Can Someone Please Help Me To Price A Cake?

Business By PatriciaGraham Updated 1 May 2014 , 10:53pm by howsweet

PatriciaGraham Posted 28 Apr 2014 , 3:37am
post #1 of 15

Hi, I have just started my own home buisness of cake decorating and i need help with a pricing of a cake. It is a three tier cake: one layer printed with a giraffe pattern, another leopard, and another zebra. It has to be able to feed 150 people for a birthday party. It also has jungle figurines on it. She also wants around 50 cupcakes with tiger and leopard faces. I was thinking about charging her around $175 for the cake but I'm not to sure about the cupcakes. can someone please help me?

i have attached an image that she wants her cake to be based on.

14 replies
denetteb Posted 28 Apr 2014 , 4:02am
post #2 of 15

It varies hugely by geographic location but I read quite often that fondant often starts at $3.50 minimum per serving, fondant topped cupcakes probably $3 or 4 a piece and the fondant figures at least $20 a piece.  So the cake should be more like $525, the cupcakes $150 to $200 and the figures another $80 so the cake alone would be $605 plus the cupcakes would bring it to $755 to $800.  You have severely underpriced this order.  I suggest you do lots more research on pricing before you accept more orders or you will be basically paying people to take your cakes rather than actually making money on them.  If you search for pricing on cake central there are thousands of threads on this topic that can give you a lot more info on how to price. 

BakingBlog Posted 30 Apr 2014 , 6:32am
post #3 of 15

Hi

 

There are many things to consider when pricing a cake (as stated in the answer above) - specially when you're new in the business:

  • How much does it cost you to make the cake?
  • How long time?
  • How much do you want to earn per hour?
  • What is a cake like that generally worth in your area (not from a hobby baker)
  • Do you want/need this customer (in which case your pricing may vary depending on how eager you are for getting the customer. I.e. are you just starting out then maybe you'll lower your prices to build a showcase).
  • Etc.

 

Prices also vary depending on your brand, anything special you can offer your customers etc.

 

The best thing to do is consider everything and then price your work so you feel good about it but make sure you don't go too low. I think underpricing your work is common when you're just starting.

 

Good luck with your business.

 

Best regards

Diana

bakingwithlove.dk

MimiFix Posted 30 Apr 2014 , 1:11pm
post #4 of 15

As denetteb suggested, your best help will come from CakeCentral pricing threads. This topic has been discussed extensively. Use the search box and type in "how to price cakes" or use Google to learn for yourself how to do the math. Knowing how to price all your products is far better than posting each individual cake or cookie. 

-K8memphis Posted 30 Apr 2014 , 2:15pm
post #5 of 15

yes great responses there -- good stuff--and for example if you order dessert anywhere even with your pizza delivery you're paying several dollars per serving y'know? then once you add in  special personalized decor it to make it the focal point of a celebration-- kaching kaching kaching--

 

if you decide to lowball prices initially to build a portfolio as has been mentioned upthread then consider providing each client with an invoice that reflects the real price and the 'portfolio discount' so everyone is aware of the deal they are getting and how much it will be in future--and likely some of those customers might not be repeat customers--

 

cute cake to do -- looks like fun

 

when you buy gas i mean a package of hostess cupcakes can be over a dollar--a beautiful cake should be valued much greater than that per serving yes?

 

best bakin' & cakin' to you

howsweet Posted 30 Apr 2014 , 2:39pm
post #6 of 15

AI'm sorry but I have to disagree with part of that. When I google [B]how to price cakes[/B], I get a lot of blogs regurgitating wrong information they seem to have gotten from here. These blogs are pleasant places where they are in the business of getting clicks so they get as many advertisers as possible. They make money with clicks, not accuracy. I'm not saying they are all bad, but I would say most are. Many of these bloggers possibly couldn't make it in the cake business for whatever reason and decided copy writing and tutorials were more lucrative.

Googling [B]how to price[/B] is a little more helpful because, even though they include lots of info about costing, it's never said without some paragraphs on other issues like knowing your competitors costs. But again, it's just a bunch of people needing clicks. But at least they seem to have gotten or copied their info from better business sources

When pricing your cakes, this short snippet from the small business association site, sba.gov, sums it up:

[B]Your pricing structure is determined through market research and analysis of financial considerations. Basic marketing strategy is to price within the range between the price ceiling and the price floor. The price ceiling is determined by the market; it is the highest cost a consumer will pay for a product or service and is based on perceived value. What is the competition charging? What is the quality of the product or service you are offering? What is the nature of the demand and what is the image you are projecting? The price floor is the lowest amount at which you can offer a product or service, meet all your costs and still make your desired profit. Consider all costs -- raw materials, office overhead, shipping, vehicle expense, taxes, loan and interest payments and owner draws are a few.[/B]

[B][COLOR=blue]Almost all the advice for pricing I've seen on this website recommend pricing at the price floor.[/COLOR][/B]

howsweet Posted 30 Apr 2014 , 2:54pm
post #7 of 15

AIf that, because "decide on a wage that you're conformable with" is what many people will assume [B][COLOR=blue]make your desired profit[/COLOR][/B] means.But what it means is profit after paying employees (or yourself) plus enough to support a house hold, not just enough to pay for ballet lessons. If all you want to pay for is ballet lessons, then you only need to sell is maybe one cake a month. If you need to make 3 cakes to do that, you're probably undercharging. Obviously I don't know what type of cake or where you go to ballet - just trying to illustrate a point.

