How Much Per Hour ?

Decorating By cakelove2105 Updated 26 Mar 2014 , 12:24am by cakelove2105

cakelove2105 Posted 23 Mar 2014 , 11:58am
post #1 of 30

Hello, everyone :)

 

I know there is a lot of threads talking about how to charge for cake here, and I also know that in order to charge a cake we need to take into account ~~Ingredient Cost + Labor Cost + Allocated Overhead Cost + Profit (I've been doing the research a lot) however, I wonder how much do a regular baker (home baker) charger per hour? is there anything we need to take into account in order to establish how much we want to earn per hour? I also want to know, what do they mean by "Profit"?

 

In my opinion, it's very hard to know how much to charge so that we don't undercharge :(

 

Please help, I'm confused.!

 

Thank you in advance!

29 replies
Norasmom Posted 23 Mar 2014 , 1:26pm
post #2 of 30

Well, minimum wage is about to be $10, so go up from there.  In Boston, it's $20/hr for bakers.

TheSweetTreat Posted 23 Mar 2014 , 4:00pm
post #3 of 30

Quote:

Originally Posted by cakelove2105 
 

Hello, everyone :)

 

I know there is a lot of threads talking about how to charge for cake here, and I also know that in order to charge a cake we need to take into account ~~Ingredient Cost + Labor Cost + Allocated Overhead Cost + Profit (I've been doing the research a lot) however, I wonder how much do a regular baker (home baker) charger per hour? is there anything we need to take into account in order to establish how much we want to earn per hour? I also want to know, what do they mean by "Profit"?

 

In my opinion, it's very hard to know how much to charge so that we don't undercharge :(

 

Please help, I'm confused.!

 

Thank you in advance!

 

I also wonder how home bakers take into account the difference in overhead from someone who actually owns a storefront or rents a commercial kitchen.  If I total up all of my costs from working in my home I'm sure it's going to be much less than someone who owns a store or rents a kitchen.  Their charge for a cake based on their numbers is going to be higher than the charge I would have based on my numbers.  So if based on my numbers I could charge $50 and the same cake would have to be at least $80 for the other person how do I charge so as not to undercut or hurt the industry?  

 

I am not using actual numbers or even myself really, it's just something I've thought about.  I am a big believer in not hurting the industry with cheap prices, but when we're supposed to each run our own numbers to come to a price then it's obvious my price will end up less than someone with a lot of overhead even though we may be making the same identical cake.  

 

Should a home baker crunch the numbers and if they come out less then raise them to be at least the same as a non-home baker?

 

Sorry if I went off tangent here.

Godot Posted 23 Mar 2014 , 4:15pm
post #4 of 30

AI have a storefront.

Rent, wages, utilities, taxes, and fees comt to about 13000 USD a month.

That's before I even buy that first dozen eggs, so, yeah, I get really p!$$ed off at people who undercharge - and even MORE so att those who deliberately undercut.

thecakewitch Posted 23 Mar 2014 , 5:17pm
post #5 of 30

Quote:

Originally Posted by TheSweetTreat 
 

 

I also wonder how home bakers take into account the difference in overhead from someone who actually owns a storefront or rents a commercial kitchen.  If I total up all of my costs from working in my home I'm sure it's going to be much less than someone who owns a store or rents a kitchen.  Their charge for a cake based on their numbers is going to be higher than the charge I would have based on my numbers.  So if based on my numbers I could charge $50 and the same cake would have to be at least $80 for the other person how do I charge so as not to undercut or hurt the industry?  

 

I am not using actual numbers or even myself really, it's just something I've thought about.  I am a big believer in not hurting the industry with cheap prices, but when we're supposed to each run our own numbers to come to a price then it's obvious my price will end up less than someone with a lot of overhead even though we may be making the same identical cake.  

 

Should a home baker crunch the numbers and if they come out less then raise them to be at least the same as a non-home baker?

 

Sorry if I went off tangent here.

