AThis is what I know, whatever is your total expense in baking these cupcakes, triple it then divide by number of cupcakes, you baked that will give price for each one, by tripling the overall costs, this covers you're materials, time and efforts. You've done right by researching the other bakeries in your town for their prices and then adjust your price accordingly. That way you're not accused of undercutting the other bakeries.Also to save costs, make your decorations simple, rolled roses in miniatures, add Swiss dots, or anything that will make it look like you spent a week in decorating each cupcake. Good luck.

AI know the multiply by 3 rule is popular, but it's incorrect and that strategy is not rooted in any kind of business sense. I know that a lot of blogs recommend that but it's just not good business practice at all :(

A

Yep, agree.

My mum used to use the x3 principal in the 80's when she was a caterer, and *most* of the time it worked as her time was not spent making fiddly decorations etc.

If I used it for wedding cakes etc though, I'd consistently be undercharging by hundreds of pounds.

AI live in NJ just outside of NYC, so I couldn't see those selling for less than $4 or so around here as a consumer. But, you have to consider your area and what the local market will accept. Don't giveaway your work or you will burn out quickly. I would think that you would need to consider a "simple" design that you can do in a timely manner yet meets a creative design that allows you to get paid for your hardwork.

Good luck.

My food costs are consistently about 15% of the total sale price of whatever I'm making. So if I spend $15 on ingredients, I know that I'm probably charging about $100 for that item. If I used the 3X rule I'd be charging $45 for it, which isn't going to cover my real costs and time.

Part of the problem of determining pricing is that you need to know what your real costs are, and simple formulas don't give you that. Once you do your taxes a few years in a row and see what you're actually making vs. what your expenses are you can get a pretty good idea about whether you need to raise your prices or whether you're charging correctly. Plus, what one person considers a "good" profit might not be what someone else would.

You definitely need to know what other people are charging for SIMILAR items, but if you're selling something that's different in terms of customization, choice of flavors, fillings, etc, you're not selling the same thing. Raise your prices based on how many options people are able to choose, that's why we call it "custom" cakes. I could walk into a furniture store today and buy a basic chair, but if I wanted a specific color, shape, etc I'd expect to pay more for it. Custom=More, so charge more for custom work.

Remember a few years ago when people tried the "basic wedding cake" option for a flat, lower price? That went over like a lead balloon with most brides, because they don't want to pick something out of a catalog and not make changes to it. You can't offer customized cakes at the same price that people pay for something they're choosing from a bakery case, it isn't the same product.

Also, be wary of anything or anyone who says "use this formula" and gives you a basic 1+1+1+1=4 formula for pricing. They're probably reading out of a textbook, and the textbook never ran a business.

A

Yes, I apologize. I did not mean to invalidate the strategy as a whole for OTHER business. I was speaking with cake decorating specifically in mind. Should have been more clear.

AI understand everyone's concern with this basic formula. However has not anyone ever thought that this formula only applies to your basic cake, cupcake, cookie,etc? One must have forgotten that you have to add fillings, other embellishments such as fruit etc, the handmade bouquet, or a fantasy flower, all of these adds up to your costs. When all of these are considered then do your math, and don't forget this applies to serving sizes. Of course you can add more if the requested design is labor intensive and all of these should be discussed to your customer before drawing your contract also with a stipulation that should there'll be changes while work is in progress that costs should be added too. If you have a license to sell your home based products you can also buy wholesale, and by doing that you can maximize your profit more.

AWow, I'm causing a lot of furor over this one. I use this formula though, but wait before making a conclusion, consider these few things : let's say I spent $10 for a basic cake, to serve 20 people $10 for filling, $10 for fondant to cover cake, then a small bouquet made of varying sizes, which I will again bill separately (depending on how intricate) say $20, using this formula gives me a total of $150.00 now I divide this number with 20 serving, that gives me $7.50 per serving. What do you think?

AOh let me add this, if you think doing this formula does not cover your paper towels, aluminum foils etc, then by all means add cost of living increase to your price say 3% and adjust your percentage according to cost-of-living increase index.

I'm not sure the OP is still reading this thread…

AMake everything from scratch, fondant, royal icing, marzipan, utilize Places like Costco, they have bulk sugar, flour, ground your own cinnamon, weigh instead of going swoop and deep, if an order includes something very expensive and customer will not allow substitution then you must let customer know that this will be billed separately from the cake. I'm surprised that despite of all the discussions here no one has really come up with a solution to pricing. Despite of what everyone else is saying. I bill by that simple formula from my basic recipe and on to, according to the number of servings, flavors, decorations, etc. the price of the cake builds up from there. Of course you give your customer time to digest the expense involved with customized cakes. It is essential to have all prices spelled out even before anything is discussed. The easiest way to do this is to have a catalogue of your pricing for every details that maybe added on to your basic price. Be ready to have fresh samples for them to taste after you have come to agree to a specific design. Whew!

APeppercorns, I don't understand why you are arguing about pricing with people who are making a living at this if you make cakes as a hobby. That just doesn't make sense to me. ("Cake decorating is a hobby, not commercial")

APricing is not a problem, therefore there is no "solution" it's a business principle. The problem in my opinion is that people are looking for solutions and formulas. There's no short cut you really have to research and just understand things for yourself.

Like costume said it's all fine and dandy to just throw numbers out there. But that multiply business is not good for cake decorating that's just it. In that example where the cake is $150 what's the profit margin and what's your labor cost. Multiplying by 3 covers that?

A[B]Be ready to have fresh samples for them to taste after you have come to agree to a specific design.[/B]

Are you suggesting giving them a tasting for free? Ummmmhhh........NO!

AHello, as you wish, you are right, I shouldn't be arguing, I had been so naughty today. This thread however keeps coming up and I thought I'd jumped in. He, he

A

I've looked at them, mine are just setup differently, they are just basic pricing matrix's I've found on CC. I was just trying to give her an idea of what people take into consideration when pricing-since she was asking about the CakeBoss software.

No worries, I totally understand where your coming from! I get frustrated too, like you I depend on this income and I've worked very hard to build/maintain a customer base.

AWow, after reading through the rest of this thread I in no way meant to suggest multiplying ingredients by 3. Obviously my ingredients are accounted for, as well as my dowels, boards, etc. into my base pricing but I also consider my area, time for baking, cleaning, shopping, insurance, design time, and so much more. Perhaps I should have been more specific, but like most of you, I have responded to this question many times.

A^ I don't think people were responding to you suggesting it, at least I wasn't. I was referring to peppercorns