Hi everyone!
I was just wondering how do you all manage to get profit from your cakes without charging a ton for them. I there are a few cakes that I make that I know would do well, however the ingridients cost alot as I do not buy at cost.
I don't do this for a bussiness as I think I would never suceed with the market out there ie walmart, grocery stores... I have sold a few cakes & cookies but I did not make any profit on them as I was trying to build clientel so I tried to give reasonable prices. I would like to do more but I really can't afford to do it without a profit even if it's very little.
Any suggestions would be greatly appreciated.
You should try to price the cake in a way that clears all the expenses, at a minimum. When a decorator is fairly new, taking on more complex designs, it is unlikely you can be paid what your time is worth. It takes longer to try new things. However, the cost of the ingredients can be calculated so you can charge at lease 3 times what they cost. that covers your overhead (water, oven, etc) and all your ingredient costs, with a small profit.
good luck.
JoAnn
where are you shopping? Can you buy from Sam's or Costco to get a better price on your ingredients. I'm a hobbyist. My goal is to pay for this hobby with orders from friends and family. So far I'm doing ok. How little are you charging for your cakes? I refuse to compete with wal-mart.
If they want a cake for that price go there and my friends and family respects that. There's a good profit in cake balls, so I do a lot of those. Have any of the people you gave great prices to reordered from you?
You should try to price the cake in a way that clears all the expenses, at a minimum. When a decorator is fairly new, taking on more complex designs, it is unlikely you can be paid what your time is worth. It takes longer to try new things. However, the cost of the ingredients can be calculated so you can charge at lease 3 times what they cost. that covers your overhead (water, oven, etc) and all your ingredient costs, with a small profit.
good luck.
JoAnn
Who came up with the ingredients x 3 formula?
That is crazy? How do you expect to stay in business at that tiny little amount. That is so crazy! I'm not being mean, I just don't get it.
You would have to be selling huge amounts of products to be able for this formula to work.
mpc
I have not idea what your experience level is or anything but here is my two cents. : )
Do not base your prices on what you think others are willing to pay. (especially if you are unwilling to pay that price yourself. -that's why you learned to make them afterall. ) Does that make sense?
Base it on the cost of ingredients, time, per serving or however you wish. But don't loose money on it at the very least! If I went by how much I was willing to pay for a cake I would be giving them away for free, LOL. That is why I learned to make them myself. I am frugal. : )
Please remember, walmart and costco are not your competition. Find something that you do and enjoy that is different from them. How can you compare a hat box cake to a 1/4 sheet cake with basic roses and a shell border for example? Differentiate yourself from them. : )
Best wishes to you,
I agree (with MPC). I think it could work for some things, but for decorated cakes it is unlikely you will ever be reimbursed for your time with this formula.
When I priced out some of my products, the only thing this compensates me on is quick breads and muffins, and then I end up with a number that's too high!
Amber
Just wanted to add I never cared for that 3 times the expenses formula simply because if I make a 3d car cake vs a sheet cake, they might serve the same amount of people but have very different amount of time that it took me to complete one over the other. : )
Just wanted to add I never cared for that 3 times the expenses formula simply because if I make a 3d car cake vs a sheet cake, they might serve the same amount of people but have very different amount of time that it took me to complete one over the other. : )
And I wanted to add that I also agree with everything in your previous post 
- I hope I didn't come off otherwise!
Amber
You should try to price the cake in a way that clears all the expenses, at a minimum. When a decorator is fairly new, taking on more complex designs, it is unlikely you can be paid what your time is worth. It takes longer to try new things. However, the cost of the ingredients can be calculated so you can charge at lease 3 times what they cost. that covers your overhead (water, oven, etc) and all your ingredient costs, with a small profit.
good luck.
JoAnn
Who came up with the ingredients x 3 formula?
That is crazy? How do you expect to stay in business at that tiny little amount. That is so crazy! I'm not being mean, I just don't get it.
You would have to be selling huge amounts of products to be able for this formula to work.
mpc
I'm with mpc on this one! If I followed the 3x's formula I would be charging less than $100 for a cake I just charged someone $600 for! You could check out some of the websites here on cc...most of us have prices posted or atleast a general idea. I posted my prices because I don't want to waste my time or the customer's if they feel they can't/won't pay what I charge. When anyone orders a cake from a cake studio, bakery or specialty company they are paying for someone's time and creativity not the costs of the ingredients. Just some food for thought....my prices were the same when I started decorating cakes as they are now. Just because you are new doesn't mean your time is worthless! 
my problem with people undercharging is it really messes up the specialty cake business/prices and customers think I'm trying to rip them off when they get my price.
mpc
Agree with all the experts on this. The "times 3" formula is a good starting base, but with everything else, you have to be a bit logical. Example, it costs me 17 cents a dozen to make my Snickerdoodles (raw ingredients cost). They sell for $4.50 a dozen.