 

1. Store front/comm. kitchen can buy in bulk/wholesale and has a storage for it, home bakers usually buy retail.

2. Store front/comm. kitchen has the capacity for multiple orders in one day, home bakers can't or you'll die early.

 

I know there's a lot more reason, but I'm too lazy to think of another. I think in the end it evens out.

kblickster Posted 23 Mar 2014 , 5:17pm
post #6 of 30

Why is your overhead lower if you work out of your home?  I have a utility bills, mortgage, equipment, insurance, taxes, etc. just like a storefront has.  I do not have employees other than myself, but I don't do the volume that a storefront does.  I also pay more for my ingredients and supplies than a bakery does because I can't buy in bulk.

 

Don't charge less because you work out of your home.

 

As for your hourly wage, that's up to you.  This is where you have more flexibility in charging.  What is your skill level?  How fast do you work?  Lot's of variables.  Some of my cakes take me a long time.  I have increased my speed tremendously since I first started, but I'm sure that those that work at this on a storefront level can run circles around me.  Should my customer pay for my lack of speed?

 

I watch what the established bakeries in my area charge for their cakes.  Then estimate the amount of time it will take me.  Several times I have been way off base with my time estimates doing cakes that I have little experience in.  Sometimes it's to my advantage and sometimes it's not.

 

I've priced cakes and had the customer tell me that I was to high.  I don't back down though.  I once priced a 2 tier cake, 10, 8 and the top tier was a carved fire helmet.  Simple design other than the helmet, which with a custom emblem I figured was going to take me some time.  I priced it at 150.00 and she got it done at a storefront bakery for 110.00.  I saw the pictures on FB and the bakery did a really nice job.

Godot Posted 23 Mar 2014 , 5:44pm
post #7 of 30

AMy (storefront) kitchen is about 25 square meters. We barely have room to turn around some days. Where are we going to store all this stuff we supposedly buy in bulk?

We do order from a wholesaler, but it really isn't that much cheaper than a large grocery store. It is, however, much more convenient because if I order for at least 300 USD I get free delivery. I don't have to drive all around town wasting my time shopping and schlepping.

BeesKnees578 Posted 23 Mar 2014 , 5:58pm
post #8 of 30

I have been thinking a lot about this, too.

 

I have come up with a bit of a pricing schematic and I'm testing it out a bit to see if it works.

 

I have different pay grades for different jobs.   I don't think that I should get paid top dollar to go shopping for supplies....

 

The shopping/cleaning (things that anyone could do), I charge $8/hr and have it worked out for up to a 5 tier cake.

Communications, creating cakes and icings, fillings,  applying fillings, icings and fondant (things that you need some skill to do) etc. get charged at $12/hr. and also worked out for up to a 5 tier cake.

The creation and application of decorative elements is $20/hr. 

 

Now this is JUST for labor.  Doesn't include materials, ingredients, overhead, etc.

 

I have also costed out the recipes and added certain things in the "materials" section of Cake Boss that will apply to each cake as necessary (fondant, fondant accents, etc).

 

It's all a little confusing but it really breaks it down and makes me go over EVERY LITTLE cost and make sure I have included everything.


I'm sure I am making the whole process more difficult, but I am the only one that needs to understand it and be able to justify it when someone says "why is it so much for this cake?"

morganchampagne Posted 23 Mar 2014 , 6:59pm
post #9 of 30

AI pay myself $25/hr. My salary is an expense. I pay myself what I would be able to get in the work place as a degreed individual.

howsweet Posted 23 Mar 2014 , 7:12pm
post #10 of 30

AI'm having a hard time understanding the question and some of the comments on this thread. Are you a cake making service? Are you like a plumber or a lawyer who is selling a service? Or are you selling a product? When you're selling a product, price is based on the market value of that product. A reasonable response to storefront bakeries or market prices being higher than what you may "think" you need to make is to keep your prices in line with theirs. And be grateful for the profit one can earn selling cakes.

If Wendy of the famous hamburger chain were to decide to work as a manager in one of her restaurants, she would pay herself what she pays her other managers. Then she would smile all the way to the bank with her lovely profits.

So the question is, what would you pay a decorator or worker if you hired one? And honestly that's a much easier question to answer, isn't it? You must view profit as separate to a wage or you wind up in this kind of quagmire (and discussion).

