Pricing Help, Pleeease!!

Business By fdusing Updated 29 Apr 2015 , 4:47pm by MimiFix

fdusing Posted 25 Apr 2015 , 12:15am
post #1 of 42

I did a single layer half sheet cake.. half chocolate/half vanilla.  It's decorated mainly with buttercream (elmo face--red and multi color polka dots--yellow, orange, green, blue, and purple) and some fondant for the sesame street street sign customized. I have a little over $30 into the cake ingredients and the board/box.  Probably around 5-6 hours for labor.  And, I will be delivering tomorrow.  Any idea what I should charge??


Thanks so much for any help!  This site is a God send.

41 replies
ammcats Posted 25 Apr 2015 , 2:34am
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Does your customer not know how much they have to pay for a cake already ordered and made?  Have you taken into account all your overheads?  Have you received permission to use copyrighted material?  Lots of things you should have thought about before agreeing to make a cake that you have no idea how much to charge for.


-K8memphis Posted 25 Apr 2015 , 2:03pm
post #3 of 42

what a put down --

you should charge in line or more as the nicest bakery in your area for the same thing -- there's always a lot to learn about caking -- i've been doing it a long time and i learn new stuff all the time -- i wish i had learned it all in time to use it for the task at hand but it just doesn't always work that way does it --

best to you dfusing and i love your online name -- keep on dfusing

johnson6ofus Posted 25 Apr 2015 , 4:50pm
post #4 of 42


Quote by @-K8memphis on 2 hours ago

what a put down --


????? No, it's not. This is the business forum and she asked about a business question. You,  yourself referred her to "the nicest bakery in your area" for pricing. If fdusing wants to be paid like a bakery she has to  work like a bakery, including being more efficient with time/labor (doesn't sound like a 5-6 hour labor cake). 

ammcats is 100% correct. We all know and read here how surprised MANY "customers" are when they get the price of a custom cake. And MANY choose NOT to order.  Is this a Costco customer that thinks they will pay $5 extra for the sesame street details?

I think EVERY baker on here has their mouth open in wonder how a baker took and order for a cake, made a cake, and then asks how much to charge (sorry fdusing, but price and budget is really step #1). Many baker adjust cake details and design with their client to meet their budget. For example- If they knew you were going to charge $20 for the fondant "sesame street" sign, would they have ordered it? 

I hope they love your cake and you are compensated fairly. But a price after you baked it and delivered it just has disaster written all over it. 



johnson6ofus Posted 25 Apr 2015 , 4:51pm
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oops... sorry about the spelling typos. Accidentally posted too quickly...

-K8memphis Posted 25 Apr 2015 , 4:54pm
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i stand by my statement that the way the information was delivered was in a put down manner -- not that the information wasn't accurate --

jgifford Posted 25 Apr 2015 , 11:27pm
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This type of question never ceases to amaze me.  If you don't know how much to charge - - for EVERYTHING - - you shouldn't be charging at all.  This is one of the most basic parts of your business and should be firmly in place before you take your first phone call.  This is right up there with knowing how to turn on an oven and having your recipes ready to go.

Can you imagine a new hardware store opening in your neighborhood without prices marked on any of their items? 

It shouldn't be a case of "everyone says I should open a business" so you start selling the next day.  This is one of the main reasons so many businesses fail, whether it's a bakery or a dog groomer.  Do your homework, put in the time and effort to make sure you have the basics in place or it won't matter how good your cakes taste or how wonderful they look.

Please take a step back and get everything lined up or I'm afraid you won't have a business for long. 

ammcats Posted 26 Apr 2015 , 2:03am
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Sorry Kate that you saw it as a put down.  

It was not meant to come across like that.  Just some basic questions for the baker to think about.  In all honesty I cannot believe the customer has ordered a cake and not discussed price.  

To me it would be like going to the dentist and telling him you want a filling.  In the back of your mind you have an idea of how much that might cost.  Say $180.  The dentist does a root canal and charges you  $1500.  What come back have you got?  You gotta discuss price so you have an idea of what you are going to pay out, for what you expect to get,  with no suprises.

red0027 Posted 26 Apr 2015 , 8:59am
post #9 of 42

FDusing,


It's obvious by now you know that you did things completely backwards with this order.  I am not sure if this is your first paying order or your 10th.  If you are going to sell your services/goods, you need to have pricing already down.  Whether it's by a per serving amount or by overall design or a little of both.  Consider a delivery charge as well...that costs money, gas, wear and tear on your vehicle.  The very first thing you need to do to after this order is to cost out all of your recipes, supplies/materials, etc.  Then you need to consider your cost of gas, electric, insurance, marketing (business cards, website, etc), and don't forget to pay yourself an hourly wage (this can already be incorporated into your cake pricing or as a separate add in.  Choosing an hourly wage depends a lot on years of experience, skills, techniques used, schooling/training, etc. 