If you can buy anything in volume it will help. For example, I use a lot of rosemary in my signature chicken dish. If I buy it in those little 1 oz bottles at walmart, I'm paying close to $4 per ounce. I buy it in a huge container thru Sysco and I'm paying less than $1 per ounce. I think grated orange peel (for my cookies) was the same way. At walmart in 1 oz bottles, it was over $3.50 an ounce. Thru Sysco, it's something like 25 cents an ounce. Flour in a 2-lb bag can run you 50 or 60 cents a cup. I buy mine in 50-lb bags and it costs less than 2 cents per cup. I understand that not everyone can buy 50-lbs of flour, but ANYTHING you can buy in volume will really help you out.
Carefully comparison shop, though. I checked out mini M&M's at Sysco. I'd have to buy a 25-lb bag and it would cost me $13 more than buying 25 lbs worth in the little bags at walmart ..... plus at walmart I don't have to buy 25 lbs all at once!
If you don't see it on the shelf at Sam's, ask their customer service desk. They have someone devoted to helping small businesses get the items they need. Whenever I know I'm going to need a large supply of something, I just order it thru the cust svc desk and they have it waiting on me when I go to pick it up.
Here's one thing I learned...... if it's a Walmart brand item, Sam's cannot get it for you. It's exclusively thru walmart only.
mypastrychef makes a good point. If you are undercharging, then the general public thinks that is what the cake is worth .... because they've NO IDEA what a REAL cake is worth. If their only exposure is sheet cakes at Sam's or walmart, then that's all they know.
the 3x's formulas are ONLY for the PRODUCT itself...you need to then add the times...rate per hour to your final cost to make your profit work
for instance, I make one of my "special cakes" it takes me an hour to bake one ( not counting cooling time ) and 2 hours to decorate them.
so my base price on my cake is 75.00.
going rate for someone with my qualifications is about 25.00 an hour, so that's where I start...then I go up from there.
I find that people will pay the high price at a bakery just to say it came from a bakery.
The housewife that enjoys decorating and sells a few cakes just to help pay for the cost of supplies is expected to be dirt cheap. I spend hundreds of dollars on supplies, but I really enjoy it as a hobby.
I wished I could sell a cake now and then, but you are right the people that don't pay at the bakery will go to the grocery store. Their work is sloppy and not detailed but I guess in their eyes it's good enough and the cost is low.
My daughter buys from a bakery. She admits that my cakes and decorating is just as good as theirs but it's a status thing. Her in-laws would pitch a fit if she didn't pay top dollar at the bakery.
Christmas she ask if I would make the Christmas Mice for her, and I did. When his family came over and found out I made them they didn't touch them. It's not just me they won't eat anything my daughter bakes. It has to come from one of the upper scale bakeries.
I don't take it personal.
I guess I'm just saying if you are making cakes out of your home I hope you really enjoy the decorating side of it. And, if you make some extra money that's great.
I tell them my cakes are custom and very hi-falutent and then show a picture or two and sure enough, those who want status will buy! Go figure!! It's just sugar! 
I tell them my cakes are custom and very hi-falutent and then show a picture or two and sure enough, those who want status will buy! Go figure!! It's just sugar!
Honey..it's NOT just sugar!! 
some of the cakes are EDIBLE works of art!! 
If that attitude is picked up by your customers, they are going to feel the same way and tell YOU..."IT'S JUST SUGAR!!" 
Ok, so for a cake like the one with the piroulines cookies (in my photos, tall or short there are 2) What would you charge? They are 9 or 10" cakes chocolate fudge filling, chocolate hazelnut icing on the outside, the cookies & the chocolate dipped strawberries on the top. Ribbon in the middle.
I think I may be able to sell a few at valentines, however I do not want to sell my product too cheap as it's not a cheap cake to make.
Jovi girl..I KNOW that cake is not cheap...I made a 10" and the cookies alone cost me 5 bucks!!!..so If I follow the 3x rule..I'd have to start adding 15.00 to my 10" cake!!!
