Thinking About Higher Prices...

Decorating By cupncake1 Updated 31 Jan 2012 , 6:44pm by jason_kraft

cupncake1 Posted 30 Jan 2012 , 8:16am
post #1 of 28

I hate to do this and I'm not sure how to go about it but I realize that for the work I do I make less than minumum wage in many cases, I charge $2.50 per serving using the earlene cake serving chart, I use it because I want to be sure people are getting the servings they need, anyway a 6 in and 8 inch tiered cake end up costing like $57.50 and I put alot detail into my cakes now so does anyone have any ideas for me? For example I made my fisher price cake (9" and 6") so that was $75.00 and it took 11 hours just to decorate, and my "hot pink black and white" baby shower cake was $67.50 and only because I charged $8.00 extra for the scupted baby, dont get me wrong I love what I do but it does take a lot of time away from my family,

27 replies
scp1127 Posted 30 Jan 2012 , 8:42am
post #2 of 28

I wasn't aware that you could bake from home anywhere in CA. It would be important for you to contact your local health dept and arrange for a commercial kitchen rental. I may be wrong, but I haven't seen any baker in CA able to bake from home.

FromScratchSF Posted 30 Jan 2012 , 9:19am
post #3 of 28

Cupncake1, you do really nice work (seriously, I will be borrowing from your jungle cake a lot next weekend, it was in my favs as soon as you posted it) so it actually makes me sad to realize you might not be doing it legally in California. I don't want to assume, but your post leads us to assume that.

So, my advice to you is to become a legitimate business and get commercial kitchen space to bake out of ASAP. Once you do that, you would easily be able to charge nicely for your skill level, making it much more rewarding personally and financially. The bonus is all those people that have been buying your cakes super cheep-o will will totally understand your dramatic (and it should be dramatic) hike in prices because they will understand that you are legit. No other explanation will be necessary.

FromScratchSF Posted 30 Jan 2012 , 9:23am
post #4 of 28

Yeah, just double-checked your pics - really nice work, you have a lot of talent!

j92383 Posted 30 Jan 2012 , 5:20pm
post #5 of 28

I think she's well aware of the fact that it"s not legal in California. I hate when people get on here and post comments that have nothing to do with the question. If you're legal that's great but a lot of us start off baking from home this way and your price have nothing to do with where you bake. It's the quality of the work. cupncake1 you should charge more you might lose some customers but most people won't care cause they know how great your cakes are

cupncake1 Posted 30 Jan 2012 , 5:41pm
post #6 of 28

Ok everyone why would you just assume Im doing this out of my home, thanks for the compliments but dang it seems like everyone is getting a little crazy on here about all that, I never said I was doing it out of my home, this DOESNT have anything to do with that and this is like the 3rd time this week I've seen people on here get all dramatic about it, give it a rest already, and thank you j92383, it's true that a lot of people do start off at home and I dont feel compelled to call the health department on them and try to investigate each person or assume if someone doesnt own a bakery that they are doing it out of their homes and if they do I dont care because I have my customers already and I'm not worried about losing any buisiness

jason_kraft Posted 30 Jan 2012 , 5:44pm
post #7 of 28

You definitely need to make sure you are adequately compensated for your time. When you price a cake you should be able to put together a rough estimate of how long it will take you to bake and decorate (including cleanup time). If you're unsure, err on the side of a higher estimate.

For example, if you think a 30-serving cake will take 11 hours just to decorate, you'll probably want to charge more like $6-7/serving...unfortunately running a legal baking business is expensive in CA so you need to make sure you cover your costs.