I can't tell you how much to price your cake at.  I don't know any of the above information I suggested.  And geographical location also plays a part in what the market will bear as far as cost based on what you have determined to be your pricing points.  

I can tell you that I will never give a quote immediately over the phone and I will never take an order unless a quote is agreed upon, a retainer fee is received and a contract is signed (and yes, I'm a Cottage Food Operater-work out of my home legally).  I also have business software that I input every tiny detail in and worked hard to input all my costs, overhead, supplies, hourly wage, recipes, master ingredients, etc.  So for me, to give a quote off the top of my head is nonsensical.  If the customer is serious about ordering than they have no issues hashing out the details and waiting 24 hours for a completed, accurate quote. 

There is so much more involved in operating a business and this is a business if you are taking money for services/goods regardless if it's just a hobby for you (not saying it is, but I hear that term used a lot). 

Good luck!

Cevamal Posted 26 Apr 2015 , 11:37am
post #10 of 42

Ammcats, that's an ironic example since that's almost exactly how medical pricing works. 


To the OP: I'm guessing you're an amateur making your first paid cake? I would figure out how much time you put into it, pay yourself $15/h, and add that to the $30 in ingredients. Consider it a lesson learned for next time.


Then before taking any more orders spend hours on this forum reading about pricing, legalities, and logistics.

johnson6ofus Posted 26 Apr 2015 , 2:16pm
post #11 of 42


Quote by @Cevamal on 2 hours ago

"....figure out how much time you put into it, pay yourself $15/h, and add that to the $30 in ingredients. ..."


But is this even fair? If she is slow, paying herself $15/hr may not reasonable. Is the cake she described a 6 hour cake? Anyone "new" has to consider they are learning, and picking up speed. That "learning time" may NOT be worth $15/hr. She could come up with a really crazy price. A new baker, learning and developing new skills should not expect to earn as much as a skilled decorator. 

Someone once wrote here how she paid herself $7/ hr while learning, and as she improved and speed up, she cut her time in half (or even more) so when she "charged" $15/hr, her price was still fair. I think she ended saying she now figures at about $20/hr, is much better at estimating time needs and is better skilled overall. 

Granted, I am  assuming that OP is not too experienced yet with this type of pricing question and may be totally wrong. 

Cevamal Posted 26 Apr 2015 , 4:28pm
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Fair? No, probably not. I figured she needed something to start with ASAP and was giving an alternative to getting bogged down trying to calculate overhead.

I didn't see, until now, the part in the OP about it taking 5-6 hours. :eek:

fdusing Posted 27 Apr 2015 , 1:53pm
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WOW is all I have to say.  I am not a pro by any means at all, and I don't want to over charge anyone.  I do not have a legal license to make and sell, so I do not have a pricing sheet all set up.  I have looked into it, believe me.  I have a full time job, and enjoy making cakes on the side.  I do what I can when I have the time, hence the 5-6hrs..  I was told buy a local bakery, that legally I cannot ask for a price, rather than just tell the customer that they can make donations for what they think the cake is worth.  I came here simply wondering, and thought I could ask the pros for help, but this post has turned me off to even wanting to ask for help on here ever again.  I asked so I could learn.  Thanks for all the negative comments.  My customer happens to be a long time friend that I've done cakes for for years, who LOVES my work.  Sorry for being terrible at something I enjoy so much.  I never in a million years would have expected this type of reaction.

Pastrybaglady Posted 27 Apr 2015 , 3:28pm
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fdusing, I'm sorry this was a rough intro to these boards, but this is the business forum also known as the no rainbows and puppies forum.  Here you will get the straight up hard nosed business answers.  There are softer ways to answer your questions sure, but you are getting good advice here if you are serious about selling.  I know it stings but as you first posted these forums are a godsend.  You can learn so much here.  To avoid cuts and bruises use the search function for your questions.  Almost every question has already been asked.  You can grow immeasurably from reading these boards, incredible bakers and decorators hang out here.