denetteb Posted 30 Apr 2014 , 6:06pm
post #8 of 15

By anyones definition or research tool charging $175 for a three tier fondant cake with 4 custom figures is below the floor, assuming it is a 6, 8, 10 which seems to be a pretty common combination.  I understand what you are saying howsweet but it seems to be that even if you match the local pricing, you still need to calculate all those other costs so you know how profitable it actually is, and even more important so that you can confidently charge the higher rates to match the local pricing.  If you are thinking of only the basic costs of cake and icing ingredients and not all the other things a new baker is going to have a harder time believing he or she can actually get those prices.  In addition they need to keep track of how long it takes them to do the work.  If they know that their actual costs are $2 per serving, they certainly won't likely charge less and will be whole lot more likely to match local pricing.  It still seems to be a vital step in calculating pricing.    Plus they need that info to price all different kinds of cakes, they certainly can't be calling local places every time they have an order.  I get your emphasis on market pricing, it just doesn't seem to eliminate the other work. 

howsweet Posted 30 Apr 2014 , 8:54pm
post #9 of 15

A

Original message sent by denetteb

By anyones definition or research tool charging $175 for a three tier fondant cake with 4 custom figures is below the floor, assuming it is a 6, 8, 10 which seems to be a pretty common combination.  I understand what you are saying howsweet but it seems to be that even if you match the local pricing, you still need to calculate all those other costs so you know how profitable it actually is, and even more important so that you can confidently charge the higher rates to match the local pricing.  If you are thinking of only the basic costs of cake and icing ingredients and not all the other things a new baker is going to have a harder time believing he or she can actually get those prices.  In addition they need to keep track of how long it takes them to do the work.  If they know that their actual costs are $2 per serving, they certainly won't likely charge less and will be whole lot more likely to match local pricing.  It still seems to be a vital step in calculating pricing.    Plus they need that info to price all different kinds of cakes, they certainly can't be calling local places every time they have an order.  I get your emphasis on market pricing, it just doesn't seem to eliminate the other work. 

I've said many times that you need to know your costs in order to know whether it's worthwhile to turn on the oven. And it was included in my post above. Please read more carefully before putting words in my mouth.

Of course, they can't call a local place every time they need pricing. You get general prices and then extrapolate how they apply to your cakes. For example, if they use lower quality ingredients, then you'd add something. If their cakes are more professional looking then you'd subtract something.

And as mentioned the "vital step" was included in my post above.

denetteb Posted 1 May 2014 , 2:47am
post #10 of 15

I wasn't trying to put words in your mouth.  I was trying state to the poster that both elements need to be done to get your price figured and why the costing was important for other reasons than a final per serving amount.

howsweet Posted 1 May 2014 , 3:42am
post #11 of 15

ABut you said, "I understand what you are saying howsweet but it seems to be that even if you match the local pricing, you still need to calculate all those other costs ..." Right after a post where I'd included this: Consider all costs -- raw materials, office overhead, shipping, vehicle expense, taxes, loan and interest payments and owner draws are a few.

I never say don't worry about costs. But I'll say something sort of like that, and anyone who wants to dispute this, please at least read it carefully: Many home bakers would be better off if they never added up a single cost of doing business, but instead dedicated themselves to charging correct market prices for their cake. By better off, I mean make more money.

It's a lot better if they do both, and a little insane not to, but LOTS of people don't do either. If they just pick one, then they, and the rest of us, would be better off if they choose market value.

MimiFix Posted 1 May 2014 , 12:42pm
post #12 of 15

As a side note: We use the forum as a tool to communicate. This can only be done through writing. So written words have the utmost importance, especially in dialogues such as pricing.

 

Unfortunately when there are typos, misplaced words, and run-on sentences, it makes communication difficult. And the biggest stumbling block in sharing ideas, is reading posts that are excessively wordy.

 

We are all guilty of this. I'm not targeting any individual. 

TheItalianBaker Posted 1 May 2014 , 1:05pm
post #13 of 15

AI spent the last 3 days doping my math and checking how much my recipes cost to me. Also how long it takes to me to bake one, torte, fill and decorate, so now I know pretty much basic price. After that, I'm going to set a pricing list for fondant decorations: a bow, a ruffle, and so on.. So I know know how much to add every time. The only think I miss is the quantity of fondant I need to covere a cake, let's say 8". After aaaaall the math (i hated it!) i add my rate and then my profit. Also, u might want to call local bakeries to check their prices too. I did it. Someone charges $3.50/serving, someone else $5.50, all fondant. I think I'll try to stick in between..

PatriciaGraham Posted 1 May 2014 , 10:19pm
post #14 of 15

AThankyou everyone so much for helping me. I have decided to charge her $325 for the cake and $100 for the cupcakes. This price may seem low for some but after some careful consideration I believe it is a good price for a starting career. Thankyou all for the friendly help and advise and I am now confident in pricing cakes for the near future. Again Thankyou all and I hope you all have a good day.

howsweet Posted 1 May 2014 , 10:50pm
post #15 of 15

If the work is of professional quality,  you'll be doing yourself a favor if you can get the customer to say that the value is about $1500. If she tells people what she paid without saying she got a great deal, you may wind up having to deal with some customers you won't want. This will be good to have in your portfolio. You may be really tired by the time everything is done, so don't forget to get some great photos. There may be a professional photographer, but it my experience, that's hit or miss for getting the kind of photo you'd want.

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