Floored At The Cost Of My Cakes!

Decorating By tsal Updated 6 Feb 2015 , 2:43am by costumeczar

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winniemog Posted 5 Feb 2015 , 3:54am
post #31 of 52

AFor me, a two tier 8" and 6" cake costs about $85-90 before I even add labour. Yes, I use high quality ingredients (Belgian choc, free range eggs, vanilla beans, etc), but a lot of the cost comes in boards, electricity, registration, all the non-edible costs. And I add calculate my ingredient costs to the gram in a spreadsheet I've developed.

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Jedi Knight Posted 5 Feb 2015 , 5:54am
post #32 of 52

AMany people don't even think about their overhead and non-edibles!!! That needs to be factored in as well.

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costumeczar Posted 5 Feb 2015 , 11:24am
post #33 of 52
Quote:
Originally Posted by Jedi Knight 

Many people don't even think about their overhead and non-edibles!!! That needs to be factored in as well.


 

Quote:
Originally Posted by winniemog 

For me, a two tier 8" and 6" cake costs about $85-90 before I even add labour. Yes, I use high quality ingredients (Belgian choc, free range eggs, vanilla beans, etc), but a lot of the cost comes in boards, electricity, registration, all the non-edible costs. And I add calculate my ingredient costs to the gram in a spreadsheet I've developed.

I did a video with another baker about pricing yesterday and we talked about this. I end up keeping 54% of every cake I make after ALL expenses, so if I charged $20 for something that means I'd be making about $12. If that's the case, the whole thing (baking, decorating etc) had better only take fifteen minutes to do because if it takes a couple of hours I'd be making $6 an hour, and I'd rather take a nap.

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cazza1 Posted 5 Feb 2015 , 12:57pm
post #34 of 52

Donating to schools has obviously not changed over the years.  18 years ago I gave up baking for the kids primary school and just gave a donation when they were having a street stall or fete as everything was sold so cheap.  It reached a point where, as a Mother's Club, we decided to have cake less cake stalls and people just donated money instead of cakes.  We actually made more money doing this as it was always the same people that baked, whereas with the bakeless stall people who were working quite happily donated a few dollars as well.

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MimiFix Posted 5 Feb 2015 , 1:30pm
post #35 of 52
Quote:
Originally Posted by costumeczar 

 

I did a video with another baker about pricing yesterday and we talked about this. I end up keeping 54% of every cake I make after ALL expenses, so if I charged $20 for something that means I'd be making about $12. If that's the case, the whole thing (baking, decorating etc) had better only take fifteen minutes to do because if it takes a couple of hours I'd be making $6 an hour, and I'd rather take a nap.

 

I've observed that many people are not able to grasp (or too lazy to calculate) the full concept cost-of-goods + overhead + labor + profit = Price.

 

Using your example above, some would say, "OMG, woo-hoo, I made $20!" 

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costumeczar Posted 5 Feb 2015 , 3:02pm
post #36 of 52
Quote:
Originally Posted by MimiFix 
 

 

I've observed that many people are not able to grasp (or too lazy to calculate) the full concept cost-of-goods + overhead + labor + profit = Price.

 

Using your example above, some would say, "OMG, woo-hoo, I made $20!" 


Exactly...what we didn't get to on the video (which I'm posting now, I'm waiting for youtube to process it) is that we were also talking about how for some people, the $20 is probably enough. Not for people who are running a real business to support their families. But for people who are doing it for fun or for extra cash, they're probably doing "grocery store money laundering" by buying the ingredients from their household budget, and that $20 they make ends up seeming like pure profit. There are plenty of people who would think "yay I made $20" and for them that's enough. That's the problem with trying to get people to price things "correctly." Bad pricing practices are good enough for a lot of people.:-( 

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Jedi Knight Posted 5 Feb 2015 , 3:09pm
post #37 of 52

AMany peoplehave the wrong mindset, too - both clients and so-called businesses.

If I charge $1000 for a cake (which I do quite regularly), this does not mean a thousand bucks in my pocket. It means I can pay overhead, ingredients, non-edibles, and labor - and have enough to make a living wage for myself and my employees with money left to invest back into my business.

