Pricing Question

Business By mjsirhunter Updated 10 Jan 2012 , 10:30pm by MsGF

mjsirhunter Posted 10 Jan 2012 , 5:08pm
post #1 of 10

Hi, I have had my home bakery going for about 4 months. I sat down and figured out how much it cost for me to make one cake mix ( I make mine from scratch and get about 6 cups of batter) as well as the cost for the icing. I then included the boxes, boards, etc... and got a basic "cost" price. Ive currently been doubling that price as a starting "price" for my cakes and then adding a little more, However I feel like im not making any profit ever. I was wondering how do you determine what to pay yourself per hour? It usually takes me 6-8 hours from taking the ingredients out of the fridge/pantry to when the cake is complete and ready for pick up for a basic sheet cake. I dont want to go crazy with my prices but also want to make it worth my time.
For instance. I have a full sheet due this week (18x24) and the customer wants 2D sports balls on the cake with one removable for a smash cake as well as design on the cake to go along with the balls. Its all going to be done in buttercream and she wants half chocolate half vanilla cake. I charged her $65.00. Is this way reasonable?

9 replies
brenda549 Posted 10 Jan 2012 , 6:13pm
post #2 of 10

I follow the 8 cubic inch per serving rule. If I were to sell an 18x24 cake 2 inches tall, that is approximately 100 servings. For $65, that is 65 cents per serving. If the cake is 4 inches tall, that is approximately 200 servings. That is about 32 cents per serving. I would not even turn my oven on for those figures. Even some of the more financially depressed area custom bakers/decorators can get $2.00 per serving. I say you undercut yourself.

The question you have to ask yourself is how much is your time worth? Do you want to do this for minimum wage? Many decorators value their time between $10 - $30 per hour and up as the skill level increases.

Remember, pricing includes more than just materials. It includes your time, utilities, gas, miles, any licensing fees, insurance, profit, etc. Even though you are a home baker, there are added costs to using your home that some home bakers do not include in pricing. This will eventually cut into profits as well.

Good luck!

brenda549 Posted 10 Jan 2012 , 6:15pm
post #3 of 10

Delete duplicate post

MsGF Posted 10 Jan 2012 , 6:45pm
post #4 of 10

I think you are really undercutting you're prices. $65.00 is a steal. You should invest in the Cake Boss Software, I use it and let me tell you it was very enlightening to see the real cost of cakes.

If you don't want to do that, try pricing per serving, x amount per serving for all buttercream, x amount per serving for fondant and x amount per serving for carved and highly detailed

There are numerous serving guides online and on this site.

I would start with at least $2.00 per serving for all buttercream (depends on your level of experience) People will take advantage of you if you're pricing too low.

Good Luck.

jason_kraft Posted 10 Jan 2012 , 7:00pm
post #5 of 10
Quote:
Originally Posted by mjsirhunter

For instance. I have a full sheet due this week (18x24) and the customer wants 2D sports balls on the cake with one removable for a smash cake as well as design on the cake to go along with the balls. Its all going to be done in buttercream and she wants half chocolate half vanilla cake. I charged her $65.00. Is this way reasonable?



How many hours would you estimate this complete order to take, and how much do you think you will spend on ingredients? What is your current annual overhead (business licenses, advertising, web site, liability insurance, etc.) and about how many orders do you have per year?

Our price for that order would be around the $350 range -- but we are in CA, which requires any food for sale to be made in a licensed commercial kitchen. That's roughly $2.50/serving (a two layer full sheet cake is 144 servings).

Alexsmommee Posted 10 Jan 2012 , 8:53pm
post #6 of 10

My hubby is in manufacturing so he's been teaching me "old school" and "new school" ways of doing things at work. I have been trying to apply it to my business. Trying. Probably the biggest difference in the two is how you charge the customer. The "old school" way was to add all materials, overhead, payroll, profit margin and that equals what you charge the customer. The "new school" way in manufacturing is to figure out what the customer is willing to pay and cut your expenses somewhere to make that number work. So, cut payroll...are you willing to reduce your pay per hour? I am not, but I am calculating my work hours better and working more efficiently. Cut profit margin? Maybe. Cut materials expense? I am working on that too.

