Cake Pricing Confusion!

Decorating By Bizzers Updated 12 Nov 2010 , 4:22pm by -K8memphis

Bizzers Posted 11 Nov 2010 , 10:26pm
post #1 of 10

Can anyone tell me what you think my cakes are worth?? I am not a business, just doing it as a hobby for friends/family/friends of friends and I am a little confused on how to price each cake. I could price each by an hourly basis, but if someone wants to know the cost up front, I would have no idea. Then I thought about charging $2/serving for buttercream and $3/serving for fondant, but it just seems like a lot--for my budget anyway--being a SAHMicon_wink.gif Then I have other people that have seen my cakes and say I could really make some money off of them. Any ideas?

9 replies
brincess_b Posted 11 Nov 2010 , 10:53pm
post #2 of 10

well if you're not a business, how come you're charging - if you're charging you're a business. doesnt really matter how you see it, but the tax man and the health inspector will see it like that! there is a legality issue, but also, you should have insurance. all just worth bearing in mind.

when people ask for a price you say 'i will get back to you by X time/ day wth that'. better to be sure of the price than just go 'uhhh $40?'

do not compare what you would spend on cake to what other people would spend. you are not the target market - people with the money for cake are your target market! knowing your market and how to reach them is important.
and i would guarentee the people saying you could make money are not the people who would pay genuine prices! many posts on here about friends and family saying this, and then promptly not paying or wanting discounts!

those sound like fairly average prices, have you compared to other local custom bakeries? does that price cover your costs, and give you at least minimum wage? if so, then your off to a good start. but really, its the added extras that are hard to work out - so thats when you say you will get back to them, so you can guesstimate how long it will take to make 2 figures, or 100 daises.
xx

indydebi Posted 11 Nov 2010 , 11:09pm
post #3 of 10

all legalities and business rules/laws aside, you do not price items based on your thinking as a consumer .... you price them on your thinking like a business owner.

As I state frequently ...... i would never spend $70,000 on a car but if I opened a car dealership, I wouldn't sell cadillac Escalades for $18,000. I would never pay more than twenty bucks for a purse, but if I opened a high end purse store, you bet your patooty I'd sell Coach purses for the multi-hundred dollars they are worth.

the cost is what it is. Just because you wouldnt' personally pay it, that doesn't make it "too expensive".

If you're going to function as a business, you need to think like one.

-K8memphis Posted 12 Nov 2010 , 12:54am
post #4 of 10

Here's my idea for you. Enjoy your cake decorating talent. When foolish people advise you to open a daycare because you're a good babysitter or advise you to start a personal shopping business because you're a good buyer, when they advise you to become a nurse's aid and set up a clinic because you took good care of your grandfather -- smile and nod and keep enjoying your cake decorating talent. Don't listen to them.

But you don't hear them say that do you?

Making money at it means you will be a business owner and making good money at it is completley different than being a talented decorator.

If you wanna be a business person--find the type of business that suits you and go for it. But just because someone said you should open a cake business because you made a cake--I mean what did they say when they saw you pump gas in your car.

No offense to you at all --I'm sick of people telling other people to open a bakery because they can bake. Have they seen one market freaking study on the likelihood of such a business being even possible much less successful? Have they looked for one minute at the extinct Mom & Pop bakeries all across the land--not all but most. No they haven't.

There's this "I'm going to discover you" phenomenon. pfhhht

Just saying.

I mean if you live in Ohio--go for it--or any other state that allows home baking free & clear. Otherwise tell them to shut up--tell them they should open a consulting firm advising people to open businesses.

That's my idea for you. Enjoy your cakes.

Scarlets-Cakes Posted 12 Nov 2010 , 1:10am
post #5 of 10
Quote:
Originally Posted by -K8memphis

tell them they should open a consulting firm advising people to open businesses.




Ha ha ha....love it. It's sooooo true.

TexasSugar Posted 12 Nov 2010 , 2:35pm
post #6 of 10

First thing I would suggest is to figure out what it is costing you to bake. Not just the cake mix plus eggs and powder sugar. There are many little expenses that you use that add up fast, plus people for get to add in cake boards, boxes, toothpicks, wax paper and so on. It is amazing to see how much you are really spending on a cake. If you don't charge enough to cover than then you are taking money out of your household budget to do cakes for other people.

Second, figure out what your time is worth to you. You said you are a stay at home mom. So isn't your time in the kitchen away from your family worth something? And figure out on average how much you spend doing a cake. Some cakes may take a little more time, but then you will have others that take less time, so it averages out in the long run.

