sarzoemom Posted 1 Mar 2013 , 3:59am
post #1 of

AI have been in business for 6 months now and I know how much my cakes cost me to bake in material. What I am curious about is how much does everyone charge for labor per hour? I'm in Australia and minimum wage is almost $17 an hour. I figure if someone working McDonalds makes $19-20 an hour, I should be able to charge quite a bit for my time and skill.

16 replies
howsweet Posted 1 Mar 2013 , 4:29am
post #2 of

It's important to know what your costs and wage per hour are and everyone always seems to know that.  You also want to consider profit after wages. Wages might be what a cake decorator or bakery manager would make per hour and profit is the amount beyond that. So it's vital to know what the going price for cake is. You can't sell a cake for more than market value and certainly wouldn't want to sell it for less.

Annabakescakes Posted 1 Mar 2013 , 4:46am
post #3 of
Quote:
Originally Posted by howsweet 

It's important to know what your costs and wage per hour are and everyone always seems to know that.  You also want to consider profit after wages. Wages might be what a cake decorator or bakery manager would make per hour and profit is the amount beyond that. So it's vital to know what the going price for cake is. You can't sell a cake for more than market value and certainly wouldn't want to sell it for less.

It depends on your skill level. I would have assumed that as well, an did a while ago, but as I look at the amazing skills of some of the CC's on here, and check out their websites, I am always amazed by how high some of the prices are, but when I look at them, and know the skill that went into them, with ever color precise, and every piece cut perfectly, and the scale is perfect and the photography is immaculate, I see how it is worth getting paid every penny. AZCouture's piano, anyone? WOW! I would need the $1000 minimum to get me through it without saying "FLIP it! I quit!" and it still wouldn't look that good.

 

I admit I am very motivated by money, it is a miracle that feeds, clothes, shelters and entertains my 4 kids!

howsweet Posted 1 Mar 2013 , 5:05am
post #4 of
Quote:
Originally Posted by Annabakescakes 

It depends on your skill level. I would have assumed that as well, an did a while ago, but as I look at the amazing skills of some of the CC's on here, and check out their websites, I am always amazed by how high some of the prices are, but when I look at them, and know the skill that went into them, with ever color precise, and every piece cut perfectly, and the scale is perfect and the photography is immaculate, I see how it is worth getting paid every penny. AZCouture's piano, anyone? WOW! I would need the $1000 minimum to get me through it without saying "FLIP it! I quit!" and it still wouldn't look that good.

 

I admit I am very motivated by money, it is a miracle that feeds, clothes, shelters and entertains my 4 kids!


I don't understand the assumption that any of these cakes are selling above market value just because they are very expensive. It certainly doesn't sound like it. Was it my wording? How about this - you have to find out of the market value of the cakes you're selling - is that better? :)

jason_kraft Posted 1 Mar 2013 , 5:29am
post #5 of

AIf you do market research and look for salary surveys in your area you should get a better idea what the going rate is for a cake decorator where you live.

As mentioned above, when you run your own business you should be paid twice for each order: your wage compensates you for your work as a cake decorator, and your profit margin compensates you for your work as a business owner. The latter will depend on market value, how good you are at increasing the value offered by your products, and how good you are at keeping costs down.

jason_kraft Posted 1 Mar 2013 , 5:33am
post #6 of

A

Original message sent by howsweet

I don't understand the assumption that any of these cakes are selling above market value just because they are very expensive. It certainly doesn't sound like it. Was it my wording? How about this - you have to find out of the market value [COLOR=0000CD]of the cakes you're selling[/COLOR] - is that better? :)

Agreed...if an expensive cake was above market value for the target customer, it wouldn't have sold.

It's not just about the market value of the product, you have to take into account who the customer is, since different customers may have very different ideas of what the market value of a specific cake is.

fearlessbaker Posted 1 Mar 2013 , 5:42am
post #7 of

Jason, I wished that applied to buying a car also. I would love to tell the dealer what my idea of the value for a car is and get him to sell it to,me for that.

jason_kraft Posted 1 Mar 2013 , 5:49am
post #8 of

A

Original message sent by fearlessbaker

Jason, I wished that applied to buying a car also. I would love to tell the dealer what my idea of the value for a car is and get him to sell it to,me for that.

I've done exactly that. When I bought a Rav4 a couple years ago I researched the dealer invoice price, holdback, mfr to dealer incentives, etc. and came up with a price for a specific model and configuration I was comfortable paying that still allowed the dealer a fair profit. I went to the dealership and offered slightly below that number, they countered slightly above, and we settled on just about that exact price.

The whole process (at the dealership anyway, not including research time) took about an hour.

Annabakescakes Posted 1 Mar 2013 , 3:30pm
post #9 of

Double post

Annabakescakes Posted 1 Mar 2013 , 3:31pm
Quote:
Originally Posted by howsweet 


I don't understand the assumption that any of these cakes are selling above market value just because they are very expensive. It certainly doesn't sound like it. Was it my wording? How about this - you have to find out of the market value of the cakes you're selling - is that better? :)

 

Quote:
Originally Posted by howsweet 

It's important to know what your costs and wage per hour are and everyone always seems to know that.  You also want to consider profit after wages. Wages might be what a cake decorator or bakery manager would make per hour and profit is the amount beyond that. So it's vital to know what the going price for cake is. You can't sell a cake for more than market value and certainly wouldn't want to sell it for less.

