Thoughts On This Cupcake Pricing For My Business

Decorating By kparks2 Updated 18 Mar 2014 , 8:57pm by kparks2

kparks2 Posted 17 Mar 2014 , 1:48pm
post #1 of 31

Hello all. I  have just decided to start my own side business in my area for baking.  I wanted to get some ideas on pricing especially for cakes and cupcakes and I want some opinions.  Keep in mind I want to be competitive with cupcake business so I want to keep my prices lower.  For cupcakes I was thinking $20/doz. for basic cupcakes (cupcake with frosting) $25 for speciality cupcakes (special toppers, fillings, additions, etc...)

 

Cakes

8 - inch specialty $30

9 - inch $35

10 - inch or more will be $2.50 per serving

 

 

Thoughts?

30 replies
BeesKnees578 Posted 17 Mar 2014 , 2:12pm
post #2 of 31

Are the other business selling for this same price?

 

If not, you are not being competitive...you are undercutting.  Not good business practice.


Put "pricing my cakes" in the search bar and you will find tons of info about this!

 

Good luck!

kparks2 Posted 17 Mar 2014 , 2:15pm
post #3 of 31

No they are charging more around the $30 range.  I guess competitive was the bad word but I wanted to be cheaper than them.  Thanks for the tip of searching.

BeesKnees578 Posted 17 Mar 2014 , 2:28pm
post #4 of 31

Don't be cheaper if your product is equal to or greater than theirs.  Just because you don't have the overhead of the shop doesn't mean that you should charge less.  They probably get their ingredients at a cheaper rate than you will, but they have more overhead. 

 

You will steal business from them, which isn't fair (may sound good to you, but it makes people believe that high quality stuff SHOULD be cheap and it SHOULDN'T at all).

 

Guaranteed you will be working your arse off for VERY, VERY little money.  Why would you want to work harder for less money?

 

Respect your time and pay yourself for it.  And don't be dumb like me and wait a really, really long time to time yourself to know how long it actually takes you - start to finish - to complete a batch of cupcakes.  There are some great timer apps for smart phones or the clock function as a start/stop timer.  Cost out your ingredients for each recipe (Cake Boss helps immensely or just do it yourself if you have the patience to figure out what a tsp of vanilla, baking soda, a cup of flour and sugar, etc., costs.  You WILL be shocked how much icing costs to make.

 

Use high/better quality ingredients and bake from scratch...people can get mass produced cupcakes from a base mix at the grocery store.  Set yourself apart so that people will WANT to pay your competitive prices and choose you over a shop with roughly the same prices.

 

Just some thoughts...

thecakewitch Posted 17 Mar 2014 , 2:29pm
post #5 of 31

ABefore you compare your prices to other business, have you cost out your products? How much your overhead and ingredients costs are?

Godot Posted 17 Mar 2014 , 2:57pm
post #6 of 31

AWhat is it with everyone thinking they should be a businessperson?

kparks2 Posted 17 Mar 2014 , 3:15pm
post #7 of 31

Yes and I mean basic cupcake ingredients are not horrible expensive and I always stock up on flour, sugar, butter, eggs, etc....

 

I think after the some of the research (I bake cupcakes all the time this is not something new to me and I am always creating new cupcake flavors too so I finally decided to turn my passion into a side business).  I think from what I see on the other forums my pricing is not too high but not too low.  I will definitely take the advice I got except from the last person in terms of figuring out pricing.  Thanks so much guys!

maisie73 Posted 17 Mar 2014 , 3:20pm
post #8 of 31

AIt's called ambition and aspiration where I come from Godot. Can't help you with prices kparks2 but good luck with your business . :-)

kparks2 Posted 17 Mar 2014 , 4:13pm
post #9 of 31

Quote:

Originally Posted by maisie73 

It's called ambition and aspiration where I come from Godot.
Can't help you with prices kparks2 but good luck with your business . icon_smile.gif


I agree with the first statement and I think I have an idea of what I will do but I will take my friend's advice and for the first few customers charge a bit lower just to build up my business.  Thanks for the wishes! :)

Apti Posted 17 Mar 2014 , 4:37pm
post #10 of 31

How Much Should I Charge for my [Cup]Cakes?

 

http://www.cakeboss.com/CakeStuff/Articles/HowMuchShouldICharge.aspx

 

Excerpt from excellent article above:

 

"This is one of the most frequently asked questions by cake decorators when they begin to sell their cakes.  The simple but frustrating answer is that no one can tell you how much you should charge.  Setting a price structure is one of the most difficult parts of any business.  As with real estate, the price of cakes varies widely by location and is largely determined by your local market.  Finding the right price point requires research of your competitors' prices, and a solid understanding of your own costs."

