This person is a new pastry chef and feels comfortable enough to bake cakes, but not comfortable enough to assemble or decorate. I've confirmed that that cakes are tall enough.

This would not be an issue, since our company is not baking or decorating anything that will be sold commercially, we are providing consulting services. Also, the cake will never be in our kitchen, we are doing the decorating at the customer's site. Same as if you went to someone's house and gave them a private baking class.

Did you actually check with your insurance company on this, though? This would be a lot more than jsust consulting, you'd have your hands all over the cake (literally) so I don't see how an insurance company would see it as consulting alone.

Would the $25 an hour include materials? If it would I think it's too low.

I sent off an email to our liability insurance broker, I'll post once I get an official answer. It's certainly possible that this type of thing would be covered under professional liability (i.e. malpractice) which I do not have, but since this is a one-off I'm not too concerned about it, especially since the riskiest part (the baking) will be done before we arrive.

The $25/hour does not include materials.

This might be fine for your travel/setup time, but are you really willing to charge only by the hour for decorating time? If you're experienced in making 4-tier wedding cakes in record time, then you're certainly better off to charge a flat fee or per serving charge.

The vast majority of our business is sheet cakes and single-tier round cakes -- we've done some wedding cakes, but I wouldn't say we are super-experienced.

Obviously we will be aiming for quality rather than speed, especially considering the hourly rate. We are estimating about 4 hours prep time beforehand and 3 hours assembly & decorating time on site.

Are you saying you'd be happy with $175 for the work?

Considering we will be reimbursed for all the materials, and I passed basic arithmetic, yes.

When I work out variable product costs for our traditional products I figure the pastry chef's labor at $20/hour, so I'll charge slightly more than that considering the work is being done at the customer's site.

Which hourly rate do you use for labor when you look at the cost of your products?

I hope you got the answers you were looking for, or at least something to think about.

As a business owner, I make A LOT more than $20 an hour or what I pay employees.

Your total income per hour is not the same thing as the hourly labor cost component of your products...your total income had better be higher than the labor cost component, otherwise you'd be losing money!

Thanks for the feedback...this is a slightly different situation as our services are more of a "nice to have" to this particular customer, but for more commercial consulting we would probably increase our rate.

As for time taken away from the business, we'll work this into our schedule just like any other order. We do mostly smaller orders in the $50-100 range anyway so it's pretty easy to work around the few larger orders we get.

Exactly... which is why I wondered why you said you'd charge slightly more than the pastry chef's hourly wage.

If it's your pastry chef's responsibility to do all 7 hours of the estimated work involved (prep/setup/decorating), and they are paid $140, you're only keeping $35 of the $175 total. The value of this 4-tier cake is worth so much more than that (even if you aren't baking the cake).

For example, if the cake serves 200 and you charge $3.50 - $7.00 per serving (or more in CA) for BC/fondant, it's worth between a minimum of $700 - $1400 not including extras. Depending on cake flavor(s), $70 - $140 for cake ingredients would more than cover that cost for the baker (who's volunteering time?), leaving a $630 - $1260 value cake that someone will receive for only $175 or so. You should be charging much more.

The pastry chef is also the co-founder of the company so her "salary" really just flows back into the business, but you have a good point, and the hourly rate charged to customers probably should be higher.

The cake will serve about 100, and we would probably charge about $500 if we had made the cake from scratch. Including travel time and reimbursement for decorating ingredients (the fondant alone will be $80) we will probably end up bringing in ~$300 for this order unless it takes longer than expected.

If you normally charge $5 per serving, I think you'd still be cutting yourselves short. The smallest 4-tier, 6x8x10x12 (without starting with a 4" top), serves 130 x $5 = $650. (Are you giving away 30 extra servings, or making a smaller 4-tier?)

The way I see it, the only way you'll bring in $300 for this order, is if you drag it out to 12 hours to decorate @ $25/per hr. Because you really don't know how long it will take until it's finished, even $50/per hr. might not be enough to cover your time (which is why I think you can't go wrong charging your normal per serving rate).

We calculate serving sizes using the page linked below, the 12/10/8/6 comes out to 98 servings.

http://www.pastrywiz.com/cakes/servings.htm

7 hours labor + 1 hour r/t travel = 8 hours * $25/hour = $200 + $100 for ingredients = $300, gross of course.

An hourly charge will be enough to cover our time by definition, since if it takes longer to decorate the cake, we charge more.