I don't think even I would pay that..lol
Who came up with the ingredients x 3 formula?
I think that's a rule of thumb used in a lot of businesses. It sounded good to me at first- THEN I did the math- no way does it work with cakes, not decorated ones anyway.
Yes for the cookies alone at costco I pay 7.50 for the can. The tall cake took a full can of cookies & the shorter cake used only about half a can as I did diferent size cookies.
So for ingredients I spend on average $30 so am I too charge $90 for this cake??? I would never get that....
I know it's not "just sugar", I was being facetious! 
I've had many customers come to me with just that argument -- Why do your cakes cost so much, it's only sugar? Why? Because you can't get what I'm offering at Costco. Period. There's a LOT that goes into them, and if they want fondant and gumpaste, then it's more. They don't appreciate what goes into a good, quality cake. They think it's just sugar! Someone here on CC has the perfect signature -- quality cakes aren't cheap and cheap cakes aren't quality. Amen!!
Double Amen...I used to have a LOT of FATHER'S OF THE BRIDE come tell me that...ugh..
I'm so glad that you were joking about that comment..lol
Now, I have my framed degree up on the wall...I'm waiting for someone to complain..( I don't think so much anymore as in Miami, there are lot of HIGH end cake designers down here)
I'm waiting for someone to say, "it's just sugar"..so I can point to my degree and say.."Well, find someone without a 35 thousand dollar education to make your cake!"
ugh
Also to clarify, I don't put up with the "it's only sugar" nonsense from customers, however, when it comes to my students that's another matter entirely. When I see my first-time students stressing themselves to tears (which has happened!) because their shell border isn't just so, I tell them "relax honey, it's only sugar!" Then I show them how to fix it. I want them to have fun with it, otherwise they'll never progress.
bob, you are right..I try to make class fun for my student..just the first few minutes of class when I scare the snot out of them to make them behave..I have had people paying full price for the class and then treat it like a social club!
When other students in class are eager to learn, I do try to give them time to have fun!!
Even asking if they want to do a "round robin!"
I ask them to bring in iced cake boards..they place them in front of them..and when I say switch..they have to move to the next seat and take over...they bring the bag they have..lol
A lot of giggling and surprises come about...especially when I see that the class is proceeding at a quick enough pace to be able to spend time doing this..
That's a cool idea risquebusiness!!!
I would love to take your class, If I'm ever in your neck of the woods I just might
Cake decorating round robin is a hoot and if anyone want's to do it in class, that's fine, just make sure that you have enought time and you've covered your agenda and this is just extra!
Usually done on last day of class when I bring my camera! and I tell students to bring theirs also!! we also email each other the pics!! I tell everyone to email me and I send out the pics!
I miss teaching...lol
and, it always kills me that they bring their little price lists to me after classes showing me what they are going to charge when they "set" up their little cake business..lol
)
Please remember, walmart and costco are not your competition. Find something that you do and enjoy that is different from them. How can you compare a hat box cake to a 1/4 sheet cake with basic roses and a shell border for example? Differentiate yourself from them. : )
I just had this conversation with a lady I'm doing a two tier bday cake for next week. She went to three store bakeries and all of the said they didn't do tiered cakes, then she went to our two local bakeries and they said they charged by slice and wedding cake slice price, so they were asking $200 for a buttercream 6" and 10" tiered cake. No wonder she didn't bat an eye when I said $100.
Melissa
Yes for the cookies alone at costco I pay 7.50 for the can. The tall cake took a full can of cookies & the shorter cake used only about half a can as I did diferent size cookies.
So for ingredients I spend on average $30 so am I too charge $90 for this cake??? I would never get that....
If you can't get the price why would you make the cake?
How do you know you would never get $90 for that cake if you don't sell it for $90.
know what I mean?
mpc
Sweetamber, NO your post was just fine. : )
Janeete, I can't believe they wouldn't eat what you made. That's just weird and rude.
Bobwonderbuns, I am so glad to see you were just joking. I was going to say its just sugar like a picasso is just paint. : )
If you can't get the price why would you make the cake?
How do you know you would never get $90 for that cake if you don't sell it for $90.
know what I mean?
mpc[/quote]
Mpc
I only do orders from my home, I'm new the the area & I do not have a bakery nor a license...
I do not bake cakes & try to sell them, any bake goods I do are only done when I get an order. I also live in a small town, so I really don't get any high roller customers that are willing to pay $90 for a 8 or 10"cake with cookies on it... I only wish one day
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