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MimiFix Posted 5 Feb 2015 , 3:27pm
post #38 of 52
Quote:
Originally Posted by costumeczar 
 
Quote:
Originally Posted by MimiFix 
 

I've observed that many people are not able to grasp (or too lazy to calculate) the full concept cost-of-goods + overhead + labor + profit = Price.

 

Using your example above, some would say, "OMG, woo-hoo, I made $20!" 


Exactly... for some people, the $20 is probably enough. Not for people who are running a real business to support their families. But for people who are doing it for fun or for extra cash, they're probably doing "grocery store money laundering" by buying the ingredients from their household budget, and that $20 they make ends up seeming like pure profit. There are plenty of people who would think "yay I made $20" and for them that's enough.

 

The saddest thing is when members ask, "How much for this?" and answers come from people in the above category. 

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ellavanilla Posted 5 Feb 2015 , 4:09pm
post #39 of 52

"grocery store money laundering"

 

 

nailed it!

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costumeczar Posted 5 Feb 2015 , 5:48pm
post #40 of 52

Quote:

Originally Posted by Jedi Knight 

Many peoplehave the wrong mindset, too - both clients and so-called businesses.

If I charge $1000 for a cake (which I do quite regularly), this does not mean a thousand bucks in my pocket. It means I can pay overhead, ingredients, non-edibles, and labor - and have enough to make a living wage for myself and my employees with money left to invest back into my business.


This is why I hate it when people ask me how long it takes me to make a cake. If I tell them three hours (from de-panning to done for a wedding cake) I know they're calculating that I'm making $300 an hour on a $900 cake. I don't even answer the question at all anymore.

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Jedi Knight Posted 5 Feb 2015 , 6:26pm
post #41 of 52

AGaghh! I hate that question, too. People always ask *How long does it take to make a cake?* Like 'a cake' is such a technical term and all cakes take the same amount of time. I always feel like getting really snarky and asking them back - what kind of cake? A seven-tiered fondant beauty with 183 hand-made, realistic gumpaste flowers, or a monkey-iced cakewreck?

I never answer.

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MimiFix Posted 5 Feb 2015 , 7:41pm
post #42 of 52
Quote:
Originally Posted by Jedi Knight 

I never answer.

 

Tell me it ain't so. I can see @costumeczar politely ignoring that question. But I imagine our @Jedi Knight would snort: "One hour." Followed by, "$19.99."

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winniemog Posted 5 Feb 2015 , 8:20pm
post #43 of 52

AGosh I wish I could earn $19.99 an hour.....but then I'm not a monkey laundering grocery money producing cake wrecks as a hobby....

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tsal Posted 5 Feb 2015 , 8:53pm
post #44 of 52

AHonestly, the whole breakdown of costs and time has made me realize that there is really no money in it for me (not that I ever really considered going into business).

Now that it was all broken down and I'd be making $2/hr - why would I want that?!

Mind you, i may be a slow worker and I buy my ingredients at retail prices with no wholesale discount, but still!

I would go as far as to suggest that home bakers are largely unprofitable. *dons flame suit*

The hours and hours and HOURS of work plus the cost of ingredients and overhead (electricity, gas for delivery etc) just makes it really hard to make a profit. There, I said it.

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costumeczar Posted 5 Feb 2015 , 9:36pm
post #45 of 52

Quote:

Originally Posted by tsal 

Honestly, the whole breakdown of costs and time has made me realize that there is really no money in it for me (not that I ever really considered going into business).

Now that it was all broken down and I'd be making $2/hr - why would I want that?!

Mind you, i may be a slow worker and I buy my ingredients at retail prices with no wholesale discount, but still!

I would go as far as to suggest that home bakers are largely unprofitable. *dons flame suit*

The hours and hours and HOURS of work plus the cost of ingredients and overhead (electricity, gas for delivery etc) just makes it really hard to make a profit. There, I said it.