 

Welcome to the forum.  If you do a search on this forum alone, you will find literally millions of posts from new members for this question with many thoughtful answers that are all basically summed up in the paragraph (and full article) above.

kparks2 Posted 17 Mar 2014 , 4:39pm
post #11 of 31

Wow!  That helps a lot.  I really appreciate the feedback all! :smile:

liz at sugar Posted 17 Mar 2014 , 4:39pm
post #12 of 31

Quote:

Originally Posted by kparks2 
 


I agree with the first statement and I think I have an idea of what I will do but I will take my friend's advice and for the first few customers charge a bit lower just to build up my business.  Thanks for the wishes! :)

 

Yes, definately take the advice of a friend who says to charge lower prices . . .  once your business is built up, you will get the opportunity to start from scratch and build it up again when you wake up and decide to charge what you need to charge to stay in business.  The customers who want cheap cake won't stick around for your second act.

 

Business experience or education is far more important that knowing how to bake.  My two cents of advice - take it or leave it.

 

Liz

leah_s Posted 17 Mar 2014 , 5:08pm
post #13 of 31

When you position yourself as an equal in the caking community, you'll find that other bakers and bakeries respect you and will help you out in a pinch.  When you start out by purposefully setting your prices lower, you are undercutting and you will quickly make no friends in the business.  It's simply wrong. It devalues everyone else's work in your community and becasue of the global community of the internet, it hurts all of us.

raksbrasil Posted 17 Mar 2014 , 5:21pm
post #14 of 31

When I started my cake business, I had my prices much lower than the bakeries and other people making cakes, not because I wanted to undercut them, but just because I was scared of over-pricing, and not being able to deliver accordingly. As I grew in experience, realized how much work went into each cake and got the hang of things, I gradually started raising my prices until they were equal or even more expensive than some other cake places. Some original customers who called and got the new prices didn't buy from me anymore (not that I care) but new customers are always coming in, and there are always people who are willing to pay what a cake is worth.. 

kparks2 Posted 17 Mar 2014 , 5:57pm
post #15 of 31
Quote:
Originally Posted by leah_s 
 

When you position yourself as an equal in the caking community, you'll find that other bakers and bakeries respect you and will help you out in a pinch.  When you start out by purposefully setting your prices lower, you are undercutting and you will quickly make no friends in the business.  It's simply wrong. It devalues everyone else's work in your community and becasue of the global community of the internet, it hurts all of us.


Thanks for the advice and my intention is not to "hurt" anyone as I am new at this.  Here is the reality when it comes to any competition you are not trying to charge more than your competitor.  Most cupcake shops around here harge $3 - $3.50.  My idea is $2.50 per basic cupcake and $3 for specialty which I do not feel is too much lower than the other business.  I complete understand what you are saying and I appreciate the feedback as since this is new to me I am learning.  Raks, thanks as I think your advice really understands my current situation and you make a very valid point and it makes sense.  Liz thanks for the advice, a little abrupt, but I do see your point of view. 

liz at sugar Posted 17 Mar 2014 , 6:45pm
post #16 of 31

Quote:

Originally Posted by kparks2 
 


Thanks for the advice and my intention is not to "hurt" anyone as I am new at this.  Here is the reality when it comes to any competition you are not trying to charge more than your competitor.  Most cupcake shops around here harge $3 - $3.50.  My idea is $2.50 per basic cupcake and $3 for specialty which I do not feel is too much lower than the other business.  I complete understand what you are saying and I appreciate the feedback as since this is new to me I am learning.  Raks, thanks as I think your advice really understands my current situation and you make a very valid point and it makes sense.  Liz thanks for the advice, a little abrupt, but I do see your point of view. 

 

kparks2 - Not trying to sound harsh or abrupt, just to the point.  Take it with the good intentions that come with it.

 

But this statement I have bolded above shows me you should do a little studying on business and competition before you hang out your shingle.  I would not have opened my bakery this year if I could not charge far more than any competitor in my area.  I am providing a premium product, in a premium environment, and expect to get top dollar for it.  If you want to be the Walmart of cake makers and think that your only competition is Target or Kmart, then your idea about pricing may suit you.  But you are mistaken that every business that opens wants to match or beat the local competition.  My goal, and that of many other bakers and cakers on this site is to be the Tiffany of cakes, and to charge accordingly.

 

Please do a little research before deciding on your pricing.

