Hello everyone, I realized that I have been undercharging and I am calculating new prices. My question is what is included in your pricing? In my area I though about charging $2.00 (I was charging $1.40 a serving)but that would only include basic decorating. I did some research and other places charge up to $5.00 a serving (excluding fondant) and that includes scroll work, the basket weave, and other designs. I would also like to know how much extra do you charge for fondant? Thanks for the help!

AMy pricing includes ingredients, overhead, hourly wage, and profit. Not sure if that's what you are asking. To the customer, my charges include two hours of decorating time. that pretty much covers basic piping stuff. Fondant is .50 more per serving.

Probably not the answer you want to hear, but if you haven't done a basic business plan, there is no way to answer this.  The answer is everything.  You need to sit with your books and look at what it takes to keep the beaters spinning.

This is the real hard work of a business:  the numbers.   It might take an hour, a couple hours, or days to figure it out. When you look at your numbers, then you can decide how to spread those costs to your cake.

Some questions:  Do you have a store front? Rent, electric, insurance, taxes, maintenance, employees will all figure into the cost.  Are you at home?  Wear and tear on appliances, additional insurance, licensing fees/inspections, and how much you pay yourself an hour all figure into the cost.  Obviously ingredients factor in, but they are the last thing.  Everything else first.

Sit down and do a plan, or pay someone to do it.  Best time and money ever spent.

AWhat mathew said. Rate you charge yourself an hr, cost of supplies, utilities, insurance, license, fees and of course ingredients and profit you want to make. Lots of research going on there.

I'm curious what you guys pay yourself as an hourly rate? Hope that's not too nosy, but I'm not sure what's realistic. Also, do you just know/estimate how long something will take ahead of time when you quote a price? I'm terrible at this, and I always think it will take less time than it actually does. 

This isn't what I pay myself, but I break down tasks by skilled labor/unskilled labor.  For example, I use $15/hour skilled (basic baking and icing) and $10 unskilled (run the counter/clean/dishes).  Minimum wage here is $7.25/hour, so for the unskilled person, that leaves me 2.75/hour towards taxes/etc.  Same logic applies with the skilled number.  I use those basic figures when figuring all my costs for each recipe (prep/decoration/cleanup).  So for a basic cake, I will have XX hours skilled labor figured in, XX hours unskilled, plus ingredients, overhead and profit.  You will need to adjust this to your part of the country/economy/etc.

Hope this helps. 

Liz
 

P.S. And just double the amount of hours you think something will take. :)

A

Our labor cost rate is also $15/hour, plus an additional ~20% markup above cost for profit.

After a while you will get better at estimating the amount of labor required for different designs. If you find yourself consistently underestimating, look back at estimates vs. actual times and adjust your estimates upward by the percentage variance you find, plus a little extra.

Thank you everyone for your help! I live in TX and home bakers don't need a lincense , thanks again!