Your cakes look great and you have a lot of talent! One thing to watch out for is copyright infringement, unless you are just using a licensed cake topper you will need written permission from the copyright owner if you want to legally sell a cake with someone else's character on it.

ljslight Posted 30 Jan 2012 , 6:07pm
post #8 of 28

I think you do great work! And I agree, why does everyone jump down your throat. I thought this web page was for anyone who like to do cakes. I am a hobby baker and legal to do so in my home in Iowa. I make cakes for friends and family and people at church and work. I love to decorate and learn new things. I know so much time goes into some cakes and big box stores would never do them because they would not make enough money off them. Keep up the good work, you are amazing!

jason_kraft Posted 30 Jan 2012 , 6:27pm
post #9 of 28

To be fair, when you talk about pricing your cost structure is integral to the discussion, including overhead costs (which can be high in states without cottage food laws).

I don't agree with assuming someone is operating illegally (unless they specifically say so) but it is important information to have to help determine how much to charge for their products.

FromScratchSF Posted 30 Jan 2012 , 6:28pm
post #10 of 28
Quote:
Originally Posted by cupncake1

Ok everyone why would you just assume Im doing this out of my home, thanks for the compliments but dang it seems like everyone is getting a little crazy on here about all that, I never said I was doing it out of my home, this DOESNT have anything to do with that and this is like the 3rd time this week I've seen people on here get all dramatic about it, give it a rest already, and thank you j92383, it's true that a lot of people do start off at home and I dont feel compelled to call the health department on them and try to investigate each person or assume if someone doesnt own a bakery that they are doing it out of their homes and if they do I dont care because I have my customers already and I'm not worried about losing any buisiness




OK first? This ALWAYS has been a hot topic - for years. If you post asking for business advice on CC then you are going to get business advice. I hope this isn't one of those threads though where the OP is going to get all butt-sore because she doesn't like the advice she is going to get, no matter how relevant or good it is.

Business 101: Pricing is based on ingredients, time, and overhead. You clearly are only covering your ingredients, not paying yourself at all, and clearly not paying any overhead. I hope you start thinking like a business person instead of thinking like a home baker that is failing at business!

No way could I be working at a legal rental kitchen for 11 hours making a cake that I'm selling for only $75. That's $140 in rental fees alone for me. I'm simply using business logic. If I knew a cake that was going to cost me $140 just in rental fees to make then I wouldn't be wasting time posting on an internet forum on "how to charge more". I'd be charging more. So I'm sorry, but no way in any part of California could you only be charging $2.50 per serving for cake (using Earlene so you are giving a ton of cake away for free) and actually cover your overhead unless you are working out of your house. Illegally.

So I actually though I gave you good advice on how to fix that? When you become legal, you can actually charge what you are worth and not what you think your grandma will pay you. And we ALL gave you the complement that you do fantastic work so you should have no problems making that transition. The reality is you will loose all those customers you think you have now (that you are allowing to completely take advantage of you) and you will trade them in for a whole new customer base that will pay you what you are worth.

Now, if you happen to have some fantastic arrangement working out of a commercial kitchen for free or something (which again, by my math you would have to be doing), then I apologize, but then again, I think you would have posted that info instead of gotten all up-in-arms about us asking about the legal aspect.

jason_kraft Posted 30 Jan 2012 , 6:35pm
post #11 of 28
Quote:
Originally Posted by FromScratchSF

So I'm sorry, but no way in any part of California could you only be charging $2.50 per serving for cake (using Earlene so you are giving a ton of cake away for free) and actually cover your overhead unless you are working out of your house. Illegally.



It's certainly possible to legally run a home bakery in CA, as long as you bring your home kitchen up to code or build a secondary kitchen on your property.

I agree that it's pretty much impossible to sustain a legal business in CA at the $2.50/serving price point, in almost all cases you would either have a significant initial capital investment to recoup or ongoing rent (or both).

FromScratchSF Posted 30 Jan 2012 , 6:37pm
post #12 of 28
Quote:
Originally Posted by j92383

I think she's well aware of the fact that it"s not legal in California. I hate when people get on here and post comments that have nothing to do with the question. If you're legal that's great but a lot of us start off baking from home this way and your price have nothing to do with where you bake. It's the quality of the work. cupncake1 you should charge more you might lose some customers but most people won't care cause they know how great your cakes are




Why is this a hard concept for people to understand? If you want to actually make money doing this and not pay other people to eat your cake while you loose precious time from your family, then you need to learn teh maths. Do you live in a cardboard box on the street rent free! , bake with a solar powered easy bake oven and work for free? If not, where you bake and how much it costs you matters in your pricing.