 

Liz

kparks2 Posted 17 Mar 2014 , 7:18pm
post #17 of 31

I have been doing research and for me I like to get other input from professionals such as yourself (personally that is my way of doing research as the input has made me think and re-evaluate).  I completely understand your point of view and you do make a lot of sense and do not get me wrong I do appreciate what you are saying.  This is a side business not my main business so that is why I guess I was a little worried about charging way too much for my product but of course I am not trying .  I do like the CakeBoss article that someone posted earlier as it did give me a lot of insight on pricing as well.  I know we all come from different areas and prices vary based on region but I know of two reputable cupcake business in my area that charge around what I am planning on charging and I must admit they are much better at the decorating game than I am but I do feel I am better than Publix and Wal-mart.  I will keep doing more research and thanks again for your input.

thecakewitch Posted 17 Mar 2014 , 7:20pm
post #18 of 31

ATo the OP: when you say you're going to charge $2.50 for basic cc instead of $3, how did you come up with that price? Do you know how much your cc at cost? Did you include your labor, license fee, profit, and all the other overhead that goes in to running a business? Side business or not, it's still is a business. All i'm trying to say is do your math first, then compare it to your competitors.

kparks2 Posted 17 Mar 2014 , 8:50pm
post #19 of 31

This is a place that has a few locations near me and their prices are cheaper than what I projected.  I think it varies on area but even when I was in DC Georgetown Cupcake charges about $3 for their cupcakes. http://www.sugardarlingscupcakes.com/Ordering.html

liz at sugar Posted 17 Mar 2014 , 9:06pm
post #20 of 31

Quote:

Originally Posted by kparks2 
 

This is a place that has a few locations near me and their prices are cheaper than what I projected.  I think it varies on area but even when I was in DC Georgetown Cupcake charges about $3 for their cupcakes. http://www.sugardarlingscupcakes.com/Ordering.html

 

$16/dozen for advance ordered cupcakes?  I'd sure love to know what quality level those are.  I am guessing they are operating on volume, and they have the additional revenue stream from ice cream and the parties, so that helps cover the costs of the cupcakes.

 

It sounds like you are getting your ducks in a row, which is great.  Just figure out your costs, your labor, overhead and profit, and then make sure you aren't leaving any money on the table.  If the market will bear more than all that added up, by all means charge more.

 

Good luck!

 

Liz

morganchampagne Posted 17 Mar 2014 , 9:07pm
post #21 of 31

AThe point is that you have to do your own math! You can't just say well they charge 3 so I'll charge 2.50. That's not at all how you price. Forget for a moment about the undercutting which is important. But you are pricing WRONG. You're just not doing it right.

You need to look at how you price, and then do the math. There's a formula for calculating price. Find it and do the math

kparks2 Posted 17 Mar 2014 , 9:09pm
post #22 of 31

Oh I agree that is super low and I would not charge that low but hey somehow it works for them.  I am still doing research and all that you say makes since.  Thanks for the advice.

kparks2 Posted 18 Mar 2014 , 1:53am
post #23 of 31

Quote:

Originally Posted by morganchampagne 

The point is that you have to do your own math! You can't just say well they charge 3 so I'll charge 2.50. That's not at all how you price. Forget for a moment about the undercutting which is important. But you are pricing WRONG. You're just not doing it right.

You need to look at how you price, and then do the math. There's a formula for calculating price. Find it and do the math

:-?

Apti Posted 18 Mar 2014 , 3:27am
post #24 of 31

To the OP~~You have received some thoughtful answers here.  ALL of them say you need to do your own math to arrive at your pricing calculations.  Morganchampagne is correct.   She was not being snarky, she is correct.

 

Since you are new to this forum (12 posts), you may not be aware that there are thousands upon thousands of brand new forum members who may believe that it is possible to enter a forum, obtain advice about pricing, and go with only that advice.  It can become extremely frustrating to those who do not do this as a hobby and rely on income derived from a bakery business model which involves a lot of research, cost analysis, marketing, overhead calculations, and everything that is involved in creating a profitable model based on demographics and realistic projections, not hope.

 

You may be an exception with business skills and knowledge and a marketing plan, but this is a forum and we don't know anything about you, your demographics, your cost structure, your recipes etc.  It is literally impossible for anyone on this forum to ever provide meaningful advice on pricing.   I visited the Sugar Darlings site.  They appear to be a viable business model with 3 viable locations.  However, you as a customer, and I as a visitor to their site, have zero knowledge of their profitability.  Just because a business has one or multiple locations, it is never, ever a "given" that these businesses are profitable and sustainable.