-K8memphis Posted 27 Apr 2015 , 4:21pm
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while that is true, pastrybaglady, i also think it's time for all of us to grow up and move on from the pettiness of the past -- stop thinking of new posts in the business forum as chum in the water -- even in business we need to be respectful if not outright kind --

why do we keep on hurting people like this over and over and over -- it's stupid -- then rush up and say oh this is the "business forum" where we allow ourselves to be brutish -- too bad for you if you request good information you will bleed first --

look at dfusing's response to this -- don't tell her she's wrong to feel the way she does -- her reaction is normal yet we try & smooth it over like it's ok -- IT'S NOT OK -- and it happens over and over and over -- stupid --

giving good info does not license us to become ugly, judgmental and hurtful

the over riding theme on here used to be "there's no stupid question"

(but i can tell yeah for sure there's some damn stupid answers)

let's move on and do better

-K8memphis Posted 27 Apr 2015 , 4:21pm
post #16 of 42

while that is true, pastrybaglady, i also think it's time for all of us to grow up and move on from the pettiness of the past -- stop thinking of new posts in the business forum as chum in the water -- even in business we need to be respectful if not outright kind --

why do we keep on hurting people like this over and over and over -- it's stupid -- then rush up and say oh this is the "business forum" where we allow ourselves to be brutish -- too bad for you if you request good information you will bleed first --

look at dfusing's response to this -- don't tell her she's wrong to feel the way she does -- her reaction is normal yet we try & smooth it over like it's ok -- IT'S NOT OK -- and it happens over and over and over -- stupid --

giving good info does not license us to become ugly, judgmental and hurtful

the over riding theme on here used to be "there's no stupid question"

(but i can tell yeah for sure there's some damn stupid answers)

let's move on and do better

jgifford Posted 27 Apr 2015 , 4:59pm
post #17 of 42

I have nothing but the utmost respect for those who are so quick to share their vast knowledge on these forums.  To calmly answer the same questions over and over is evidence of a truly giving heart and a wealth of patience.  Probably why I rarely post anymore.

As one who is self-taught and has worked diligently for years to gain what knowledge I do have, I find I have little patience for lazy questions.  "How many cups of batter does an 8 inch pan hold?" Honestly?  Figure it out.

Questions about pricing are especially guaranteed to chap my hide. To me, they indicate that, 1. the person hasn't done any homework, 2. the person probably shouldn't be selling yet and 3. the person is looking for a quick $ amount so they don't have to do the work.

fdusing, I'm sorry you didn't get the response you were expecting.  If you haven't worked out pricing and truly don't have a business, you shouldn't be charging at all.  It doesn't matter if it's an old friend who gets cakes from you on a regular basis. Either you're a business or you're not.  If you want to let your "customers" buy the ingredients, that's fine. Give them a list and be done with it.  You shouldn't be charging them anything above that. Donate your time or chalk it up to a learning experience.

 I wish you luck in the future and hope you end up with a successful business, if that's what you want. Just be willing to put in the legwork ahead of time. 

  

 

Natka81 Posted 27 Apr 2015 , 5:12pm
post #18 of 42


Quote by @fdusing on 3 hours ago

WOW is all I have to say.  I am not a pro by any means at all, and I don't want to over charge anyone.  I do not have a legal license to make and sell, so I do not have a pricing sheet all set up.  I have looked into it, believe me.  I have a full time job, and enjoy making cakes on the side.  I do what I can when I have the time, hence the 5-6hrs..  I was told buy a local bakery, that legally I cannot ask for a price, rather than just tell the customer that they can make donations for what they think the cake is worth.  I came here simply wondering, and thought I could ask the pros for help, but this post has turned me off to even wanting to ask for help on here ever again.  I asked so I could learn.  Thanks for all the negative comments.  My customer happens to be a long time friend that I've done cakes for for years, who LOVES my work.  Sorry for being terrible at something I enjoy so much.  I never in a million years would have expected this type of reaction.

Well, how much did you charge? Do you have a picture of your cake? Just curious.

 


Happyfood Posted 27 Apr 2015 , 5:27pm
post #19 of 42

fdusing

I am sorry you were treated so rudely.  Some people are better at creating beautiful cakes than they are with with communication.   Some people simply forgot what it is like to be new or they have no understanding of empathy.