You're totally right! I think that most home-based bakers earn very little on average unless you really get out there and hustle. I make what I consider to be a good living but it took me about 6 or 7 years of concentrating on the wedding industry, networking my hiney off, booking multiple cakes per week and stressing myself out. When I look at the people I know who are home-based, they're not making a lot of money if they are profitable, and if they broke down the hours they worked to get to the income they have, they would probably be horrified at what they're earning per hour. I'm doing fine, but I was in it before the glut of cake tv shows, tutorials, classes and unicorn-y dreams of pink aprons and trays of cupcakes made people think that cake is a super fun thing to do.

 

Especially now, with the flood of new decorators in the market over the last 6 years or so driving prices down, it's hard to make a profit. I don't talk to anyone who says "oh I love doing cakes," either. The people who are working hard at it are finding it less and less desirable a profession. I had the art teacher at my daughter's school ask me to come speak at career day last year. I told her that if she wanted someone to come tell them to go find something else to do then I was there. I can't in good conscience tell a bunch of teenagers to go start a home-based food business these days, it's just not profitable.

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shanter Posted 5 Feb 2015 , 9:37pm
post #46 of 52

You're now wise as well as educated, @tsai. Good for you.

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costumeczar Posted 5 Feb 2015 , 9:39pm
post #47 of 52

Quote:

Originally Posted by MimiFix 
 

 

Tell me it ain't so. I can see @costumeczar politely ignoring that question. But I imagine our @Jedi Knight would snort: "One hour." Followed by, "$19.99."


I actually just say "it's a full-time job" and leave it at that. I want to jump across the table and choke them while screaming "I know you think I'm rolling in money and trying to rip you off" but that wouldn't be professional. :roll:

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MimiFix Posted 5 Feb 2015 , 10:46pm
post #48 of 52

I wrote about this yesterday. Is the Home-Based Bakery a Saturated Market? I agree that the cake market is no longer viable. But other baked goods can still keep a home-bakery doing well. It depends upon product quality, target market, available venues, and the competition. With a good business plan and honest assessment, it can work. I know several home processors who are doing well, but they understand the business dynamics (and none of them do cakes). 

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Mimimakescakes Posted 5 Feb 2015 , 11:08pm
post #49 of 52

I simply do not turn my oven on for less than $150 . That is usually what I charge for an eight inch. But you can have a three inch , a four inch , a five inch or six inch for that price if you want.   I consider myself a professional hobbyist.  If I am doing a cake I will be paid for it. I have a chronic illness so fulltime caking is not an option for me and I don't take on more than I can handle ( says she that put five cakes out last week ) .  My clients have learnt to book in early. I have cakes on my books sometimes three years into the future.   

 

I think it comes down to valuing yourself and your work. Also if I undercharge it effects all of the other cakers in my area. Besides I hate to pay people for me to do a cake for them. 

 

 

Just my two cents worth. ;)

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Apti Posted 6 Feb 2015 , 12:24am
post #50 of 52
Quote:
Originally Posted by ellavanilla 

... when I provide the invoice I am sure to show the amount I'm donating in cost and if it's cupcakes I always use Sprinkles price per cup

Great idea to use an existing brick and mortar establishment with publicized pricing as a "comparable" for donated cupcake pricing!

Quote:
Originally Posted by costumeczar 
 


I want to jump across the table and choke them while screaming "I know you think I'm rolling in money and trying to rip you off" but that wouldn't be professional. :roll:


Oh, Kara.... you're killin' me.....

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costumeczar Posted 6 Feb 2015 , 2:35am
post #51 of 52

Quote:

Originally Posted by Apti 
 

 


Oh, Kara.... you're killin' me.....

heh heh heh

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costumeczar Posted 6 Feb 2015 , 2:43am
post #52 of 52

Quote:

Originally Posted by MimiFix 
 

I wrote about this yesterday. Is the Home-Based Bakery a Saturated Market? I agree that the cake market is no longer viable. But other baked goods can still keep a home-bakery doing well. It depends upon product quality, target market, available venues, and the competition. With a good business plan and honest assessment, it can work. I know several home processors who are doing well, but they understand the business dynamics (and none of them do cakes). 

Interesting...I know a bunch of cake decorators who are adding other products to their businesses. Decorated cookies seem to be the up and coming item.

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