I recently made a cake for a friend, and I only charged for the ingredients. I am awaiting my inspection to become permitted to bake at home so I can sell cakes to the public, and I could use some help with pricing. I figured that the cake cost about $50 for ingredients, board, etc. and it took me about 8 hours to bake, decorate, etc. The cake in question is the Millennium Falcon cake in my gallery(i cant figure out how to post the pic in this message!) It is the size of 2 half sheets stacked. My estimation gives me a retail of about $200. What do some of you experienced business owners think? Thanks in advance for any help.
Here is a fabulous, recent, thread about How Much to Charge. If you haven't read the thread and all the links provided by vgcea, it is well worth the time to read all the information.
How much to charge:
Exact title of thread: How much to charge
Author of thread: MallorieH
Date of thread: Posted: Fri Jul 20, 2012 11:23 am
I figured that the cake cost about $50 for ingredients, board, etc. and it took me about 8 hours to bake, decorate, etc.
If you pay yourself $12/hour and your per-order overhead is $30 (this would account for insurance, accounting, licensing, etc.), your cost would be $50 + (8 * $12) + $30 = $176. A price of $200 is reasonable and would give you a 15% profit margin.
BTW the Millennium Falcon is copyrighted so you would need Lucasfilm's permission to reproduce it. I would also advise not accepting any money for cakes until you are licensed (even just to pay for ingredients).
Thanks for the advice. Don't you think $12 an hour is a bit low? I am a cake decorator for a business now and I make more than that, and have insurance!
As a side note, I do not plan on selling cakes with copyrighted images in the future. After I made it I realized that it would not be advisable or right to do it in my legitimate business.
$12 may be on the low side depending on your area, your business plan will give you a better idea what comparable wages are and (more importantly) how much you can pay yourself based on the efficiency of your processes and market prices for your products.
So if your wage is, say, $15/hour (with all the other numbers the same) your cost would already be $200, so if you sold it at that price your business would make zero profit on the transaction.
Ah hah! I see what you are getting at now!