What I have found is I have been miscalculating my payroll and working inefficiently. Maybe you too? If it takes you 6 to 8 hours start to finish, there is bound to me some down time in there. Maybe you hopped on the computer to play or did laundry while the cake was in the oven. This is time you don't pay yourself. Maybe you tossed the cake in the fridge to cool down for 2 hours before icing it. You pay yourself the time of wrapping and putting the cake in the fridge, but unless you are cleaning the kitchen, making the icing, prepping the work area, etc. then you aren't on your payroll during the 2 hours it cools. You might find you really aren't working up to 8 hours on the cake. This might at least help you feel like you are making more per hour.

If you are working 8 hours forget all your other math and just say pay ($65) per labor (8hrs) = $8.13/hour; not that much above minimum wage. Well we all know art is worth much more plus you have all those materials and specialty tooling! My hubby reminds me I could go back to work and make that being an unskilled worker; cake decorating/designing is definitely a skill worth charging for.

Lastly, give yourself a raise! You are so undercharging!! Like the others above, start at about $2 per buttercream serving and see how it works out.

Alexsmommee Posted 10 Jan 2012 , 8:55pm
post #7 of 10

My hubby is in manufacturing so he's been teaching me "old school" and "new school" ways of doing things at work. I have been trying to apply it to my business. Trying. Probably the biggest difference in the two is how you charge the customer. The "old school" way was to add all materials, overhead, payroll, profit margin and that equals what you charge the customer. The "new school" way in manufacturing is to figure out what the customer is willing to pay and cut your expenses somewhere to make that number work. So, cut payroll...are you willing to reduce your pay per hour? I am not, but I am calculating my work hours better and working more efficiently. Cut profit margin? Maybe. Cut materials expense? I am working on that too.

What I have found is I have been miscalculating my payroll and working inefficiently. Maybe you too? If it takes you 6 to 8 hours start to finish, there is bound to me some down time in there. Maybe you hopped on the computer to play or did laundry while the cake was in the oven. This is time you don't pay yourself. Maybe you tossed the cake in the fridge to cool down for 2 hours before icing it. You pay yourself the time of wrapping and putting the cake in the fridge, but unless you are cleaning the kitchen, making the icing, prepping the work area, etc. then you aren't on your payroll during the 2 hours it cools. You might find you really aren't working up to 8 hours on the cake. This might at least help you feel like you are making more per hour.

If you are working 8 hours forget all your other math and just say pay ($65) per labor (8hrs) = $8.13/hour; not that much above minimum wage. Well we all know art is worth much more plus you have all those materials and specialty tooling! My hubby reminds me I could go back to work and make that being an unskilled worker; cake decorating/designing is definitely a skill worth charging for.

Lastly, give yourself a raise! You are so undercharging!! Like the others above, start at about $2 per buttercream serving and see how it works out.

SomethingSweetCC Posted 10 Jan 2012 , 9:29pm
post #8 of 10

I've been finding myself in the same boat lately and am trying to figure out what I want to do. I enjoy doing the cakes as a hobby but I also want to be able to make some money on them. Everyone even my customers are telling me I need to raise my prices.

mjsirhunter Posted 10 Jan 2012 , 9:51pm
post #9 of 10

Thank you all for your advise. I do feel that I need to up my prices some.Im not sure how much though. I live in Columbus Ohio so im in a decent market but there is also alot of competition and Im just not sure that my skill level is there yet. Im going to post some pictures under my profile. Maybe some of you can take a look and give me your thoughts. I really would appreciate it. I know what my costs are for supplies and even add in a little extra for the Utilites and such. It the paying myself that I have a hard time calculating....Thanks Everyone, you are all great![/quote]

MsGF Posted 10 Jan 2012 , 10:30pm
post #10 of 10

I think your cakes are good. Charge at least $2 per serving for buttercream. More for fondant and even more for carved (camera cake). If you just want to charge an hourly decorating wage go with $10 per hour of decorating time. In Canada that is minimum wage. I used to take all my materials (Utilities, ingredients, boxes, boards, dowels etc..) x by 2 then add $10 per hour of decorating time. That was the way I priced birthday cakes. It was easier for me that way until I got the Cake Boss Software.

Good Luck, You deserve more and you need to expect more too.

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