MBalaska Posted 23 Mar 2014 , 7:46pm
post #11 of 30

Quote:

Originally Posted by howsweet 

".......So the question is, what would you pay a decorator or worker if you hired one? And honestly that's a much easier question to answer, isn't it? You must view profit as separate to a wage or you wind up in this kind of quagmire (and discussion).

 

The question reminds me of child care expenses.

 

What is the cost of caring for your child in your own home, compared to paying a neighbor to watch them in their home along with their kids, or paying the little business in town to take them in along with the other 20 kids with the hired help wages and all the legal upgrades needed to stay licensed.

 

It's a puzzle that needs to be worked out by each business person, but your beautiful creations should profit$$ you talented decorators.

enga Posted 23 Mar 2014 , 8:07pm
post #12 of 30

I paid myself by adding the cost of ingredients and overhead and X by 3.5. Say it cost me $1.25 to make a high quality cupcake, I could have sold them for $4.38 which would have given me a nice profit. If I'm actually going to be able to sell said cupcake, I understand that I would have to stay somewhere around the average cost of a (gourmet) cupcake in my area. So I would sell them at $3.75 each. Another way to look at it is the cupcake is $2.50 the $1.25 is for me.

 

I understand what you are saying howsweet, while I make a decent wage at the bakery I work at, it's calculated differently when I work for myself.

Norasmom Posted 23 Mar 2014 , 8:25pm
post #13 of 30

I don't charge less because I bake at home.   My electric bill is very high!   It's expensive to bake, period.  There are people out there who think I will not be expensive because I bake out of my home and they are shocked at my prices, but I refuse to burn myself out by charging too little.

costumeczar Posted 23 Mar 2014 , 8:35pm
post #14 of 30

AAs far as the IRS us concerned,as a pass-through LLC my profit and salary are the same thing since i report everything on my schedule C forms. I estimate between $30 and $75 an hour for hands-on cake time.

I'm home-based and I don't drop my prices because of it...I have no idea how my expenses compare to a storefront, but from averages that I've seenm I'm pretty accurate percentage- wise

-K8memphis Posted 23 Mar 2014 , 8:39pm
post #15 of 30
Quote:
Originally Posted by morganchampagne 

I pay myself $25/hr. My salary is an expense. I pay myself what I would be able to get in the work place as a degreed individual.

 

 

you mean (degreed) for doing celebration cakes? or in your other chosen field

-K8memphis Posted 23 Mar 2014 , 8:54pm
post #16 of 30

and clearly i got carried away w/the font--that green is so pretty but it doesn't show up too good then it got kinda oversize--but it's just me being spring-y

morganchampagne Posted 23 Mar 2014 , 9:14pm
post #17 of 30

AI'm sorry, I should have clarified. I meant a degreed individual, at my age, that's working at a skill. So like an entry level job. I don't pay myself less because I do cakes...

I'm not sure if that's clear lol

-K8memphis Posted 23 Mar 2014 , 9:38pm
post #18 of 30

no i gotcha now-- but that's a dang big pot o' entry level   :party:  go for it though

morganchampagne Posted 23 Mar 2014 , 10:20pm
post #19 of 30

Quote:

Originally Posted by -K8memphis 
 

no i gotcha now-- but that's a dang big pot o' entry level   :party:  go for it though

I was so nervous about doing that too, I was Like nobody is going to pay me this. But people have, sometimes I still can't believe it, but I'm grateful!!! 

FrostedMoon Posted 24 Mar 2014 , 12:25am
post #20 of 30

I struggle with this too.  I know how much it costs me to make a cake, but I stress over how much to pay myself.  I know many bakers can work faster, so I'm not sure an hourly wage is the best method for me.  Skill-wise I've come a long way, but I see improvement that can be made on each and every cake.  So I am not the cheapest baker in the area, but I've been charging slightly less than some of the bakeries based on what I thought was a lack of skill on my part.  Then people started specifically telling me they like my cakes better than particular brick and mortar bakeries, so I go to their websites and am somewhat shocked by the sloppy decorating.  Does that mean I should raise what I pay myself because if they can get more money for lower quality work than I can get the same for higher quality work?  

