First let me begin by apologizing if this is a duplicate question. I know there has been quite a few questions on pricing but I couldn't find any pertaining to my topic.

I'm fairly new to this all. Business has been going well thus far and it's starting to pick up. I have someone who is interested in having me do their wedding cake (vow renewal). And this is where the pricing questions come in. I have gathered pricing information from local bakeries (BC vs. Fondant) and was trying to set my (wedding) prices accordingly(per slice). However, when discussing with my DH (who is more business savvy than me) he thought I was cheating myself. With that discussion he asked me why I thought my prices should be much cheaper than the bakeries just because I was baking out of our home? And I must say, I couldn't give him a very good reason. His thinking is this: if both the bakery and me were given the exact same cake to bake & decorate, why should mine be cheaper? And I don't know why! My first response is because I'm an in-home baker and in the state of Maryland they don't license in-home bakeries. Should this matter when it comes to pricing? I have received rave reviews on all the cakes I have done and I get progressively better with each. And each customer has raved about the taste and the decorations. When it comes to pricing other type cakes I think I do fairly well with making sure I have earned a "worthy" profit. But this wedding thing has me at an impasse and I know if there's anyone out there that can help me it would be my fellow CC'rs.

So...what'da you say?

I agree with your hubby. Just because you bake out of your home doesn't mean you need to charge low prices. I looked at your photos and your work is equal or better than a bakery.

Funny you should ask. The past two cakes I've done (not wedding cakes sadly) I have made a point to price accordingly as if I were a bakery. After all, I am trying to secure kitchen space to get licensed. Neither customer flinched, as if they expect to pay that price where ever they go. They also know that you have a style all your own, and they trust your work. I will never sell myself short again.

I've been afraid to charge full price for the same reasons that you've said. I'm working from home (shhh - don't tell!). But the price of supplies keeps going up..... also, I am finally confident enough to know that I can give my customers what they want so they come back to me for their next cake.

Don't undercharge. The worst someone can say is no thanks,and then you can negotiate from there if you really want their business.

HTH

Granpam is right. And you must continue to look down the road. When you're ready to move into a "real" shop and have "real" overhead, if you have kept your prices low just because you're not a "real" baker, then your customers will get sticker shock when you are forced to raise your pricing dramatically to cover your "real" overhead. You are devaluing your work if you are priced too low.

And on the topic of no "real" overhead while you're in a house, my hubby was the one who pointed out that we gave up our eating area (dining room table became the conference table for clients); we gave up parts of our home as it became storage and office space and work space..... we may have purchased a 2000 sq ft home, but it quickly got whittled down to way smaller than that in "real" living space.

So there is a "real" cost to working out of your home ... you're just not writing a check for it every month like you would in a "real" shop so it's more difficult to see.

Doing this out of your home, you don't have the luxury of bulk pricing and business discounts on ingredients and supplies that the bakeries enjoy.

Same cake, side by side, your cake actually costs MORE to produce than the bakery cake.

Also agree with your hubby! most people call around to make sure they are competetive with local bakeries in their area not lower. i can see not charging the same as the most expensive bakery if you didn't feel your skill level was there, but you shouldn't be trying to price way under either. HTH

Hi All

I absolutely agree. I started out pricing quite a bit lower than the bakery I worked for. My reasoning was that I had no overhead,etc... Then my DH said, hello, you would be doing the cake there, so why would you charge less to do the same cake yourself? I have to admit he was right. If I am good enough to be paid at the bakery,then why am I shorting myself. You are worth it and price accordingly.

Good luck with the wedding cake by the way.

Bestest
Dawn

lol, and even though I have a business..I think you shouldn't undercut the bakery.

I think you should price accordingly also. Same work, same stuff..

and if you figure out how much you pay per sq. ft for your home...and deduct the space you use for your cake making...you can figure out what you're "over" head actually is...

Let's say you have a 2,000 sq. ft. home and your morg. or rent is...1,000.00 a month..

let's say you use 500 sq. ft of your home to bake and make your cakes...( if I did my math right and I doubt it...it comes to about .50 cents a sq. ft. )

so..that 500 sq. ft. $250.00 of your 1,000.00 is what your over head is.

So, you should be making at least $250.00 a month to pay your "RENT/overhead" and you need to pay yourself an hourly wage also.

so, if you're making 6 cakes a month and they take you 3 hours each to make...and you want to pay yourself 10.00 an hour ( and that's pretty low)

on top of your 250 dollars you MUST bring in another 180 dollars a month.

so..add the 250 and the 180 which will give you...$430.00 a month that you MUST bring in before you can even THINK you're making any money..

add to that your ingredients and supplies...lets say you are spending another...$50.00 on that...so...now you're talking about...

$480.00 that you MUST clear before you can say that you can make a profit...

you bring in $483.00 next month..that $3.00 is your profit.

WOW, I just figured out that we must be crazy or truly must love what we do to keep doing it...

and it really doesn't matter from home or shop...lol

Thank you all so very much for your comments. You have really made the DH day by agreeing with him.

