Labor Rates

Business By JeniC Updated 4 Feb 2016 , 6:45pm by LelekBolek

JeniC Posted 2 Feb 2016 , 8:39pm
post #1 of 21

Ok, I know this is a very complicated question.  So many things to consider, like demographic, competition etc.. but any insight I can get will truly help. 

I have been running my cake business fairly successfully from home for a few years. I however constantly find myself lowering my prices (which I know is so wrong) just to get the order.  When I finished all of my year end paperwork it works out that I am working like a dog and really not making any money.

I have the Cake Boss software and I have input all of my costs accordingly so that part isn't an issue really, my biggest challenge is feeling confident in my prices. It's the labor I'm unsure of.  I have researched tons but found nothing that make me confident in my pricing scale.  

Do you all charge a flat dollar per hour labor rate?  What is the fair dollar per hour rate for a custom cake decorator? If you would like to share your labor rate with me, PLEASE do, if not no worries.  Do yo charge a different labor rate for something custom as opposed to something standard?  I mean If I hired another decorator I wouldn't pay them $5.00/hour... that is often what I end up making.. I also want for my business to make a little profit too..

Any input you all have would be greatly appreciated.   :) 

20 replies
Jenmarlene Posted 2 Feb 2016 , 10:42pm
post #2 of 21

I'm in the same boat as you, I know I under charge. Curious what everyone else has to say

costumeczar Posted 3 Feb 2016 , 2:47am
post #3 of 21

I aim for $30 an hour as a base price, and depending on what i'm doing it goes up from there. I have some things that don't take as long that I end up making the equivalent of $100 an hour. I have a friend who owns a couple of storefronts, and if she has to get involved in decorating a cake she bills at $100 an hour.

It's a little deceptive, though, because if you take that $100 an hour that you're calculating, then spread it out to all the time you've spent working on contracts, social media, networking, etc, that hourly rate isn't as high. I did a pricing guide that takes all of that into account and helps you figure out how much you should be charging per cake to include all of the "non-cake" time that you're actually still working, and it's a little complicated to figure out. So it's hard to give a specific figure that you want to make unless you're thinking of all the work you do and including that.

Also, remember that there are places in the US now where the guy at the drive-through asking if you want fries with that is making $15 an hour minimum wage, so a skill like cake decorating is worth more than that!

MimiFix Posted 3 Feb 2016 , 4:00am
post #4 of 21

A highly skilled confident decorator who values her time, can do reasonably well. But there's an underlying issue. In most regions, the market is so saturated with cake decorators they are fighting each other for cake orders. The result is that prices are being driven down. Every time someone undercharges, it sets the tone for future custom cake customers who will expect wal-mart prices. It might be worth it to expand your business to include other types of baked goods. And, if your permit allows, sell products to local restaurants, delis, coffee shops, and other eateries. Good luck!

mammaslcakes Posted 3 Feb 2016 , 3:06pm
post #5 of 21

Hi, I'm new to business i've opened a cake and snack shop 6mths ago.  i am from the u.k. so i work in £s. i have just signed up to cake central. so this is new to me to. Is there anyone else from u.k.?    Maureen

JeniC Posted 3 Feb 2016 , 3:11pm
post #6 of 21

Costumeczar-  Does this rate have your cost worked in or is this in addition to that?  Just want to be sure I'm on the same page :) 

Thank you for your help! 

*Last edited by JeniC on 3 Feb 2016 , 3:12pm
Webake2gether Posted 3 Feb 2016 , 4:12pm
post #7 of 21

@JeniC ‍ I would highly recommend costumeczar pricing guide!! It opened my eyes to pricing even though I had my prices and hourly wage set the pricing guide just perfected what I already had started and helped me to see areas that needed changed. As another poster stated the over saturation of the cake market is a real big problem. I raised my prices and we are seeing a really good change in our customer base. That also encourages us to be better and deliver a product that satisfies the customer and leaves them feeling like they got what they paid for. We are currently branching out as well bc I love baking more than just cakes so it's a win win for me. Be confident in what you do and charge what your worth. Insecurity grips me from time to time and I'm scared people won't order from us bc we charge for our time and so many others don't but I remind myself I'm putting my time and effort into something and that's worth something. offering quality products with great services will prove to be better for you then lowering your prices to gain orders. My prices are non negotiable they either adjust their expectations/servings or order somewhere else. And I'm ok with that :)

JeniC Posted 3 Feb 2016 , 5:05pm
post #8 of 21

@Webake2gether ‍So where can I get my hands on this pricing guide you and @costumeczar ‍are talking about? :) Or how do I create one?  It sounds like that is a good place to start!  