FromScratchSF Posted 30 Jan 2012 , 6:43pm
post #13 of 28
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by FromScratchSF

So I'm sorry, but no way in any part of California could you only be charging $2.50 per serving for cake (using Earlene so you are giving a ton of cake away for free) and actually cover your overhead unless you are working out of your house. Illegally.


It's certainly possible to legally run a home bakery in CA, as long as you bring your home kitchen up to code or build a secondary kitchen on your property.

I agree that it's pretty much impossible to sustain a legal business in CA at the $2.50/serving price point, in almost all cases you would either have a significant initial capital investment to recoup or ongoing rent (or both).




What? No it's NOT legal to do either. There is no cottage law here and frankly I am completely amused that YOU, Mister California Legal Police hisownself, has chosen to take an opposite viewpoint from practically EVERY POST you have ever done just to be cute and argue. icon_rolleyes.gif

Must be a slow day for the computer programmer so he has decided to annoy the REAL cake artists again.

jason_kraft Posted 30 Jan 2012 , 6:48pm
post #14 of 28
Quote:
Originally Posted by FromScratchSF

What? No it's NOT legal to do either.



Sure it is, as long as you can pass inspection (and are compliant with local zoning). It's not easy though, the kitchen must be segregated from the living areas of the house if it is not a separate building on the property.

http://www.ehow.com/list_6718156_codes-home-baking-business-california.html

FromScratchSF Posted 30 Jan 2012 , 7:03pm
post #15 of 28

Really? E-how? That's where you are getting your info now? Cute. I expected a much better irrelevant link from you, but this one? Man, that's awesome. Do you do all your term papers crediting Wikipedia too?

Image

OK, done with this thread.

jason_kraft Posted 30 Jan 2012 , 7:06pm
post #16 of 28

That was the only relevant link I could find. I had this discussion with an inspector from Santa Clara County when we first started our business, she said that home bakeries could be certified if they passed inspection. Of course that doesn't happen very often due to the onerous requirements of the inspection.

That's the whole point of cottage food laws, to set up alternative rules for home bakeries so they don't have to go through what commercial bakeries do, so when CA passes a CFL the ease of running a legal home bakery will go from "very difficult" (not "impossible") to "relatively easy".

cupncake1 Posted 30 Jan 2012 , 7:30pm
post #17 of 28
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Now, if you happen to have some fantastic arrangement working out of a commercial kitchen for free or something (which again, by my math you would have to be doing), then I apologize, but then again, I think you would have posted that info instead of gotten all up-in-arms about us asking about the legal aspect.



I didnt know I was required to explain that I follow every legal aspect of my buisiness at every post, Apology accepted, no one starts off charging what a bakery does even with the overhead cost of renting a commercial kitchen and they do actually give away quite a few cakes as well before they see that they are good enough to actually charge and then how much they should charge and yes you did assume that I was doing it from home

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so it actually makes me sad to realize you might not be doing it legally in California. I don't want to assume, but your post leads us to assume that.



Like I said no starts out charging what a bakery does, it's very nice for you that you can afford to open a bakery but you must understand that not everyone starts that way, I have 3 kids to support and just because I found that I had a talent doesnt mean I can afford to buy tons of bakery equipment and open up a shop and everyone will be content to let me practice my cake making skills on them while I charge them $7.00 per serving. Someday I will open a bakery but I need to go to buisiness school first icon_biggrin.gif

Debbye27 Posted 30 Jan 2012 , 7:32pm
post #18 of 28

Ignoring all of the attitudes on here........

I think you are definitely undercharging! No cake that you -hand decorate- should sell for 50-70 dollars!
Babysitters make more money then you do!

