I'm just starting out in my business...only been up and running for about 2-3 months. I sell cupcakes and cake pops at the local farmer's markets every other weekend and have been doing a couple cakes for people also. When I do research on other baker's and cake people in my area...the pricing and servings range so much!! Anywhere from $8/dz to $24/dz for cupcakes. and Serving for an 9 in round ranges from 10-30!! And pricing for cakes is anywhere from $1 and under per serving to $2.00 and up per serving. I have no idea what to charge because of the servings and the wide range of prices in the area. Right now I sell cupcakes for $2 each or $18 for dz and some people have commented that $2 is really expensive for a cupcake. I really want to get into a higher class market where i can charge more and do more intricate and larger cakes but I don't know if the market exists here! At the local bakers (most from home) the cakes they show for weddings are small and basic buttercream....I want to do more big cakes with fondant and cool designs. How can I set my prices but also back it up with my work? And how can I start to get people to want to spend more money on cakes around here??? Sorry this is so long
How much does it cost you to make a cake? If you don't know that then all those other prices will confuse you. What makes you different from other homebakers? If you're a scratch baker do you let customers know it? Are your cuppies filled or decorated with fondant and special deco? If so let ppl know that too. Make sure that your potential customers know what makes you different. If your cakes taste and look outstanding then you can justify commanding more.
this is going to sound extreme, but it needs to be:
IT DOESN'T MATTER WHAT EVERYONE ELSE CHARGES!!!!!!
Now, I say that so loudly (sorta ) because if you price based on what others are charging, how do you know your profit margin?
You need to do these things:
1. Determine what it costs you to make a cake/cupcakes-supplies, ingredients, utilities and labor (yes you still pay yourself- this is NOT your profit)
2. Determine how much profit you want, $$ or % doesn't matter, just choose
3. Price your items to get you that profit.
4. THEN see how it compares to the market.
As far as "How can I set my prices but also back it up with my work?": Your customers will pay your prices if they think the work is worth it. Now, if you know that you need more practice before you charge top dollar, then you might need to lower your profit margin for a while.
I know how you feel, and trust me, in the beginning, it can be very hard to "break" through the low price constraint. I've been doing cakes for 6 to 7 years and was just able to get licensed last March of 09'. For me, I felt more comfortable breaking into the higher price bracket once I was able to actually "show" or "prove" that I was capable of charging that amount. I don't think you can start out in this business and just start charging high end prices if you don't have any cakes in your album that show what kind of work you can do. ANd I'm also not saying that you should charge really low starting out either. Because then there is too much of a difference for you to have to build up from and struggle with as a year or two goes by.IT does have to be gradual. I look back at the first wedding cake I did in March 2009 and it was just a 3 tier square fondant, and I think I charged $400 for it. Now, I would have charged $600 for the same cake. In the past year, I have done several weddings and I have decided that I am ready to up my prices for any new weddings that I book for next year. The ones that I am booking are more intricate designs, and more tiers than usual, and just honestly more work than usual, and it's time to compensate myself for that. I was comfortable charging $600-$700 for a 200 serving cake for fondant, and from now on they are going to be more like $800-$900 because I have learned a lot from the cakes I did this year, and when I got done with them, I realized that on some of them I undercharged. Its just one of those things as a new business owner. You learn as you go. ANd every location is different. If you are in a rural area, then of course your prices are going to be different than someone else on here because of location. I am not near a big city, and I know that I can't get the higher end prices that I would like. I get brides who bring me pics straight out of magazines all the time and they expect me to replicate them. ANd there is no bakery in this area, including myself who would be able to charge what the cake artist in that magazine or book charged. I wish we could all band together and set that standard together, but I don't think it's going to happen. lol All I can tell you is that there is a market for it, but it does take time to build your business. Think of it as a plus if nobody around you is doing the kind of cakes that you describe that you want to do. And building your portfolio is part of your backbone to your business. It is your backup to your work, and shows just how good you are. That is shows the public why you can charge what you charge. ANd you also have to be prepared that not everyone will afford you as well. That is just a given. I know I probably haven't answered all your questions, but hopefully someone else will respond too. Good luck to you! Mindy
Check out the business forum. There is a great price calculator spreadsheet you can use.I think the name of the Attachment is Pricematrix 764
If you don't have a lot in your portfolio of these types of design, it pays to buy a few dummies and make some of these intricate cakes. You can use the same dummy over and over again. I even did one where I decorated each side of a square in different, crazy designs....
Thanks everyone!! I'll definitely take your advice!
I wish we could all band together and set that standard together, but I don't think it's going to happen.
Not to mention all of the "fair pricing" laws you'd be breaking.
Can we say "cartel"?
1. ..... and labor (yes you still pay yourself- this is NOT your profit)
THANK YOU THANK YOU THANK YOU! omg, I'm so glad to see I'm no longer the only one saying this!
Yes yes yes!!! The money you pay yourself is NOT your profit! It is your payroll expense! The money left over AFTER you pay the payroll expense is the profit THE BUSINESS made and it's the money that is used to re-invest in the business for equipment, ads, etc.
lol Debi, but I think you know what I mean! lol
Thanks for posting this. I am also having trouble wondering how I am going to make $! I need to stop being afraid of charging enough to make a profit. I also have a hard time figuring out how much to actually charge for supplies, I haven't made enough cakes yet to know exactly how much BC I am going to need and how much fondant....etc. I swear I always end up spending more than I thought. But I am writing it all down as I go so I can get my costs right! I guess it just takes experience....