JeniC Posted 3 Feb 2016 , 5:08pm
post #9 of 21

I do have a problem in my area with too many decorators... there are a few who do beautiful work but they charge less than it costs me to make them. So when people hear my prices they run because why should they pay $150 when they can get it for $50?... 

costumeczar Posted 3 Feb 2016 , 5:17pm
post #10 of 21

Quote by @JeniC on 2 minutes ago

I do have a problem in my area with too many decorators... there are a few who do beautiful work but they charge less than it costs me to make them. So when people hear my prices they run because why should they pay $150 when they can get it for $50?... 

That's the problem that's happening all over the world now, it seems. If people had a better idea of how to price things it wouldn't be as difficult, but there are so many people doing cakes who don't run it like a real business it's driving prices down. You just need to figure out your pricing that's right for you and stick to it, or else it isn't worth it. Go to my website and there are links to my pricing guide. You could also get Mimi Fix's books that address small business, those are on her website at The cake "environment" has changed a lot in the past six or seven years, so you need to adapt to survive.

My hourly rate is after expenses, that's on top of expenses and profit. In my case it's kind of hard to separate out what's profit and what's hourly wage since the way my business is structured, I do my business taxes with my personal taxes. But I aim for making enough to fund my retirement account, pay for a kid in college and a bunch of other household expenses etc. If I didn't make enough to do that I'd go get a job at Kroger.

Webake2gether Posted 3 Feb 2016 , 8:10pm
post #11 of 21

@JeniC ‍ You can find it at:

Its absolutely worth reading!! It's never a bad thing to read and research something like pricing. The pricing where I am is so Out of whack its ridiculous. We are sort of left to set our prices based on what we do and what we offer not what anyone else is doing.there is really no legitimate comparisons here. There will always be people who run from higher prices and the undercharging epidimic has made it worse lol. You won't always get every order that's just a fact but as long as your getting some you know your priced right. Those who undercharge are busy and largely for that reason. I'm totally quoting another cc member(s) but I love it and remind myself often of it  

"The race to the bottom is short and fast" 

my prices are what they are so I can stay in business and not burn out bc I'm not making any money. I'm not in this for fun or as a hobby it's a legitimate business to make money. Of course it's a bonus to love what your doing but it can't just be for the love of it if your a business. 

Webake2gether Posted 3 Feb 2016 , 8:14pm
post #12 of 21

Sorry not the right link.  here it is it will take you directly to it :)

MimiFix Posted 3 Feb 2016 , 8:35pm
post #13 of 21

Quote by @Webake2gether on 5 hours ago

my prices are what they are so I can stay in business and not burn out bc I'm not making any money. I'm not in this for fun or as a hobby it's a legitimate business to make money. Of course it's a bonus to love what your doing but it can't just be for the love of it if your a business. 

Absolutely! Passion for baking, while nice, cannot sustain a business. Often, it will only get in the way of running a profitable business. You will end up tired, frustrated, and angry, with very little income for all your hard work.  

JeniC Posted 4 Feb 2016 , 4:48am
post #14 of 21

Thank you all so much for your input! I will definitely check out those links. 

LelekBolek Posted 4 Feb 2016 , 11:43am
post #15 of 21

Although the responses to the pricing threads sometimes may "sound" like a screaming "raise-your-prices-now!-you-are-seriously-undercharging!", I hope you take all the reasonable advice.  It is hard, especially as you said - there are many bakers in your area, who seem to drive the prices down. 

$5 per hour - I would not take as a job payment, either. It is too low. I am struggling sometimes with the pricing "morality issues", but - as some of the replies indicated - it is after all to make profit, and not drive the market further down. Recently, I read a post (elsewhere) for a position opening at a home daycare center in our (medium-income) area. It required completing high school, and knowing basic words in Spanish. The _starting_ rate offered was $11 an hour. For some reason, cake business pricing was the first thing I thought of. Do you value your skills less than that? I do.  

I still have a "luxury" of falling back on plan-A as far as household income goes, so I am not selling my cakes/taking cake orders for less than I believe my time is worth (my other kink is I don't do cakes that resemble live human body parts, like belly-bump cakes :-)) .  I discovered that I have no problem explaining "why is it so expensive?!!!", in terms of politely reminding of all the things required for making the cake (including "minor" things like a clean-up after, etc), and saying things like "if you paid yourself an hourly wage for doing good work, how much would you pay? Why should my labor be valued differently, because I am making just a cake?". 