You definitely have the talent- so my suggestion would be to up your confidence level and charge accordingly. If people get upset at your prices, then don't sell to them, they will have to go elsewhere and buy either a less beautiful or much more expensive cake....then they will get the hint...and probably even be back!

jason_kraft Posted 30 Jan 2012 , 7:39pm
post #19 of 28
Quote:
Originally Posted by cupncake1

no one starts off charging what a bakery does even with the overhead cost of renting a commercial kitchen



Sure they do. We started off charging pretty much what we charge now (aside from ~5% annual price increases to cover rising costs). While we were conducting R&D at home we gave away lots of cake, but we didn't sell anything until we had a commercial kitchen to rent. Trying to build a customer base by selling at a loss is counterproductive, since there probably isn't much overlap between customers who will buy a cheap cake and the customers who will pay a premium for quality, you'll want to build your business around the latter.

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and just because I found that I had a talent doesnt mean I can afford to buy tons of bakery equipment and open up a shop



If you can't afford to start a business the right way, then you can't afford to start a business. Operating out of an existing rental commercial kitchen doesn't require a lot of up-front capital...we spent around $3K in startup costs, and much of that was recurring (inspection fees, LLC, liability insurance).

gatorcake Posted 30 Jan 2012 , 7:48pm
post #20 of 28

Before going any further if this sounds chiding my apologies. It is not meant to be so and tried to control the tone.

Placing aside the question of legality and going off what you have here, the question I would ask is why are you only charging $2.50 per serving? What calculation did you use to come up with the figure? Your wage should be part of your costs (that is not profit).

Factoring minimum wage(not sure why you would value your skills as being worth less than minimum wage) your labor cost alone would be $79.75- and that does not count the time you spent baking them. Thus labor alone is more than what you charged for the cake. To say you are making less than minimum wage is an understatement.

In this case it seems you have a few options which are not mutually exclusive:

1) Alter your pricing structure to better cover your costs--including labor. If you are worried about customers not paying it, the question to consider is do you want to continue to run a business where you are essentially unable to pay yourself a wage. Profit is the excess of selling goods over their cost--your labor is part of the costs. Your wage should not be thought of as something that comes from profit. In the example you cite that $18 is not profit, it is what you have left to cover your labor costs associated with the cake including all the time you take getting the order and baking it At this point it is not a question of giving up a "profitable" business as you are currently unable to cover costs.

Worrying about going out of business seems strange if you are doing a bunch of work and you can barely pay yourself a little over a dollar an hour--if that. I get that you love doing it, but if you want a wage then you are going to have to come up with a price structure that accounts for your labor as part of your costs.

2) Become more efficient--note I am not saying you are inefficient but more efficiency means your labor charge will not be as high (assuming the same level of skill). Thus your cost increase would not have to be as much.

3) Do not use Earlene's chart or price according to larger servings. This has been debated more than once but you are essentially giving away cake. I am not sure what you mean by ensuring that they have the servings they need. Using the Wilton guide gives them the servings they need, now if they want to cut the pieces bigger than what the guide recommends then they need to order more cake.

However if you want to offer larger servings then you should price for those larger servings. So for an 8 in Wilton says 24 Earlene's says 15. If I needed to charge, per the Wilton guide, $4 a serving for an 8 in to cover costs (including labor) and get a 20% profit (totally making up those numbers) that is $96.

Whether I use Earlene's method, I still need to sell if for $96 to cover costs and make a 20% profit . Thus servings under Earlene's system should be $6.40 per serving--you must charge more for the larger servings. No matter how you slice it (pun intended) your costs and profit are the same for the 8 in. If you charge only $4 per serving use Earlene's system there is no way you will cover your costs and make a nice profit.

