AI know it isn't all glitter and unicorns and like I said I know it affects the industry and that is whyi am here. I just don't feel comfortable anymore that'sall... But thank you all for your help.

What do you mean this thread can't be real?  I was asking to try out other options.  People have liked my chocolate cake but I said my mom said it tasted like cake mix so I just wanted to try another recipe for her to try.  Didn't say it was awful.

I'll add another point to this thread, when you charge so little and then at some later date ( 6 months a year whatever) you start getting really busy and realise you are not making ends meet you will want to raise your prices and you have friends or clients (or both) not wanting to pay the new price - that's when trouble starts. Obviously you can't charge the same price when you starting out as when you have years of experience but when you price it low bc you don't understand why bakeries are charging so much (think of the overhead) & say that's the reason most of your clients will not comprehend why you have hiked the price up and will not want to pay. 

Don't forget that we (most of the bakers on this forum) fight against tv shows that run for 20 minutes and yet produce multi tiered cakes with seemingly (according to the viewing audience) no effort at all so the clients do not understand how much time and effort goes into these cakes not even starting with the ingredients & machinery etc. (note, they do not put the prices of these cakes up on the screen), if we don't charge enough this is then perpetrated and we end up working for nothing.

Charging is (for me) the hardest part of this business but as my mum says to me (repeatedly) "these cakes are a luxury item, no-one HAS to have them"

AAlso bear in mind that you and your friends are probably comparing bakery prices with grocery store prices when deciding that the bakeries are overcharging.

Grocery store cakes are made in factories, with super cheap low quality ingredients by minimum wage employees and these are still loss leaders for the stores that sell them. That means that they are sold at a loss, after paying for all of the ingredients, packaging, wages and overhead. There is no way a home baker without all the access to the equipment, ingredient prices and bulk discounts on packaging can ever compete with their prices and make a profit.

ok--the bakery business has for decades been shrinking and shrinking-- there will probably always be a few custom shops but with the tsunami of products and information available to do work that took genuine expertise just a few years ago--it's all washing away--at an accelerated pace--

sure sure you gotta have a better product but better than what? collectively we are all getting better and better at this--i have over 40 years in the industry and it's clear as day--the whole thing is on a sandbar and it is dissolving--

this is not meant to be discouraging--it's meant to explain some of the fervor over the pricing issues that have been caused by the continuing and greater influx of peeps trying to sell baked goods for a plethora of reasons, including tight economy and it's easily attainable to learn it and acquire the tools -- most of us have ovens and mixers

the writing on the wall is getting bolder--

and this is a very civilized thread--congratulations to all of us--

op, you gotta be a tough cookie to survive the business and this board--take what you want and leave the rest--cafeteria style--these threads allow peeps who are where you wanna be let off some understandable steam and they are also sharing a boatload of wisdom in the process (which actually is part of the problem) you get instant information about how to run a business by the people who are letting more cats out of the baking bag--

why bale when you've got everyone meowing for you...

Make way for the dream crusher, here I come!

I've been doing cakes for 18 years, and the idea that the cake market is shrinking is true but also not true. The possibility of earning enough to support yourself through your business is shrinking because the market is expanding at a huge pace due to so many people entering the market and it being saturated. For every person who has been in business as long as I have there are twenty people who think that they can enter the market and charge less because established businesses are overcharging, which we're not, by the way.

The reality is that there are so many people selling cakes now, it's an unsustainable business unless you're good at marketing, Not baking, not decorating, marketing. People may think that doing cakes is so much fun, but unless you're willing to treat it like a business, not as a glorified ego-stroking  hobby, you're going to be earning less than minimum wage when you add up the time it takes to do everything (shipping, cleaning, networking for business, etc etc). This only ends up driving the market value of good cakes down overall, with the people who are good at marketing still being able to survive and earn a decent living. Not a luxurious living by any means, but enough to pay the bills and have more than $8 an hour after that.

The people on here who have posted about looking at this as a business are right, you can't go in thinking that you'll charge less because that's the nice thing to do. I don't know any successful business that starts their business plan that way. You have to charge based on what you need to earn to have a sustainable income. Part of it is what the market will bear, but that's only part of it. I know what my local market will bear, so I use that as part of my pricing, but I also know what my time is worth, and that weighs more heavily when I set pricing. If I was only going to be earning $100 for a wedding cake after expenses I'd rather take the ten hours that would involve and go do something fun instead.

Unless you're good at marketing, figuring out pricing, understanding what sells in your market and responding to that, you might as well forget about it and just do cakes for a hobby. Wedding photographers have been stuggling with this same issue for years beause of weekend warrrior "photographers", and with the popularity of cake decorating and the availability of so much equipment that makes having rudimentary decorating skills totally unnecessary, the custom cake market is dealing with it now.

AIt's great that you found something you enjoy doing. I'm not sure about the prices or products of the bakeries you mentioned.

AZ put it perfectly in her first post. And this can be a great place to learn from very talented, successful people in the industry-whether you decide to run a business.

I have no intention of being rude or hurtful, I don't think anyone else does either some are just more blunt. For many of us this is how we pay the bills, so I'm sure you can understand how someone intentionally 'undercutting' ultimately hurts us all.

Someone with a storefront typically has a higher overhead then your average home-based business, but most people posting on these threads about pricing don't realize that they do still have overhead. In states like mine, in order to make direct sales to the public (from home) you must have/build a separate kitchen, with a separate entrance, water supply...on top of added insurance (that most of us also have regardless), food safety certifications, etc.etc.etc. My ten-year-old can't have a dog, believe me that's a monthly battle.