Personally, it sounds like you are concerned over making a profit as an unlicensed hobby baker.  You can do a bit of research to see what the going price is in your area for cakes so you have an idea of what the going rate is.   Then you could sit down with your friends or family and let them know that you are aware of what the going rates are.  You could also inform them that you do not purchase your ingredients in bulk so your costs are a bit higher.  Have you been able to figure out what it costs you to make a cake?  That is the best place to start then you can tell someone up front how much of a financial investment you have wrapped up in making a cake.  A lot of people have no clue as to what it costs to make a good cake, they only understand what it costs to buy a box of cake mix at the grocery store.  If you can talk to someone ahead of time and they will agree on a price to compensate you for your cost and time, then you could proceed.  You will not be making a lot of money this way but if you are happy creating cakes and will have no cost for your hobby, you will be doing good.  This will be a good place for you to begin to learn about operating a baking business before you choose to make the big plunge as there is a lot to consider and learn.  Of course, you will probably run into family and friends who are complete cheap skates simply hoping you will give them something for nothing but if someone rips you off , you do not have to help them out again.   :)

Happyfood Posted 27 Apr 2015 , 5:38pm
post #20 of 42

In short,  understanding your subject is the best place to begin.  You have to do your homework in order to grow and there are no shortcuts or substitutions for education.  Once you get a good understanding of your subject, the sky is the limit!  :) 


fdusing Posted 27 Apr 2015 , 5:52pm
post #21 of 42

I ended up just telling my customer to pay me what she thought the cake was worth.  She gave me $60, which is what she gave me for the last couple cakes I made for her.  It covered my $30 in ingredients and then some.  I honestly am not worried about making money when doing it, as much as I am worried about charing somebody fairly.   Thank you Happyfood for the kind responses.  I do appreciate the negative ones too, as everything plays a role in furthering my education.  I probably overreacted a little bit to all the rude responses.  I understand your points and know why you said what you did.  I am sorry for not knowing beforehand, now I'll do my research and go from there.  Thank you everyone.

Natka81 Posted 27 Apr 2015 , 6:12pm
post #22 of 42

I always give my family invoice with all prices and amounts of ingredients + overhead+ box+ board + ribbon.  That way they can see the cost without any labor and profit. But I wouldn't ask anybody to pay me what they think cake costs.

My friends never asked me to make a cake for them

1. They understand that they will have to pay full price. 

2.they can't afford it. 

3. It is not that important for them have a beautiful centerpiece cake at the party. 

fdusing, don't let your "customer", take advantage of you too much. 




Pastrybaglady Posted 27 Apr 2015 , 6:12pm
post #23 of 42

K8, I just want to clarify I was not telling fdusing how to feel.  I was warning her about the choppy waters here.  As this is a public forum you will get all kinds of responses.  I was trying to help her navigate the waters to get what she needs.  This is why I mentioned the search function for questions.  It's much easier to weigh all the advice objectively when it is not aimed directly at you.

Fdusing, I am glad you are not throwing all of the good and sound advice because of its delivery.  Many of us come into the baking business backwards.  I know I did.  I was not looking to start a business it kind of happened to me.  I came here and read and read and read.  I learned the basics of how to have an ethical, legal and profitable business here as well as good cake decorating.  Stay and learn you won't regret it!

fdusing Posted 27 Apr 2015 , 6:31pm
post #24 of 42

I am looking forward to learning more from this amazing site!  I do take the hard criticism to heart sometimes, something I'm working on for myself.  I will agree with coming in a** backwards.  I never intended to start a business, I enjoy baking and decorating and providing cute cakes for family and friends, and so far that's all I've been doing them for.  To be honest, this is the only "customer" I've ever been paid from.  Usually, I just make them provide the ingredients and I donate my time.  Any practice I can do I will definitely take.  If you have any specific forums I should read, please let me know.  Otherwise, what are some good things to search for in the search bar?  Thanks everyone!

Pastrybaglady Posted 27 Apr 2015 , 7:03pm
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Search: Pricing (that will keep you busy for a few days), for technique search Wanna know a secret?  For laughs search What not to say to a baker, I would also follow webaketogether as they are just getting started as well and are getting the same kind of info you need.

johnson6ofus Posted 27 Apr 2015 , 11:38pm
post #26 of 42

Why does everyone take everything as a "put down"? Or "harsh"? We have read on here countless business deals go bad, countless friends and family offended by what they perceived as ridiculous prices "after the fact" (and friendship lost or broken by it), countless bakers burn out because they didn't count the cost of washing dishes, countless bakers being bullied to accept far less than a cake was worth, and countless "newbies" (bless them all--- with stars in their eyes) who the more experienced bakers want to help protect.. YES--- it is the "Please don't make the stupid mistake I did!" mentality, not the "You are such a dumba**" mentality, I really believe that. If I am looking for a dumba**, there are loads of youtube and news of the strange I can read. In business, not everyone get a trophy. That is the reality. The more I read here (as much as I love cakes, and as much as I have learned, and as nice as I can make them)--- I 100% know, I will NEVER own/operate a bakery/ cakery. Icing smiles.org and family and friends benefit from my "caking" bug. 