FromScratchSF Posted 30 Jan 2012 , 8:25pm
post #21 of 28
Quote:
Originally Posted by cupncake1


Like I said no starts out charging what a bakery does, it's very nice for you that you can afford to open a bakery but you must understand that not everyone starts that way, I have 3 kids to support and just because I found that I had a talent doesnt mean I can afford to buy tons of bakery equipment and open up a shop and everyone will be content to let me practice my cake making skills on them while I charge them $7.00 per serving. Someday I will open a bakery but I need to go to buisiness school first icon_biggrin.gif




Cupncake: I started my business with a $300 upfront deposit to my commercial kitchen, less then $100 in licensing fees, and a free Yelp business page for advertising. I didn't even own a car. I started with above market prices and at the time I wasn't 1/2 the decorator you are, but I knew where I wanted to be even if I didn't "feel" I was there yet. I would sell a cake, then buy supplies with the profit. Sell another cake. Buy more supplies. Rinse, repeat. Deliveries were done via cab. Seriously. And I charged people my cab fair.

I have an 8 month old baby and I am a full-time mom. Which means in order to do this, I wake up at 3:00am to drag my butt to the rental kitchen no later then 4am. I have to be wrapped up and home by 8:30 am so my husband can go to work. It takes meticulous planning in advance to make sure I am 100% efficient to make sure I can get done what I need to get done in that time. If I don't, then I am back at the kitchen at 7pm after I put my kid to bed and I stay until I AM done. Sometimes I am right back at the kitchen at 4am to pick up where I had just left off at 11pm. And my baby gets to ride along with me on my daytime deliveries. I now turn down more orders then I can take and that sucks, but I am a good mom, an excellent baker and a decent decorator that is in the game, profitable, and satisfied. And I was able to buy a car after about a year in business.

You have the wrong idea of what it takes to be legal in California - it ain't the money. It's dedication, tenacity, blood, sweat and tears... and the ability to function completely sleep deprived and keep a level head when stuff starts getting out of hand. But as a mom, you should be a pro at that already.

Anyway that's my story, so I hope this inspired you and other reading this thread to break past the wall you think you see.

pummy Posted 30 Jan 2012 , 9:36pm
post #22 of 28
Quote:
Originally Posted by FromScratchSF

Quote:
Originally Posted by cupncake1


Like I said no starts out charging what a bakery does, it's very nice for you that you can afford to open a bakery but you must understand that not everyone starts that way, I have 3 kids to support and just because I found that I had a talent doesnt mean I can afford to buy tons of bakery equipment and open up a shop and everyone will be content to let me practice my cake making skills on them while I charge them $7.00 per serving. Someday I will open a bakery but I need to go to buisiness school first icon_biggrin.gif



Cupncake: I started my business with a $300 upfront deposit to my commercial kitchen, less then $100 in licensing fees, and a free Yelp business page for advertising. I didn't even own a car. I started with above market prices and at the time I wasn't 1/2 the decorator you are, but I knew where I wanted to be even if I didn't "feel" I was there yet. I would sell a cake, then buy supplies with the profit. Sell another cake. Buy more supplies. Rinse, repeat. Deliveries were done via cab. Seriously. And I charged people my cab fair.

I have an 8 month old baby and I am a full-time mom. Which means in order to do this, I wake up at 3:00am to drag my butt to the rental kitchen no later then 4am. I have to be wrapped up and home by 8:30 am so my husband can go to work. It takes meticulous planning in advance to make sure I am 100% efficient to make sure I can get done what I need to get done in that time. If I don't, then I am back at the kitchen at 7pm after I put my kid to bed and I stay until I AM done. Sometimes I am right back at the kitchen at 4am to pick up where I had just left off at 11pm. And my baby gets to ride along with me on my daytime deliveries. I now turn down more orders then I can take and that sucks, but I am a good mom, an excellent baker and a decent decorator that is in the game, profitable, and satisfied. And I was able to buy a car after about a year in business.

You have the wrong idea of what it takes to be legal in California - it ain't the money. It's dedication, tenacity, blood, sweat and tears... and the ability to function completely sleep deprived and keep a level head when stuff starts getting out of hand. But as a mom, you should be a pro at that already.

