Hi, my name is Cassie and I am a at home cake maker. It's like a side business in a smallish town. So far my business has just been friends and family so they get fabulous cakes for like $20-$30. But I've recently started getting orders from co-workers and their family and friends. I'm not by any stretch of the imagination a pro when it comes to decorations or baking. I'm good and I know I am my own worst critic, but I also think some times I under charge. I would really like to get an idea of what other people charge when they were first starting out. I've looked at equations from other forums and spreadsheets that people have done, but I'm finding that people just don't want to spend $50 on a small cake even though it's hand made and decorated to their specifications. I also know that if they went to a professional cake place they would be charged twice as much. I'm just looking to find that happy medium. One that covers my costs, allows some extra for labor, and costs for new equipment. Any ideas?
You're probably going to have to start from scratch building a new customer base if your existing customers are used to $20-30 cakes. If you haven't already done so, put together a business plan and do some research on which local markets you want to target (people who are willing to pay extra for quality) and strategies on how to reach them with advertising.
Your business plan will also help you figure out how to price your products by taking into account all your costs, including ingredients, overhead, your wage, and the market value of your kitchen space.
20-30 dollars...does that just cover the cost of your ingredients? Please don't sell yourself short when you do sell to other people besides friends and family. Also, let those people that you give inexpensive cakes to at a great price that you are doing it at this price especially for them. You don't want friends telling their friends that you sell great and cheap cakes.
Jason is right, come up with a business plan and figure out your target audience and how to get their business. If people complain that your cakes are too expensive explain what goes into your work. Let them see the quality.
Also, your cakes may not be for everyone. You deserve to be paid accordingly. Don't undersell yourself.
There is an article in my signature that may help you. Please sit down and figure out your hard costs. Once you do that, you're going to find it very difficult to continue selling cakes for $20-$30, unless you are strictly doing this as a hobby and expect to lose money on every cake.
Sometimes details get lost in the "swirl" of doing a cake. Especially when your new. I get it. I was so stressed about getting cake basics right and then when it came to design...I was a fricken' basketcase! I wasn't paying enough attention to the dollars and sense of it.
Now, that I'm more comfortable...no pro either here....I can think more clearly about the financials. So - here's a simple eye opener...
Make the normal grocery store trip that you would for the most popular cake you have. I realize that if you make cake from scratch you don't use ALL of a bag of flour or sugar or container of cocoa. But, truly - when your small, this is how you shop. Take into account that until you get some steady flow....you're going to have ingredients laying around. So, I personally try to absorb that into my pricing.
I like to put my cakes on fancy cake plates or ribbon trimmed foam board...so I include EVERYTHING. Then see what your total is. You'll be shocked to find that your not making much of nothing. Including your insurance and utilities is smart as well, etc.
NOW, think labor. Call your grocery stores. Call your regular bakeries. Call your specialty bakeries. Get prices on your most popular cake. Granted...it may take you longer as a newbie to decorate a simple cake & have it perfect. But, as time goes by...things will improve.
At the end of all of it - you should be motivated to create. Don't rip yourself off. As your skill level improves...so should your prices. At least...that's what I think.
Good Luck & always know your worth!
but I'm finding that people just don't want to spend $50 on a small cake even though it's hand made and decorated to their specifications. I also know that if they went to a professional cake place they would be charged twice as much. I'm just looking to find that happy medium. One that covers my costs, allows some extra for labor, and costs for new equipment. Any ideas?
Why would you charge half what a bakery would charge?
I ALWAYS refer people to the CakeBoss software article:
Read that article. Do everything that everyone above has suggested.
You may find that you do NOT have a viable market geographically. Just because you make a custom cake, does not mean that people will pay custom cake prices.