I guess the main question you need to ask yourself is whether or not you want a successful business or a hobby.

damn we're good at this

OP~~What may have been deemed a fairly civil and straightforward question, "how do I price my cakes?" is actually a huge red flag to business persons who must obtain all or a significant portion of their income from "cakes".  Perhaps a good way to begin to answer this question is to ask yourself one or two questions: 

"How much would I need to charge to make the same take home-pay provided by a PART-TIME job (20 hours a week, for example)  at McDonalds?"  How much would I need to charge per cake, and how many cakes would I need to sell, to make the same net dollars generated by a part-time job in food service with no benefits such as insurance, vacation pay, sick leave, etc? 

"How much would I need to charge to support my family if custom cakes were the only FULL TIME job and no one else in the household worked at a regular job?"  (There is an old joke with the punchline, "Don't quit your day job!")  How much would you need to charge to provide health insurance, car payments, utilities, mortgage, savings, vacation, emergencies, etc.

* * * * * *

Here is a superb response, dated 4/3/12, post 3 of 19 from a business person, leah_s:

(original thread link:)  http://cakecentral.com/t/742057/new-cake-business-at-home-help

"Well, the first thing you need to do is check your zoning/deed restrictions/HOA covenants, etc. to make sure that you can have a biz in your home.

Second you need to contact your Dept of Health/Dept of Ag to get certified/licensed if you are in a state that permits home kitchens. You might have a Cottage Foods Law in your state - I just don't know.

Then you should get liability insurance.

Then you might want to think about setting up banking accounts, booking procedures and of course, look in incorporating. You might be able to put that off, but it's frequently fairly easy to DIY. The Secretary of State in my state actually provides forms and templates.

Next, you'll likely need to register with the state sales tax/revenue commission and ditto any local taxing authorities.

Oh, and check into getting a federal EIN. You won't need it right away,. but it's easy to do online, and you'll need it at some point.

Then of course there is the baking."

* * * * * *

Compliments to everyone for the civility maintained!!!   Happy Holidays!

AWhile you won't have rent/lease and an entirely separate utility bill, you also won't have the purchasing power of a storefront bakery. While those are not entirely equal, it's inaccurate to say home bakers are able to charge so much less.

I recommend that you start a list. In your mind, bake a cake. Add to your list every single item you touch. This includes: paper towels, hand towels, soap, laundry soap (for hand towels & aprons), parchment paper, pencils. This will be a very long list.

When I started, I was very serious about investigating the profitability. I even looked up how much energy my oven would use to bake a cake & the cost of that energy.

A cake is so much more than the ingredients. Your costs will be more as well.

Now here's the really scary part....all those predictions are only an insight. I keep a ledger which includes every dime I spend and every some I earn. I charge $4.50 per serving and still sometimes don't make enough profit on a cake. When I look back at the profits of this year and compare them to the hours I worked .....I have to remind myself that this is only the second year on my own.

I've seen some others mention they can't affine thier own cakes. I'll take that one step farther. Many people sell or work for companies which produce products they can't themselves purchase. My husband sells roofs. No way we could afford one. A friend of mine installs pools. Doesn't/can't afford one.

Best advice: no your REAL COST and know your REAL CLIENT.

This should be a sticky! So much good information, and all civil.

"I also read up that you shouldn't price too low because it is unfair to all others"

Let them eat cake.

Don't worry about them sweetie.

Happy New Year.

AWhat great advice :eyeroll:

Well I don't have time to reread all of that.. It's not so much a matter of whether it is "nice" or not. The issue is that undercutting devalues the market of the very industry that we (a lot of us) are trying to make a living in. If I want to be a car mechanic because car mechanics make x amount of dollars per year, but I go in offering the same service for X-3 per year..then why would anyone want to pay X anymore? I have just set a new, lower standard for my industry. People should charge what the market is willing to bear for the product that they produce, taking quality into consideration of course.

(can you tell I am in algebra class right now with my X-3?)

AScott312 if you want to pay for the cakes you're 'selling' out of your own pocket go ahead, telling others to undersell themselves is poor advice.

You need to be charging to all of your ingredients, as well as ALL of your time.  You need to know what it is that you would like to earn per hour for your labour and become totally aware of how long a cake takes, right through from consultation, to shopping, to baking, clearing the kitchen and then delivery or collection.  If you do not have the figures for the ingredients and the sundry items that you have outlayed for your contract - as well as the amount of time it took and the amount per hour you are willing to work for, you WILL be loosing money.   I would use the value that the bakeries with a high street presence charge, as a guide line, and certainly I would ensure that for me I was not undercharging for my services.   I know that the cake decorating community get very passionate about how much to charge - and sometimes I have found that the problem comes - not from the value of the total contract, but the fear of asking for the price and selling the cake design to the customer.  I have even known a cake decorator who used to slice £20 off the price when the money was handed over, because she was too embarrassed to stick to her guns.   Hey ho.  So my advice would be, do some research, price all your ingredients up for each design and start to keep track of exactly how long a cake design takes you.  Once you have this in mind, it is far easier to quote for future similar designs.  Knowing how much you want to earn per hour too.  (There are other things to consider too - like overheads, utilities too, but in the first instance you MUST know exactly how much you are going to expend from your purse to create a cake.  Value yourself, and your time too and have the confidence to ask what you feel you are worth.  And do not undercut yourself.  Start as you mean to go on.   Hope that helps.  Kx   PS I use the value that the bakeries charge - within a sales technique that never fails to secure the order, when selling my cakes! 

I've been on this forum for several years, and I have to say, I'm a little embarrassed at the way a new person is treated when asking a valid question.  Can't we educate others without mocking them?