Anyway that's my story, so I hope this inspired you and other reading this thread to break past the wall you think you see.





Well you have inspired me! Seriously! thumbs_up.gif

ellawillow Posted 30 Jan 2012 , 10:00pm
post #23 of 28

Totally ignoring all the ''legal/illegal" talk as that was not your post tapedshut.gif ....I just wanted to say to you Cupncake1 - your cakes are beautiful, you are definitely worth more money and just take that leap and put your prices up. That being said, it is just steps at a time - I know where you are coming from and it is all a matter of confidence...your cakes are great and people will pay you more. People buy with 'emotion' most of the time - not with their head anyway so if they really want the cake they will pay you so don't think your cakes are less that what they are really worth. Just wanted to say 'beautiful work' - you will get there....if I could be half as talented I would be super happy icon_smile.gif

Amylou Posted 31 Jan 2012 , 4:53pm
post #24 of 28

First, your cakes are fantastic! Start charging what they're worth!!

Second,

Quote:
Originally Posted by FromScratchSF

What? No it's NOT legal to do either.




It IS possible. I am in the midst of getting my legal kitchen going on our property in California. I meet the zoning requirements, and am meeting the HD requirements. It is not an easy task...but it's the only way I could do caking legally because I'm not in the position family-wise to be able to do it outside the home. I am very fortunate to live where I do (for zoning) to be able to do this.

dawnybird Posted 31 Jan 2012 , 5:40pm
post #25 of 28

All I have to say is: I'm kinda shocked and disappointed at the snarky tone in so many of these posts. Until now, I always thought of us as a big extended family of people who enjoy the same thing and we all reach out to each other with help and encouragement. Sorry if I sound like Heidi or something, but really, let's keep things cordial and kind. No need to snip at anyone. Cupncake, good luck to you no matter what you decide to do. If you decide to make cakes absolutely free just because you love to do it, that's for you to decide.

FromScratchSF Posted 31 Jan 2012 , 6:34pm
post #26 of 28
Quote:
Originally Posted by Amylou

First, your cakes are fantastic! Start charging what they're worth!!

Second,

Quote:
Originally Posted by FromScratchSF

What? No it's NOT legal to do either.



It IS possible. I am in the midst of getting my legal kitchen going on our property in California. I meet the zoning requirements, and am meeting the HD requirements. It is not an easy task...but it's the only way I could do caking legally because I'm not in the position family-wise to be able to do it outside the home. I am very fortunate to live where I do (for zoning) to be able to do this.




Amylou, what you are doing is awesome! But to be clear, you are not doing cake "out of your house", you are making a secondary commercial space that is not part of your dwelling. Your area must already be zoned commercial mixed use and for all intents and purposes, you are essentially building out a separate commercial kitchen on your mixed-use space. Right? I could do the same, the condo I live in is a mixed use live/work loft with a retail entrance. I could buy the loft next to me, build a commercial kitchen in it and open a store. But that's not a cottage law or home baking. That's having a separate commercial space that I just so happen to own and live right next to. It's not baking out of my own personal kitchen. I want to point this out because what you are doing is awesome! but not the same.

Am I wrong?

Amylou Posted 31 Jan 2012 , 6:43pm
post #27 of 28

Correct Jennifer...it is not out of my home kitchen. For me, zoning is ag (we're out in the sticks) but in the regs I can have a "rural home business" under certain guidelines. It has helped that the guy that has helped me with my plans used to be the head Planner for the county!

jason_kraft Posted 31 Jan 2012 , 6:44pm
post #28 of 28

It depends on how you define "home baking". It is possible to get a kitchen inside your house inspected and certified if it is segregated from the living areas of the house, just as a separate structure on your property can be certified. Non-commercial zoning is not always a showstopper, since if you can show your business has a low impact on the neighborhood you may be able to get an exemption.

None of this falls under the cottage food law, any home kitchens (or home-adjacent kitchens if you want to be pedantic) must follow the same rules as commercial kitchens.

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