Seriously, you all have really given me lots to consider and I really appreciate it. I think the apprehension comes from me actually telling someone that I charge (for example) $4 a slice for BC for wedding cakes. And even though I feel that way I still keep in mind that you can't go to a restaurant and get a good dessert for under $4.99 sometimes even more than that. So why should my cake be any less I keep asking myself.??? I am very confident in my work and I'm sure it is worth that $4 as many have even stated my prices were too low.

In my area, the going rate for BC alone, per slice, can range from $4 up and fondant prices can start at $7 and up. I have thought that perhaps I will set my prices somewhat on the high end of the median prices of my local bakeries. For instance, instead of $4 (local bakery), I can charge $3.75. Thoughts?

And thanks RisqueBusiness for putting things in perspective with the numbers!

it's true, our area is really pricey. I charged $100 for a two tier cake (10" and 6" bc) and thought I was probably close to bakery prices, but guess what, the bakery would have charged her $200!!!!

Now, while I agree that you shouldn't undercut the bakery, it's also true that is cheaper for you as you don't use your kitchen JUST for cake baking. You would need a kitchen regardless, but if you bought your house or renovated to MAKE these cakes, then that is part of your costs! Every heavy duty piece of equipment is your cost. Would you have bought such a fancy mixer (assuin gyou have one) if you didn't make so many cakes? And so on...

Melissa

berryblondeboys, you are right on point with the DH. He just finished talking about the heavy duty equipment and that fancy mixer, that I want to upgrade. shhhhh!

I knew I could count on you all for guidance. You all are the BEST!!!

shaloop

that "formula" was for someone that was thinking about moving from home to shop...on how to figure the "cost", or had a "home based business" they were not moving out. In other words someone that "bakes" from home and is planning on staying there too..

and your way is also another way of figuring out the costs also, since your cost is the same for each cheesecake..I presume...let's say...for arguments sake they are between 30/35 dollars each...you know how many cheesecakes you needed to make

for me and my rents (3,500) and nothing else..I'd have to make 100 cheesecakes a month at that price..then adding another 15 cheesecakes to cover 500.00 in expenses like utilities and such.
So I would have to make 115 cheesecakes that I would sell at 35.00 each before I could make that 116th one and put a profit in my hands!..lol

wow..a lot of cheesecake for me! lol

since each cake I do is priced diff I stress a little more each week.

whatever I make I put into the bank and it's gold untill I pay my rentals, then I see if I can use any of it to "PLAY" with..

Like this month I took a class and ordered some prototype t-shirts for my web store!!! and nothing made me happier!! lol

Well, you'd actually have to make even more cheesecake than that. You have to subtract the cost of ingredients and supplies (cake boxes, cardboards, etc) from the $35 for each cheesecake. Say your costs came to $10.00. You only make $25.00 on each one. you'd have to make 160 cheesecakes per month to cover rent and utilities before you ever made a penny. Homebakers make the $25.00 per cake for each one they make!! That's the difference. I believe that's why a consumer would expect that a homebaker could charge less than a bakery. I don't feel it is WORTH less money. It may include more expensive ingredients and be done with more skill and be an overall better cake but a consumer knows that a homebaker doesn't have the overhead of a bakery. Also, the consumer knows that when they pay more for a bakery cake they're also paying for the peace of mind that buying from a licensed bakery with an inspected kitchen brings. That's not to say that our kitchens aren't as clean as or even cleaner than the average bakery, but the consumer doesn't know that. They know that they've at least passed some regulation. That's worth money to most people.

Don't forget to add in the extra electricity, hot water, etc. I know in the my a/c is going constantly because my oven is going too! I wash way more loads of dishes/pans when I am baking too. That is NOT free and is more than if I did not bake. do not forget to pay yourself. Remember the gasoline to the store, etc.

I was just using the cheesecake as an anology. and I don't think that a hombaker should charge less even if percieved by the customer as being such. I think, as you pointed out that sometimes they pay more for the ingredients cos they pay retail.

They may not have the big bad overheads a store has..they have a lot more hidden charges that make it hard to figure out just how much they should charge

Thank you Denise. I didn't even think about the things you mentioned. And just like you, I find myself washing more dishes than ever had here lately.

And thanks to all others who have responded as well. As stated earlier, you all have given me some invaluable information/tips to consider.

Best wishes to you all in your baking endeavors!

This is a great subject. As I am looking for a store. I am not a licensed in home baker, and am looking at renting a kitchen $300 month, or lease a store front $466 plus buying the business expense. But at this point I'm doing an order a week on word of mouth. I do have a few fliers posted around our small town and I hand out cards quite often. So that really scares me to think about making 200 cheesecakes to cover rent. (just an example) I'll find out more at my business meeting. MrsAB, don't sell your wedding cake short. You make just as good of a product or better then the bakeries. Stand firm and charge your price!

Thanks so much soccermom17 for the words of encouragement. Trust me, I will be standing firm on the price that I have set. No more selling myself short.