How Should I Price This Cake?

Decorating By StormyHaze Updated 27 Sep 2011 , 4:23pm by jason_kraft

StormyHaze Posted 26 Sep 2011 , 10:20pm
post #1 of 14

The cake costs 12.58 to make. (not including icing, will add that to the grand total once its figured out)

if i were to be extremely rough with time:
10-mixing ingredients
40-bake
30-cool
5- crumbcoat
5- icing the cake
10- piping design/words
------------------
1 hr 40 mins

I doubt i would be delivering. but if i were, how much should i charge per mile?

how much should i pay myself per hour? im not and expert but im not exactly a beginner. There isnt anything to extravagant with this cake, merely a quick WHY SO SERIOUS and joker eyes/mouth.

What do you think?

13 replies
flourjuice Posted 26 Sep 2011 , 10:40pm
post #2 of 14

What is the design?

jason_kraft Posted 26 Sep 2011 , 10:42pm
post #3 of 14

Let's say the ingredient cost for the icing is another $5 or so, and round up to $18. Add 20 minutes for the icing and you're at 2 hours. We'll also say that you have $1000 in annual overhead and 50 orders per year, you live in a state with a cottage food law that allows you to legally sell baked goods made at home, and your wage is $15/hour.

Your cost would be $18 + $30 (2 hrs * $15/hr) + $20 ($1000 / 50) = $68. Add a 25% profit margin and you're at a price of $85.

If your state requires a licensed commercial kitchen -- assume kitchen rent is $20/hour and annual overhead is doubled, so your new cost is $18 + $70 (2 hrs * $35/hour) + $40 = $128, with a price of $160.

We charge $1/minute round trip for deliveries.

bisbqueenb Posted 26 Sep 2011 , 10:45pm
post #4 of 14

I can't justify paying yourself an hourly wage to sit around waiting for a cake to bake and cool! If your are a storefront or home baker, surely there are other things needing to be done, or just propping your feet up and relaxing ....

StormyHaze Posted 26 Sep 2011 , 10:59pm
post #5 of 14
Quote:
Originally Posted by bisbqueenb

I can't justify paying yourself an hourly wage to sit around waiting for a cake to bake and cool! If your are a storefront or home baker, surely there are other things needing to be done, or just propping your feet up and relaxing ....




I am usually making the frosting/filling while it is baking or cooling.



http://smg.photobucket.com/albums/v651/blueplum/?action=view¤t=WHYSOSERIOUS23.jpg

StormyHaze Posted 26 Sep 2011 , 11:01pm
post #6 of 14
Quote:
Originally Posted by jason_kraft

Let's say the ingredient cost for the icing is another $5 or so, and round up to $18. Add 20 minutes for the icing and you're at 2 hours. We'll also say that you have $1000 in annual overhead and 50 orders per year, you live in a state with a cottage food law that allows you to legally sell baked goods made at home, and your wage is $15/hour.

Your cost would be $18 + $30 (2 hrs * $15/hr) + $20 ($1000 / 50) = $68. Add a 25% profit margin and you're at a price of $85.

If your state requires a licensed commercial kitchen -- assume kitchen rent is $20/hour and annual overhead is doubled, so your new cost is $18 + $70 (2 hrs * $35/hour) + $40 = $128, with a price of $160.

We charge $1/minute round trip for deliveries.




Why 25 % specifically? why add annual overhead ??

Why 15 hour wage? instead of say 10?

jason_kraft Posted 26 Sep 2011 , 11:19pm
post #7 of 14

Profit margins for custom-order baked goods tend to be in the 20-30% range. This is dependent on the price the market will bear in your area, if you find that you have to drop your margin to 15% to be competitive with other retailers of your caliber, that's what you should do.

The $15/hour wage is also dependent on your skill level and the local cost of living in your area. In some areas a $10/hour figure might be more appropriate, and in others you could set your wage at $20/hour.

Annual overhead is a cost of doing business, typically a fixed cost that is paid once a year. For example, that $1000 figure could include $400 in insurance, $300 in marginal utility costs, $100 in web site hosting costs, and $200 for an accountant. Each order contributes to this fixed overhead, and the more orders you have per year, the less each order needs to contribute to pay back this overhead.

aligotmatt Posted 27 Sep 2011 , 12:05am
post #8 of 14

I question your time and cost. But I think Jason's additions will help account for loss in these areas.

1) At some point you have to book the cake, look at the contract, make a list for items to purchase or order for a cake, then shop for or place the order to have the things delivered. Yes, you may already "be at the store", but it still takes time to make sure you have what you need. And if you won't already be at the store, to drive somewhere, shop and drive home takes time and money.

2) There is also clean up time that is not accounted for. I don't wash my mixing bowls and mop my floor for free after a cake is done.

