin out the tashmahal lol. How can I keep my customers that call me with pricing. By the way I think your spunky Debi I want to add u as a buddy I can learn alot from you

thatslifeca Posted 15 Jul 2010 , 2:28am
post #14 of 21

icon_surprised.gif $5-10hrs, I think I just fainted. I have a guestion then. Don't you think that the work you do and the art that you produce is worth more then that? I don't charge by the hour, but like others have said, by the serving. After you have done this for a while you have a general idea of how much a cake of whatever standard is going to cost you. You don't want to sell yourself short. In my humble opion, if they want WOW....WOW isn't cheap. WOW comes with a WOW price.

costumeczar Posted 15 Jul 2010 , 2:51am
post #15 of 21

I hate this reply box, it just ate my answer! icon_mad.gif

If you can't find customers who want to pay your prices, you need to look at how you're marketing your business. Do you use all free services like Craigslist and facebook? That makes you look cheaper, get a website.

Do you stress the fact that your cakes are all custom, and therefore more special than the cakes you'd get at the grocery store? You need to tell people why they should pay for your cakes, and why there's extra value to them.

Do you use free Vistaprint business cards that are printed on cheapo cardstock with "powered by Vistaprint" on the back of them? Pay for some good business cards that make a better impression.

Do you answer the phone with screaming kids in the background? Get an answering machine and return calls when they're not around.

I could go on icon_rolleyes.gif ...Read my blog, I tend to write about a lot of business topics.

PiccoloChellie Posted 15 Jul 2010 , 3:17am
post #16 of 21
Quote:
Originally Posted by sweetcheeks1

believe me i agree 100 percent.I keep losing customers because they just dont want to pay me.




Darlin', I grew up in "the Ville" and still spend a lot of time there.
The money is definitely in that town to support custom cakes. Market yourself!! icon_biggrin.gif

cakenista Posted 15 Jul 2010 , 3:26am
post #17 of 21
Quote:
Originally Posted by costumeczar

I hate this reply box, it just ate my answer! icon_mad.gif

If you can't find customers who want to pay your prices, you need to look at how you're marketing your business. Do you use all free services like Craigslist and facebook? That makes you look cheaper, get a website.

Do you stress the fact that your cakes are all custom, and therefore more special than the cakes you'd get at the grocery store? You need to tell people why they should pay for your cakes, and why there's extra value to them.

Do you use free Vistaprint business cards that are printed on cheapo cardstock with "powered by Vistaprint" on the back of them? Pay for some good business cards that make a better impression.

Do you answer the phone with screaming kids in the background? Get an answering machine and return calls when they're not around.

I could go on icon_rolleyes.gif ...Read my blog, I tend to write about a lot of business topics.


I have my own website and it wasnt cheap,I do tell my customers why they should buy my cakes,No My business cards and pamphlets are very well made Not cheap,Ummm and no kids never had um never will. I hope that answers all your questions Im not a stupid woman.I did do my homework ya know the customers would rather go to walmart or bjs or giant eagle

carmijok Posted 15 Jul 2010 , 3:46am
post #18 of 21

I am so sick of people who think all cakes are the same. A Pinto and a Mercedes are both cars, but which would you rather own? Unfortunately there are those that really don't care about custom flavors or designs...BUT there are plenty who appreciate good tasting cake and a custom design. If your customers are 'Pinto' buyers then you need to start seeking out and marketing to the Mercedes people. Or at least the Hondas! thumbs_up.gif

costumeczar Posted 15 Jul 2010 , 10:42am
post #19 of 21
Quote:
Originally Posted by sweetcheeks1

I hope that answers all your questions Im not a stupid woman.I did do my homework ya know the customers would rather go to walmart or bjs or giant eagle




Relax sweetcheeks, those general "questions" weren't necessarily directed at you personally. There are a lot of people on here who don't understand why people don't want to pay what they charge, then they say "My Craigslist ad just seems to attract cheapos" Well, duh,that's what Craigslist is for. My point is that you (the general you, not you personally) need to look at who you want to sell to and then market your product that way, don't just sit around thinking that people will understand why your product is worth what you're charging. You have to educate your customers.

indydebi Posted 15 Jul 2010 , 10:53am
post #20 of 21
Quote:
Originally Posted by costumeczar

You have to educate your customers.


That's the "marketing" part! thumbs_up.gif We can't just "sell it". we have to "market it". icon_smile.gif

cakenista Posted 15 Jul 2010 , 11:12am
post #21 of 21
Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by sweetcheeks1

I hope that answers all your questions Im not a stupid woman.I did do my homework ya know the customers would rather go to walmart or bjs or giant eagle



Relax sweetcheeks, those general "questions" weren't necessarily directed at you personally. There are a lot of people on here who don't understand why people don't want to pay what they charge, then they say "My Craigslist ad just seems to attract cheapos" Well, duh,that's what Craigslist is for. My point is that you (the general you, not you personally) need to look at who you want to sell to and then market your product that way, don't just sit around thinking that people will understand why your product is worth what you're charging. You have to educate your customers.


Yeah sorry about that I didnt mean to snap at ya. I am just frustrated.I try to market my bakery.I love making cakes and making people happy.I dont want to stop what im doing but I might have to.I will be crushed if i do.sorry once again

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