And that bakery DREAM has died, thanks to cake central.  I am 100% sincere. I don't want to deal with all the stuff I have learn here. All you "haters" have taught me so much, you have saved my sanity and my cash, as well as my time. The dream, I learned, is much different than the reality. And really knowing that today, is much more important than maintain an unrealistic dream.  Honestly, I offer my complete, unabashed thanks to you all.

I don't want the "rainbows and unicorns" to keep me on an unexpected, long, hard path to learn it later. And to you dreamers, who choose to battle on, I applaud you. But be glad for the "harsh" people here who helped you prepare for the days of rain and donkeys (as an opposite to rainbows and unicorns). 


Pastrybaglady Posted 27 Apr 2015 , 11:47pm
post #27 of 42

Rainbows and Donkeys!  That is so awesome \(° · °)/  

810whitechoc Posted 28 Apr 2015 , 10:37am
post #28 of 42

Fdusing, welcome to Cake Central, congrats for taking a breath and coming back!  I have to admit I read your post, rolled my eyes and moved on to the next.  That is an honest response not meant to be offensive.  I read that you checked with a local bakery about how to price a cake and I must admit that answer is a new one to me, but have you checked the legalities of selling a product.

I'm not saying there will ever be anything wrong with your cakes but as you are accepting money for a product you are selling, you are operating a business.  If anything ever does go wrong (again not saying it will) have you checked out legally where you stand.  Ignorance is no defence under the law.

-K8memphis Posted 28 Apr 2015 , 2:03pm
post #29 of 42

810whitechoc -- you are in australia i think? in the states, the federal government makes a distinction where in order to classify yourself as a business for tax purposes the person has to intend to be a business -- they sure enough require tax money from hobbyists too -- just the "...as you are accepting money for a product you are selling, you are operating a business" is not accurate for all of us --

for example if i sell my old couch then months later sell the matching chair then later a few more pieces i'm not then a furniture business -- even if i make a few chairs a year and sell them -- i'm not a business -- that's a hobby just a past time because here according to the government you have to intend to be a business in order to be a business --

there are also monetary distinctions -- in my city i have to transact $5,000 before i need to get a business license -- i'm not saying i can bake $5000 worth of cake before i'm a business -- i'm saying operating a business is much more than a handful of transactions over baked goods -- not saying there aren't other considerations as well 


johnson6ofus Posted 28 Apr 2015 , 4:31pm
post #30 of 42

Regional/ incorrect tax answer ^^^^. 


Issue- zoning/ local law. That varies from city to city and state to state that make have similar requirements as posted above. This refers to registering your business and paying local taxes (sales) and local permits.

Issue- Lawsuit protection/ food poisoning (even if it is NOT your cake, you will have to defend yourself). Any decent lawyer will get you if you got $1 payment for it--- even "just materials". I bet my bottom dollar the lawyer will argue successfully that you are a "business". Yes, if you lose, you can even lose your home if you own it. This is why a business has insurance. 

Issue- IRS federal taxes- the furniture example posted above is wrong. Assuming normal circumstances, the furniture was bought, used and then sold at a LOSS. Therefore, there are no taxable capital gains.  IRS guidelines state hobbyists sell items occasionally, not intending to make a profit from their activity. Hobbyists may deduct the expenses related to their hobby as miscellaneous itemized deductions, but not beyond the total revenue generated from the hobby. And, only the amount in excess of 2 percent of your adjusted gross income is deductible.So as long as you are LOSING money, the IRS is fine with it. If you make a profit...ANY profit, it is taxable. In the OP case, she bought materials for $30 (yes, other expenses like space rental, utilities, etc--- but let's keep it simple for this example), and got $60 ... so $30 TAXABLE income (and the 15% self employment tax!). OK, so get paid in cash and stick it in your pocket. I didn't say they could catch you- I am just saying it IS taxable income. The IRS doesn't give you $5,000 income "free", or care if you call yourself a business or not. the IRS even taxes bartering and drug dealing (even if you don't call it your "business")

"Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."




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