 

 

Quote:
Originally Posted by Annabakescakes 

It depends on your skill level. I would have assumed that as well, an did a while ago, but as I look at the amazing skills of some of the CC's on here, and check out their websites, I am always amazed by how high some of the prices are, but when I look at them, and know the skill that went into them, with ever color precise, and every piece cut perfectly, and the scale is perfect and the photography is immaculate, I see how it is worth getting paid every penny. AZCouture's piano, anyone? WOW! I would need the $1000 minimum to get me through it without saying "FLIP it! I quit!" and it still wouldn't look that good.

 

I admit I am very motivated by money, it is a miracle that feeds, clothes, shelters and entertains my 4 kids!

 

Quote:
Originally Posted by howsweet 


I don't understand the assumption that any of these cakes are selling above market value just because they are very expensive. It certainly doesn't sound like it. Was it my wording? How about this - you have to find out of the market value of the cakes you're selling - is that better? :)

I guess we are both guilty of having our posts misunderstood. I took your post to mean that you were saying, yeah it would nice if you could get paid that much, but it could be more than the market value, which you can't sell it for more than that.

 

I can guarantee you that the vast majority of the population would think that $18 a serving is too much for cake, let alone $33. And that is what I really meant, not that it was above market value, but that typically, very few people would actually be willing to buy it. Obviously someone thought it was a fair price, or maybe thought it was outrageous, but really wanted it! I have been guilty of purchasing things I thought were WAY overpriced, but too cute, like a $80 dress for my daughter to wear once. Or really expensive, but really cool, and helpful, like my Agbay. $317 for a knife? Seems weird. I did say that her cake was worth every penny, not that it was over priced...

kikiandkyle Posted 1 Mar 2013 , 3:34pm

There is a market for $1,000 cakes, it's just a small market. So the cake is in line with typical market value for that segment of the market. Just not with the general cake market, for which $1,000 is really out of budget for a large number of people.

Annabakescakes Posted 1 Mar 2013 , 3:50pm
Quote:
Originally Posted by kikiandkyle 

There is a market for $1,000 cakes, it's just a small market. So the cake is in line with typical market value for that segment of the market. Just not with the general cake market, for which $1,000 is really out of budget for a large number of people.

So, you could say,

 

"[some would be] amazed by how high some of the prices are, but when [they] look at them, and know the skill that went into them, with ever color precise, and every piece cut perfectly, and the scale is perfect and the photography is immaculate, [one would] see how it is worth getting paid every penny."?

 

Or "I can guarantee you that the vast majority of the population would think that $18 a serving is too much for cake, let alone $33. And that is what I really meant, not that it was above market value, but that typically, very few people would actually be willing to buy it. Obviously someone thought it was a fair price, or maybe thought it was outrageous, but really wanted it!

Annabakescakes Posted 1 Mar 2013 , 3:50pm
Quote:
Originally Posted by kikiandkyle 

There is a market for $1,000 cakes, it's just a small market. So the cake is in line with typical market value for that segment of the market. Just not with the general cake market, for which $1,000 is really out of budget for a large number of people.

So, you could say,

 

"[some would be] amazed by how high some of the prices are, but when [they] look at them, and know the skill that went into them, with ever color precise, and every piece cut perfectly, and the scale is perfect and the photography is immaculate, [one would] see how it is worth getting paid every penny."?

 

Or "I can guarantee you that the vast majority of the population would think that $18 a serving is too much for cake, let alone $33. And that is what I really meant, not that it was above market value, but that typically, very few people would actually be willing to buy it. Obviously someone thought it was a fair price, or maybe thought it was outrageous, but really wanted it!

kikiandkyle Posted 1 Mar 2013 , 4:02pm

Exactly! 

denetteb Posted 1 Mar 2013 , 4:04pm

Jason, I like how you worded your post #5 on this thread.  I read many times about your pricing suggestion....labor and profit but it never really sinked in.  Just never really GOT it. This post, how you should get paid twice, once for your work as a decorator and once as a business owner really clicked finally.  That profit part pays for your time marketing and advertising and researching and web changes, etc, etc,etc.  I don't sell cakes anyway, but good to know I finally understand the profit portion of the equation.

jason_kraft Posted 1 Mar 2013 , 6:55pm

A

Original message sent by denetteb

Jason, I like how you worded your post #5 on this thread.  I read many times about your pricing suggestion....labor and profit but it never really sinked in.  Just never really GOT it. This post, how you should get paid twice, once for your work as a decorator and once as a business owner really clicked finally.  That profit part pays for your time marketing and advertising and researching and web changes, etc, etc,etc.  I don't sell cakes anyway, but good to know I finally understand the profit portion of the equation.

I'm glad it helped!

To clarify, overhead costs like advertising and web site development are not typically paid for out of profit, since they are expenses that must be paid to other companies and can be allocated out to the cost of your products before markup.

denetteb Posted 1 Mar 2013 , 6:58pm

Ok, that makes sense.  Thanks for clarifying that.

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