Long before the cake pop craze, the bakery I worked for sold just the cake balls...and they charged $21 a dozen 2 years ago for just plain cake balls with a squiggle across the top. Decorations would be extra. We had a waiting list for people who wanted them. Why she really didn't expand that area I'll never know.

By researching local demographics and finding customers (individuals or businesses) who are willing and able to pay your prices. This is an integral part of any business plan.

I understand that, thanks, Jason. I just do work for friends and family right now. I live in NY and based on what I know from my "clientele" I can't imagine anyone paying such a high price for these. Starbucks sells theirs for a little over a dollar. I know mine taste better than theirs, but still, $3 a cake ball seems high. I wish I could get that price because honestly, they are time consuming.

Sorry for the off topic. I just wanted to say your price scaling is terrible, you charge a dollar more for 5 dozen instead of 4. 16$ x 4 = 64$ , 13$ x 5 = 65$. Anyways.

I think selling only cape pops can be viable, if you do your market research. Some people only sell cupcakes. It's really a matter of where you plan to do it and if you price yourself accordingly to the area.

Since you charge $18 for 1 dozen, $16 for 2-4 doz, and $13 for 5+ dozen, an order for 4 dozen would be priced at $64 ($16 * 4), while an order for 5 dozen would $65 ($13 * 5), only a dollar more for the extra dozen.

This type of pricing might make sense if you have a high volume operation (for example, if you make a batch of 1000 cake pops at a time and keep them frozen until someone orders them) but as a small custom order shop you are doing yourself a disservice by giving such steep discounts for relatively small volumes. $1.50 each is already pretty low to begin with, you probably aren't even paying yourself minimum wage at that price, and your low prices might be scaring off customers who are looking for a more premium product.

It's not a stupid idea to sell cake balls instead of cake pops (I don't think anyone has said that), you just have to make sure you are pricing them right.

What is your hourly wage and profit at the current $18/doz level? What about at $15/doz?

4 1/2 hours to make how many? And how much do the ingredients and packaging cost per dozen?

If we round up to 4 dozen, ingredient costs are $7.20, and we'll add another $3 for packaging to get to $10.20. At your current prices those 4 dozen cake balls would sell for $64, which leaves you with about $54 for overhead, labor, and profit. Assuming about $800/year in overhead (liability insurance, tax prep, business license, general admin, advertising, etc.) and sales of 4 dozen every week you have an overhead contribution of $15 per 4 dozen, which leaves $39 for labor and profit.

Profit margins are typically in the 20% range, but let's adjust that down to 10%, so $6 of the remaining $39 is profit that accrues to the business, leaving $33 to pay your wages. With 4.5 hours in labor you would end up paying yourself $7.30/hour -- essentially minimum wage. Given the previous sales target of 4 dozen/week and the 10% profit margin your business would accrue $312/year. Before taxes.

Dropping to $15/dozen would probably lead to your business taking a loss and you earning less than minimum wage. Increasing the price to $24/dozen would give you an additional $32 per four dozen, allowing you to earn a more respectable wage in the $12/hour range with an additional $13 profit, resulting in the business accruing $988 instead of $312 every year (or $10/hour with $21 additional profit and yearly net earnings of $1404). Of course this is contingent on a sound marketing strategy that targets the right customer base.

You do have overhead, you just don't know it. I doubt that your web site is your only advertising spend...in this thread you mentioned showcasing your products at a bridal shop, the cost of the samples and your time would fall under marketing or business development. Hopefully you are recording all these costs in accounting software, that is another source of overhead costs (either your time setting up the business accounting or the cost of an accountant to do it for you). There are costs associated with registering for a fictitious business name with the county, even if a business license is not required in your area. There's the cost of business liability insurance (if you don't have this coverage you should get it ASAP to protect your assets).

A lot of this will depend on how serious you are about the business...if you're mostly doing it for fun and don't care about making less than a job flipping burgers then you can set prices wherever you want (not being flippant here, some business owners do fall into this category), but if you want to grow your business and draw a decent wage you have to take all of these factors into account (or hire someone to run the business side).

Im sorry, I didn't mean to be rude at all. Most of the time im doing other things as I read these boards and I just wanted to throw a quick note in there and it came out a little out of whack. My bad.

What I meant, just like Jason was nice enough to go much more into detail with, is that you should be careful with the scalling of wich you give discounts. I often see people discount on scales like 1-4 items are X price, 5-9 items becomes cheaper and is X price and so on.

Since you discount at very low quantities and your discounts are actually substancial, someone who would order 4 dozen cake balls from you would pay 64$. Where someone who would order 5 dozens would only pay 65$ ( with the prices you mentionned ) wich effectively makes that 5th dozen cost 1$ to the customer. That's why I said the 5th dozen costs only 1$

Like Jason said, if your overhead is calculated on a batch of 1000 of these at a time , then it might make sense but if you bake to order, any savy customer who wants 4 dozens will get that pretty much free fifth dozen if they realise it's just a dollar. And you will never make a profit from that fifth one. So there's really no reason to ever buy 4 dozen.

And again, sorry for sounding rude previously, im a really happy person I just phrase things oddly and straight to the point sometimes I guess.