 

Prior to retirement, I worked as a successful medical equipment sales specialist.  In the last decade of work, 5 of the companies with multiple locations and a big marketing presence in the region WENT UNDER.  Gone.  Ka-put.  Each of these companies employed marketing and product and business and contract specialists who made a LOT of money at their jobs.  Even with all that "know-how", they are all gone. 

 

The reason I am, and will remain, a hobby baker is that I do not wish to invest the hours and hours and weeks and months of time required to create a profitable market for my goodies.  I could do it.  I could make a profitable business out of a cupcake or candy or cake endeavor.  I KNOW what is required to establish pricing and, personally, I'm not touching it with a 10 foot pole. 

 

IF I did wish to establish a part-time business model that earned a significant profit AND paid a reasonable wage, I would never, ever, ever go to a forum of strangers and ask for business advice.

 

The article by the CakeBoss software company is one of the best, most compact, reasonable, explanations I have found in 4 years of membership on cake forums that is specific to the custom cake community.

 

http://www.cakeboss.com/CakeStuff/Articles/HowMuchShouldICharge.aspx

morganchampagne Posted 18 Mar 2014 , 6:52am
post #25 of 31

Quote:

Originally Posted by kparks2 
 

:-?

I wasn't trying to be mean, seriously. I was actually just trying to do take the point out of what everybody was saying, because it seemed like you were feeling attacked. Thats all. Thanks Apti

Godot Posted 18 Mar 2014 , 7:10am
post #26 of 31

AEveryone always feels attacked around here, anyway.

kparks2 Posted 18 Mar 2014 , 1:24pm
post #27 of 31

Thanks for your response.  I know that Morgan was correct and I was not saying that she was I just felt it was the tone.  I am not sure if previous posts I have made in this thread were read but I am agreeing with what everyone is saying.  In no way am I saying oh you are all wrong, I am actually thanking them for the advice.  I think that is why I took the wording the wrong way.  I am not sure if it is coming off as I am being stubborn but I agree and appreciate what everyone is saying in here.  I will do the math and do the research.  I appreciate the insight because there are a lot of factors I did not think about.  Sorry to seem whiny but I guess when i am saying thanks for the advice and then others are still telling me I am wrong I do not understand it.  I do appreciate all the factors you guys are making me consider and I appreciate the advice you all have as you are more experienced than I am.  Apti, you make valid sense in all that you said and yes the cake boss article was very insightful (I bookmarked it too) and I will definitely consider that he says and the advice given here.  MorganChampagne I understand you were giving advice and unfortunately in writing tones can be misrepresented and I guess it did come off attacking even though that was not your intention.  I know you are correct in all you said and thank you for the advice

Apti Posted 18 Mar 2014 , 5:30pm
post #28 of 31

<<<<< Group Hug >>>>>>>

kparks2 Posted 18 Mar 2014 , 5:32pm
post #29 of 31

LOL Love ya for this Apti

howsweet Posted 18 Mar 2014 , 7:54pm
post #30 of 31
Quote:
Originally Posted by kparks2 
 


Thanks for the advice and my intention is not to "hurt" anyone as I am new at this.  Here is the reality when it comes to any competition you are not trying to charge more than your competitor.  Most cupcake shops around here harge $3 - $3.50.  My idea is $2.50 per basic cupcake and $3 for specialty which I do not feel is too much lower than the other business.  I complete understand what you are saying and I appreciate the feedback as since this is new to me I am learning.  Raks, thanks as I think your advice really understands my current situation and you make a very valid point and it makes sense.  Liz thanks for the advice, a little abrupt, but I do see your point of view. 

 

 

Quote:
Originally Posted by kparks2 
 

Oh I agree that is super low and I would not charge that low but hey somehow it works for them.  I am still doing research and all that you say makes since.  Thanks for the advice.


You are right on track being aware of what your competitors charge. Market is what determines the price of your product. Then you calculate costs to make sure it's worth your while based on what you can sell it for in the market. The Cake Boss article is great, but like everything else you read on pricing on these forums, it over stresses location. If you check out national cupcake chains, you'll see they charge pretty much the same regardless of location. I'm not saying location is irrelevant, obvious these shops don't set up in a slum area.

 

I get what you're saying about being afraid the quality of your product may not be as good, and if it's not, that's a reason to charge less. But keep in mind you may use higher quality products than they do. I was in the waiting room at my supplier a few weeks ago and a person from a large cupcake chain was in the room arguing with her rep. I learned from that conversation that they were using cake mixes and icing from a bucket. So, don't just price your competitor, try the product.

 

Someone up there said something about this not being a good way get business advice. She has a valid point. There is plenty of free bad advice to be had. Lots of misconceptions spread as fact.

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