Wow... I'm just starting the idea of turning my hobby into a business and I had no idea how much potential income there would be.  Based on the posts, it sounds like a beginner would charge less but increase prices over time as their skills improve.  I'm planning to start out by making cakes for friends at cost until I get my name out there.  Then I was planning to charge at least double the cost of my supplies.  It sounds like I should plan to charge extra for the work that would go into my decorations.  Has anyone estimated how much they are making on a per hour basis for all the work going into their cakes?

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Your price should not change over time (except to adjust for inflation), you should charge market prices in your area. If you start out too low you will undercut your competitors and damage the local market, plus you will have to start all over again anyway with a new customer base once you set realistic prices.

As you become more efficient your hourly wage will go up automatically because you can do more work in less time, but to figure out your profitability (and if it makes sense to even sell a product) you should look at your cost of ingredients, labor, and per-order overhead. If you are making custom products you can't rely on tricks like doubling cost of supplies.

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If you can provide a higher quality product, it's possible to change your target market. You are correct that this could be an opportunity to charge more (for example, by adding new products that require more skill to execute), since the market prices for your new target customers will be higher. If you are charging substantially more today another possibility is that you were initially charging below market rates.

Remember that being in the same line of work as someone else does not mean you serve the same market. A Ford dealership and a BMW dealership both sell cars, but they serve very different customer bases and will have different prices.

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I agree with Jason. If your skills aren't up to par to create a certain cake, you shouldn't take the order. Your skill level should determine what orders you accept; not your prices.

Wow! I can't believe some of the prices some of you can get for your beautiful cakes. I am just a hobby baker and live in a small town with high unemployment rates. I have been getting really bummed out because some people think what I charge is too high. For example, belly bump cake, 24 cupcakes decorated with the Wilton monkeys $65. Volkswagen cake covered in fondant, depending on the detail $40-$50. 11 x 15 double layer sheet cake (50 serv) decorated with butterflies and a big bow $65. It's a hobby but I have to count for my time and a lot of people don't understand that or they don't want to pay.

Punkin if the market for higher end cakes isn't there in your area, then maybe you have to look for something else to do, or keep making cakes for less than you think is fair. If there are customers out there willing to pay a fair price then you need to figure out how to market to them instead of the customer you are reaching now. 

I totally agree. I have also been told my prices are cheap! Go figure? I hate to haggle with people over a price or explain why the cake is a certain price. I just have to figure out what is FAIR to me I guess and not worry about the rest. That is hard to figure out when you really have nothing to compare to. There are bakeries but most do buttercream cakes and I have been told not well. Very little fondant decorations. Then there is local grocery stores (mainly buttercream decorations). I think that is where people get what  they think should pay me. I really don't have anyone in this area that I know that does a more elaborate cake decoration with fondant. Hopefully I will figure this out. Thanks for the advice!

Deciding what to charge for a cake is the hardest thing I have ever had to do. Living in Portland Oregon there is quite a bit of competition and most people come to me thinking they can get a cheaper price than the bakeries around town. But how do they expect that from me, someone doing all the baking out of my home, to charge significantly less than a full scale production bakery built to be efficient? I've just started out and have been doing small cakes at cost for family members just to build up my portfolio and that recently led to my first wedding cake order. The bride to be was looking for cheap, I quoted her 400 dollars for a 3 tiered buttercream cake for 150 people with modeling chocolate flower decorations. This price included delivery and set up, all flavors and fillings, and decorations. She decided that was still too spendy and she said she could probably find it for cheaper at a local bakery...ARE YOU KIDDING ME? In portland the average base price for a cake for 150 people is 450 dollars, tack on another 50 for delivery, and another 50 for decorations and you're looking at the cheapest being 550 dollars. How do you put a price on the hard work, dedication, and love you put into your cakes? People just don't understand. I've learned I need to be firm with my prices, I don't need to explain my prices, and I need to let people do their own research and discover for themselves that what I'm offering is top quality customized product that they won't be able to get anywhere else at the prices I offer. 

 

Rant over. Thanks for listening.

 

For those of you worried about charging too much, don't be. If you want to price your cakes according to the surrounding income bracket, then only offer what is actually reasonable in the price range. You don't want to drain your bank account to save theirs. If they want to feed 50 people and only want to spend 50 dollars then you should offer a sheet cake with basic buttercream decoration, not a fondant covered sculpted cake, you would be doing yourself a disservice. If people really want the sculpted cake, they will pay for it.  

If you really do live in the sticks, and don't have a high end market, then I guess my comments aren't really that helpful...lol. But really, most people in my town are cheapskates, thankfully I've managed to snag the few that aren't. And not even that entirely, there are some who definitely value quality over price.

AAt a certain price point you only attract the kind of customer who doesn't even think about haggling or having to explain why you charge more than Walmart. They seek you out precisely because they know you are worth it.

Again thanks so much for the advice here on CC. I have learned so much on this site -LOVE IT!  I agree with all of the advice and am trying to stand firm on prices. By the way I know all of your beautiful cakes are worth every penny!