Business By Tclanton Updated 4 Aug 2010 , 5:08pm by Tclanton

Tclanton Posted 4 Aug 2010 , 1:46pm
post #1 of 10

I am sure this is a worn out topic, but I need help with pricing for customers. I am in NC, and this is a side business only. I have seen some of the postings on here, but I cannot open them or get them onto my computer. Any help would be appreciated.

9 replies
leily Posted 4 Aug 2010 , 2:03pm
post #2 of 10

What are you needing help with specifically? How to figure your pricing? How to figure hours? How to figure the cost of a recipe? There is a lot that needs to be taken into account when doing pricing, but knowing what you need help with will help us help you.

Tclanton Posted 4 Aug 2010 , 4:02pm
post #3 of 10

I need to know how much to charge a customer for a cake. And I know there are many things to take into consideration - filling, how it is decorated, all that jazz. Like right now, I have a cake to do - 8", no fondant all BC - rough iced with a border. I know ingredients are going to run around 22-25 - but how much on top of that for my time.

Dang - hope this makes sense. Thus far, I havent really charged anything but ingredients as all of them have been for family and friends. But the word is spreading, and I need to be prepared.

CWR41 Posted 4 Aug 2010 , 4:13pm
post #4 of 10

If you can't open the other pricing threads, I don't know if you'll be able to read my response either, but for starters--I'd check prices within your community to compare what others are charging.

adamsmom Posted 4 Aug 2010 , 4:19pm
post #5 of 10

Aside from what others are charging in your area you need to determine what you feel you're worth getting paid on top of your cost for ingredients. Don't forget to factor in the time for clean up (washing dishes, cleaning up table tops, etc.), cost of electricity, gas, lighting and so on. I factored in all of those costs and paired that with my experience level to get my prices. This really is a case by case thing and you need to decide what works best for you and what you're comfortable with. I do caution to not undercut the other bakers in your area dramatically, you don't want any enemies icon_wink.gif Best of luck!

PiccoloChellie Posted 4 Aug 2010 , 4:27pm
post #6 of 10

First, if you haven't already done so, determine if you can sell cakes in your state and what the requirements are to do so.

Start saving all your receipts for everything you spend on cake items. You'll need them anyways for tax purposes, but they'll also help you track your costs as you go along.

Also start paying attention to every single item that you use when you're making a cake. Paper towels, dish soap, bleach, plastic wrap, aluminum foil, parchment paper, laundry soap (gotta wash your dish towels and the buttercream-covered clothes!), hand soap, hand sanitizer, napkins...everything. If you're a real stickler, make little notes as you work as to how many paper towels you use while making a cake, how much plastic wrap, how many loads of dishes you run through the dishwasher with your cake gear in it, and so on. With a little patience you can estimate how much each paper towel costs you, etc. Write it all down.

Then start tracking your actual cake-related items for each cake. Ingredients, figure it out down to how much each egg costs. Every cake board, every box, every drum, support systems, etc. Write it all down.

Track how many miles you drive to get cake groceries and supplies. Estimate how much you spend in gas to get the stuff for one cake, even if it only comes out to $.15. Write it all down.

Next track your time. This includes the time you spend driving to & from stores, doing your shopping, putting away your items, mixing the batter, making the icing, baking the cake, cooling the cake, decorating the cake, packaging the cake. Imagine that you're an employee at a bakery - would you expect to get paid hourly for all of this? I'm sure you would - you're *working*. icon_smile.gif Write it all down.

And then decide how much your time is worth. If you want to get paid $10 per hour, add up the time you tracked above and multiply that by 10. That's your labor cost for that one cake.

Pay attention to your utility bills. What I did was track them for a few months, averaged them out, divided that by the number of hours in each month, and that gave me an estimate of how much each hour of utility use cost. Look at your time tracking from a minute ago. One hour of utility use times the number of hours of labor in the cake. Your oven is on, your lights are on, your dishwasher is costs you. Write it all down.

Do you have other expenses like webhosting fees, an extra phone line, business cards, etc? Licensing fees? Don't forget insurance costs. This is a little harder to quantify per cake, but figure out how much you'll pay per month for the expenses of running & advertising a business. Depending on how much you're paying in this area and how much labor you're putting in, the easiest way is to estimate how many cakes you'll do in a month and divide your business expenses by the number of expected cakes. Write it down.

By this point you should have a really big list of numbers. This is everything involved in one, single cake. Add them up. This is your cost of making one cake. Divide that total by the number of servings in the cake, and there's your ideal per-serving price.

Tclanton Posted 4 Aug 2010 , 4:32pm
post #7 of 10

I am not aware of many bakers in this area - so I am like lost.

Tclanton Posted 4 Aug 2010 , 4:48pm
post #8 of 10

piccolo - whew - you said a mouthful!!! i will start writing all of that down for sure.

PiccoloChellie Posted 4 Aug 2010 , 5:04pm
post #9 of 10
Originally Posted by Tclanton

piccolo - whew - you said a mouthful!!! i will start writing all of that down for sure.

Breaking down everything and working towards YOUR correct price is the only accurate way to do it. I know it looks like a ridiculous amount of nonsense, but unless someone here lives in your immediate area, uses your exact same recipes and methods, works at the same speed as you do, and so on....well, no one else can give you an accurate number to charge. An organic baker is going to have different costs than non-organic. The cost of utilities, groceries, gas, and supplies in your area (wherever that may be) will be different than someone in a larger or smaller town. The market will bear much higher prices in NYC vs. Bumchuck, ND.

And so on and so on.

Do the crappy part once, do it right, and you probably won't have to do it again. You'll be able to easily adjust for price fluctuations in the future (I'm hearing wheat prices are going up, for example, which will affect us all and we may have to make some pricing adjustments!) and labor rate (as you gain further skills). Plus, when faced with a cake or technique you haven't done before, you'll have a framework to price it.

It sucks, but it's totally worth doing. thumbs_up.gif

Tclanton Posted 4 Aug 2010 , 5:08pm
post #10 of 10

Thanks Piccolo - I will start working on that right away.

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