3) Speaking of cleanup, are cleaning supplies in that price or 12.58 for supplies not including icing? dish soap, paper towels, hot water, pine sol, hand soap, any gloves you'll be using. The cake board, maybe a box to put it in? I know it seems like, oh it's just a squirt of this and a pump of that, and a little bot of saran wrap for covering this or that... But you put it all together and sometimes it can be $2 or $3 on a small cake. Doesn't SOUND like a lot, but if you're talking about a less than $75 cake, it takes a good percentage.

StormyHaze Posted 27 Sep 2011 , 12:12am
post #9 of 14
Quote:
Originally Posted by aligotmatt

I question your time and cost. But I think Jason's additions will help account for loss in these areas.

1) At some point you have to book the cake, look at the contract, make a list for items to purchase or order for a cake, then shop for or place the order to have the things delivered. Yes, you may already "be at the store", but it still takes time to make sure you have what you need. And if you won't already be at the store, to drive somewhere, shop and drive home takes time and money.

2) There is also clean up time that is not accounted for. I don't wash my mixing bowls and mop my floor for free after a cake is done.

3) Speaking of cleanup, are cleaning supplies in that price or 12.58 for supplies not including icing? dish soap, paper towels, hot water, pine sol, hand soap, any gloves you'll be using. The cake board, maybe a box to put it in? I know it seems like, oh it's just a squirt of this and a pump of that, and a little bot of saran wrap for covering this or that... But you put it all together and sometimes it can be $2 or $3 on a small cake. Doesn't SOUND like a lot, but if you're talking about a less than $75 cake, it takes a good percentage.




I actually had not even considered dish cost or cleaning cupplies.

When i said the price i tried to make it clear it was the cake by itself.

Why do you question my time?

How do i write up contracts? is there a standard sheet somewhere online?

aligotmatt Posted 27 Sep 2011 , 12:22am
post #10 of 14

Because of product acquisition and cleanup. Here is a general form you can look at http://www.cakeboss.com/contract.aspx

I'm not going to tell you what price to put on a cake, but what to think about when adding up your time and cost. Jason was telling you additional things that go in to your cost - like your annual overhead. Getting all of these numbers in order can really help build a good solid price of cakes for you. It will help you make sure you are not losing money on product, or on your time.

StormyHaze Posted 27 Sep 2011 , 12:30am
post #11 of 14

From the posts so far ive learned quite a bit. I wasn't charging for the dishes, cleaning supplies, driving time, boxes/rounds, or gas from the oven. And i hadnt even thought to make up a contract, or compare to local bakeries.

tarabara Posted 27 Sep 2011 , 2:20am
post #12 of 14

I've seen other pricing schemes that base the cost of a cake on number of servings. Is that just a quick way to calculate the price after you've priced a few cakes the more complicated way, thereby determining how much it should cost per serving? (I.e., The above cake was calculated at $185 in one example. If it served 45 people it would be close to $4 per person. Do you then just decide that all basic cakes are $4 per serving? Or do you do all these calculations every time you make a cake?) Or do some people just determine the average cost per serving in their local area an go with that? The more detailed way would obviously be more accurate but possibly take a lot of time. Thanks for the info!

TexasSugar Posted 27 Sep 2011 , 3:21pm
post #13 of 14

Tara, cost per serving is an easy way to figure out how much a standard cake would cost.

You would factor up all your costs, supplies, overhead, labor and profit that it takes to bake a cake. If you typically do tiered cakes then base all of that off a 6/10 or what ever size you decide.

I'm going to grab a figure out of the air. Let's say after the math of everything to factor in, your 6in and 10in round tiered cake costs you around 185 to make. So if you take that amount and divide it by the number of servings, you need to charge 3.70 to cover the cost. Personally I'd round it up to 3.75 or 4, but that's because I like even numbers to work with, and that means you make a little more profit.

Next time someone asks you to make a cake that is lets say a 6/8 then you can just cake the servings that cake makes, which is 36 and multiply that by the 3.75 or 4. You can quickly do the math.

In the long run some cakes may cost you more money, such as if you make a chocolate cake with chocolate icing. But then also some cakes will cost you less to make, white cake, white icing, one tier instead of two. Some cakes may take a little longer to decorate, while others may go rather quickly. In the end they will all average out.

jason_kraft Posted 27 Sep 2011 , 4:23pm
post #14 of 14
Quote:
Originally Posted by tarabara

I've seen other pricing schemes that base the cost of a cake on number of servings.



We charge a flat price for single tier cakes, and a per-serving price for multi-tier cakes. This is more based on customer expectation than anything else, since people are used to walking into a bakery for a relatively simple single tier cake and paying a flat price.

Quote:
Quote:

Or do some people just determine the average cost per serving in their local area an go with that?



Looking at the avg price per serving in your area is one data point to use when figuring out your own prices, but ideally it should be based on your own cost structure and not the cost structures of other businesses.

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