I know I'm not much help, but for what it's worth, try not to lower your prices any more. Costumeczar, WeBakeTogether, and others have very good pointers as to why. 

Webake2gether Posted 4 Feb 2016 , 3:05pm
post #16 of 21

@LelekBolek ‍ soooo glad I'm not alone on the body parts- belly cakes lol. I don't know why but I just don't like them. We've yet to have a request for one and hope we don't bc it will be a no. i dont think it's a kink it's just something you don't offer. For us we don't offer buttercream decorations (flowers character images etc) it's not bc we can't it's bc we don't want to. We have the privilege even as a commercial kitchen bakery to not have to do anything we don't want to. We have enough orders and charge appropriately to not depend on several orders we can do one or two a week and be more than fine. Id rather do fewer orders than something I hate or something I'm not getting paid enough  for. If you don't mind me asking what do you mean by morality issues on pricing cakes? I don't want to assume I know what you meant :)

LelekBolek Posted 4 Feb 2016 , 4:51pm
post #17 of 21

Oh, body parts cakes are beyond me, especially belly cakes freak me out. I can't take a knife to it, if you know what I mean. 

I agree, I'd rather do fewer orders, than invest effort into something I don't get paid for.

On subject of "morality issues". Well,  is more like the internal debate and anguish over how much to charge while making profit, yet not overpricing, being competitive, giving myself what I deserve, etc. I was raised an overachiever who cannot evaluate her own work justly - meaning, that now in my adulthood,  when people say something I made is great, I start doubting them, and may convince myself it is horrible and worthless. So setting a price on my own work is a difficult task. You asked LOL  ;-)

Webake2gether Posted 4 Feb 2016 , 5:18pm
post #18 of 21

I'm glad I did ask because I thought you meant something a little different :)

I'm a self doubter to the max and I can't take a compliment well or I think are they just being nice. I was a severe underachiever never really giving much effort to anything I did except rebeling and  breaking the rules. So I guess I view myself the same way but for opposite reasons lol. My husband has been the voice of reason, rational and price setting when I struggle with insecurities. He says went don't charge based on how we feel we charge based on our time material and ingredients. And don't even get me started on the discussions we've had about charging for materials. He's right but I still struggle with it a bit. 

I think bc what we sell is edible and perishable there is some sort diminished value on what we offer. On both sides as seller and consumer. 

LelekBolek Posted 4 Feb 2016 , 6:16pm
post #19 of 21

:) What did you think I meant? 

Oh, I loved breaking rules! I guess, being over-achiever and rule-breaking isn't mutually exclusive. I just was never taught or told to believe in my abilities, rather that everything I made - can be made better, or along those lines. Basically, that I wasn't good enough. So once an adult, I had a lot to "shed", and to understand that my life isn't about meeting someone's expectations of it. 

That is pretty neat how your husband is the "voice of reason". Good for you two that you make a great team! Arguments and all - those can help things fall back into focus, if needed.

I often hear "It is so pretty! I can't imagine eating it!!!" about my or other cakes (or consumables of any kind). And I don't get it, really. For me - I made it, I feel the achievement, I polish it to shine and to my best ability... take a photo, and dig in. Kind of a sand castle feeling. You build one, you loved it, you jumped in it and destroyed it, and you build another one. I do other art, more permanent (paintings and such), that I would feel different about destroying. But cakes I see as an edible art. 

Sorry JeniC for hijacking.

Webake2gether Posted 4 Feb 2016 , 6:32pm
post #20 of 21

Yes my apologies @JeniC ‍ sorry for hijacking :)

I figured it was overcharging but wasn't sure. We probably seem like we overcharge but that's going to happen when the prices are mostly rock bottom or for us there isn't much to compare to. We do make a great team we balance each other out and he has an endless amount of patience with me lol :)

i also do not have a problem of digging in bc i know it will taste as good if not better than it looks!!

LelekBolek Posted 4 Feb 2016 , 6:45pm
post #21 of 21

Right? It was meant for eating. I mean, great that it is eyepleasing, festive, celebratory, makes a statement for the occasion, and all. But it also tastes great. So win-win. A photo and memory is a great way to remember it.

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