Paying Yourself

Business By macie2011 Updated 20 Jan 2012 , 9:49pm by macie2011

macie2011 Posted 17 Jan 2012 , 9:21pm
post #1 of 5

Hi everyone,
I was wondering how you determine how much to pay yourself when making a cake. Do you do it as a percentage of how much the cake costs or is there any other way? Thank you!

4 replies
MsGF Posted 17 Jan 2012 , 9:56pm
post #2 of 5

Charge a per hour fee. Depending on skill level people can charge between $10.00 - $30.00 + per hour. Depends on where you live, your skill level. Personally I use the Cake Boss Software, I love it and it's worth every penny. It is a real eye opener about pricing cakes properly.

Take Care

IvyCakes Posted 17 Jan 2012 , 10:22pm
post #3 of 5

I don't think you can set prices by going "I deserve x amount per hour, so I'm throwing it into the cost", you could work painfully slow, or spend way too much on ingredients causing your cake prices to be much higher than the average baker in your area.

What you need to do is find out the maximum you can charge per slice and still sell your cakes at the volume you desire. Start out by finding what every bakery/home baker in your are charges per slice, their various mark ups, ect to get an idea of their pricing methods. Figure out where your cake skill fits in compared to theirs, and price your cakes accordingly.

Once you know the maximum you can sell your cakes for, tally up your total cost to bake a cake subtract it from the value you can sell it for and then divide by the hours spent. That's how much you made per hour... If it's extremely low, you know then you need to find a way to either A. Increase your prices, B. lower your costs of production, or C. both! Your per/hour will fluctuate per cake, it'll never be the same as costs and time spent on each cake varies, so you just need to go in with the mindset of make as much as you can! You're probably best off looking at your average income per/month vs cake, and be sure to skim off the top to put back into the business.

My point is, we may feel our time is worth x/per hour, but if that results in a 250 dollar 8" round with no one in your area willing pay more than 50 dollars, you're in trouble. If it results in you selling your 8" round for 40 dollars, and people would easily pay 80 dollars per 8" round... again you're in trouble! (Just less obvious trouble hehe)


Disclaimer: I don't have a cake business, or any business for that matter. This is just my opinion from observation and may contain flaws! >_> Also probably doesn't really pertain to someone who just bakes a cake once in a blue moon and then wants to sell it...

icon_smile.gif

jason_kraft Posted 18 Jan 2012 , 12:30am
post #4 of 5

If you run your own business and do the baking/decorating you need to pay yourself twice: an hourly wage and profit that accrues to the business.

So if you sell a cake that involves 4 hours of labor and $20 of ingredients/overhead, your cost for the cake is $60 if you pay yourself $10/hour. But the price you should charge the customer is in the $70-80 range, with the difference being reinvested into the business.

macie2011 Posted 20 Jan 2012 , 9:49pm
post #5 of 5

Thank you everyone for your help!

Quote by @%username% on %date%

%body%