And third, how much profit do you want to make?


(Cut and pasted from a pervious thread on the same topic.)
Your cost/time/profit become your price per serving.

Im just grabbing numbers out of the air here

Lets say your cost for an 8in round cake which serves 24 is $10. And it takes you 6 hours at a $10 an hour to do it.

When you divide $70 by 24 (number of servings) you know you need to charge at least $2.92 to cover your cost and time.

If you charge $3.50 per serving, then you will make a $14 profit on the cake.
If you charge $3.75 per serving, then it is a $20 profit.

You dont actually have to price out every cake, you just need some base numbers to work with. If you do mostly tiered cakes, then I would figure the cost for a 6 and 8 or a 6 and 10 and then use those numbers to figure your price per serving. That way the pillars/dowels are built into the price. So then if you do a cake that is a single tier then you just make a little extra profit on it.

Another thing to remember, when figuring your cost do not use sale or discounted prices. It is nice to buy things on sale but sometimes you may not be able to, so then you are shorting yourself. And if you do get things on sale, again that is just extra profit for you.

------
Some other things to consider about pricing, also copied from a pervious post of mine:

The problem with asking pricing questions is that there isn't a set number we can give you. There are way to many variables out there.

Your location plays a factor in it. If you are in a large city chances are you can price higher than someone in a small town.

Baking from cake mixes and scratch cost differently. Baking from expensive ingredients costs more. Buying in bulk lowers your costs. Buying supplies in a higher cost city can cost more than buying in a small town.

How long it takes you to work varies as does hourly wage.

The best thing you can do for yourself is to take some time and really figure out what you spend making a cake. It can be very surprising when you start adding up all those numbers and really see what you actual spend on a cake.

You can always call around to bakeries where you live and see what they with charge for the cake, but then you do have to keep in mind their expenses and supplies could cost more or less than what you would be spending.

Bizzers Posted 12 Nov 2010 , 2:47pm
post #7 of 10

As far as the "business" aspect, I have already talked to the Dept. of Agriculture here in TN and they said as long as I don't advertise and only do a couple cakes a week I am not considered a business. Thank you for all of your inputicon_smile.gif

-K8memphis Posted 12 Nov 2010 , 2:52pm
post #8 of 10
Quote:
Originally Posted by Bizzers

As far as the "business" aspect, I have already talked to the Dept. of Agriculture here in TN and they said as long as I don't advertise and only do a couple cakes a week I am not considered a business. Thank you for all of your inputicon_smile.gif




How you gonna pay the rent, Munchkin?

Do you mean you're not gonna lease the place?

Certain places in Tennessee are a b*tch on this thing-muy strict. I'm in Shelby County.

Bizzers Posted 12 Nov 2010 , 3:54pm
post #9 of 10
Quote:
Originally Posted by -K8memphis

Quote:
Originally Posted by Bizzers

As far as the "business" aspect, I have already talked to the Dept. of Agriculture here in TN and they said as long as I don't advertise and only do a couple cakes a week I am not considered a business. Thank you for all of your inputicon_smile.gif



How you gonna pay the rent, Munchkin?

Do you mean you're not gonna lease the place?

Certain places in Tennessee are a b*tch on this thing-muy strict. I'm in Shelby County.


I am doing it from my home, so my husband "pays the rent" thank you very much. I was just asking how to price cakes. Maybe if I could rent a commercial kitchen somewhere then I would be able to advertise and have a small business, but for now, it's more of a hobby.

-K8memphis Posted 12 Nov 2010 , 4:22pm
post #10 of 10
Quote:
Originally Posted by Bizzers

Quote:
Originally Posted by -K8memphis

Quote:
Originally Posted by Bizzers

As far as the "business" aspect, I have already talked to the Dept. of Agriculture here in TN and they said as long as I don't advertise and only do a couple cakes a week I am not considered a business. Thank you for all of your inputicon_smile.gif



How you gonna pay the rent, Munchkin?

Do you mean you're not gonna lease the place?

Certain places in Tennessee are a b*tch on this thing-muy strict. I'm in Shelby County.

I am doing it from my home, so my husband "pays the rent" thank you very much. I was just asking how to price cakes. Maybe if I could rent a commercial kitchen somewhere then I would be able to advertise and have a small business, but for now, it's more of a hobby.




Oh I posted in the wrong thread--I thought I was in the one where it seemed that the poster wanted ideas on what to bake after she signed a lease. Sorry 'bout that.

Other than that price your cakes high.

Quote by @%username% on %date%

%body%