MBalaska Posted 24 Mar 2014 , 12:49am
post #21 of 30

Quote:

Originally Posted by FrostedMoon 
 

I struggle with this too. .......................... Does that mean I should raise what I pay myself because if they can get more money for lower quality work than I can get the same for higher quality work?  

 

FrostedMoon: After looking at your adorable colorful cakes....YES YES YES

raise what you pay yourself. Not in a million years could I buy a cake at the local bakers with the charming decorations that you put on your cakes.

 

Morganchampagne: You deserve what you are charging.......again YES YES YES.

howsweet Posted 24 Mar 2014 , 1:05am
post #22 of 30

I'll put it another way. You pay yourself per hour what you'd pay an employee and the rest is profit. (after all costs).  But what you pay yourself per hour should not effect how you're pricing your cake.

 

 

There is way too much emphasis on costs.  Most people seem to be operating under the assumption that costs help determine price and they shouldn't. The way to price a cake is not to figure your expenses and add in a wage. It's really not.

morganchampagne Posted 24 Mar 2014 , 1:07am
post #23 of 30

AThank you!! I'd encourage people to get a business manager, or somebody who can help you. I'm a pretty good one, but there's so many things I didn't get. Howsweet explained to me about the market price...something I didn't know. But didn't have to because my business manager already did. See how that works :)

Had it not been for a consultant, I may not have had the courage to charge what I'm charging. You'd be really surprised what people will pay for quality work, seriously

enga Posted 24 Mar 2014 , 2:42am
post #24 of 30
morganchampagne Posted 24 Mar 2014 , 2:44am
post #25 of 30

AHey that's my local paper!! Woohoo!! Lol

enga Posted 24 Mar 2014 , 2:57am
post #26 of 30

Well that's good! They have so much information about small business start ups.

FrostedMoon Posted 24 Mar 2014 , 12:38pm
post #27 of 30

Thank you for your kind works MBalaska!  It really is a confidence thing for me rather than not understanding about profit margin.  I've learned so much on cake central, but I see all these gorgeous cakes with perfect edges and decorations and I feel like I have a long way to go!  I definitely don't want to be the "cheap" baker, but I want my business to be true to the "you get what you pay for" saying.  Pay for quality and you will get it!  

-K8memphis Posted 24 Mar 2014 , 1:12pm
post #28 of 30
Quote:
Originally Posted by morganchampagne 
 
Quote:
Originally Posted by -K8memphis 
 

no i gotcha now-- but that's a dang big pot o' entry level   :party:  go for it though

I was so nervous about doing that too, I was Like nobody is going to pay me this. But people have, sometimes I still can't believe it, but I'm grateful!!! 

 

 

no i didn't mean that-- i mean 30k-40k is typical entry level--usually takes a few years to get into 50K--which is where $25 an hour gets you in a 40 hour week give or take

 

and like i said--more power to you--and you might not be getting 40 hours a week either--but all very good

MBalaska Posted 24 Mar 2014 , 7:27pm
post #29 of 30
Quote:

Originally Posted by FrostedMoon 

"........but I see all these gorgeous cakes with perfect edges and decorations and I feel like I have a long way to go!  I definitely don't want to be the "cheap" baker, but I want my business to be true to the "you get what you pay for" saying.  Pay for quality and you will get it!  

 

And not one of those spectacular cakes was done by me.....:D    I envy the brilliant designs and color palates of the great decorators and I cheer on people like you guys who make them so well.

 

just as a thought. I watched the new remake of 'The Great Gatsby' and one thing stood out to me. Gatsby was supposed to be the super ultra rich guy with unlimited disposable funds, so when he dressed up the cottage for his lost lover he filled the cottage with.............wait for it..........multicolored French macaroons, petit fours, cupcakes with piped roses, and two (not one) but two tiered decorated cakes.   Oh yes and lots of flowers duh, of course.

 

The point being that all of you that make these super decorated cakes are making  things for people WITH MONEY to spend, so make money with pleasure and confidence in yourself.  these are luxury speciality items and they should be priced as such.

cakelove2105 Posted 26 Mar 2014 , 12:24am
post #30 of 30

Thank you all for your comments :)

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