I know pricing is dependent on location/demographic etc but I can't understand how some home bakers make a profit when it seems like they are charging almost nothing for their cupcakes. I'm a home baker as well. I charge $2.50 per cupcake for buttercream and $3.50 for fondant and it will go up from there depending on how elaborate the design is. I did start at $1.50 per cupcake when I started my business earlier this year but quickly realized there was no way I was going to make a profit for the amount of work I was putting in, so I upped my prices and people have seemed fine with it for the most part.

A popular baker/cake decorator in my area just listed her holiday flavor cupcakes. The majority of the cupcakes are $1.25 each and some are $1.50 each. I know my material (ingredients & cupcake liners) per cupcake is a minimum .50 cents with my most basic recipe. I try to buy in bulk to keep my costs down but I don't see how they are making any profit when you add in electric, gas, water, time etc. I only get 1-3 cake/cupcake orders per week. I would rather make 1-3 orders per week and make a profit then work crazy hours and barely break even. 

People tell me regularly that my prices aren't outrageous considering the quality of my work, until recently. I did a small sample booth last week and people have been inquiring about getting cakes/cupcakes and a few have said I was way out of their price range. But when you want something to feed 400 people it isn't going to be cheap.

I guess I am second guessing my pricing and wanted to see what other have to say about this topic. I know this has been an ongoing issue in the cottage food baking world but this is the first time I have run into this myself.

you need to charge what's fair and right for you end of story -- because so many more of us have been enabled to bake like this now -- the pricing thing is ever the more disparate -- just because you can (meaning all of us) can bake doesn't mean you can run a viable business and make a profit -- so keep doing what you're doing -- or down size your product for a price reduction

best to you

I think you are charging quite fairly, and that perhaps this baker is trying to corner the local market.  We have one bakery here in town that specializes in pretty cupcakes.  They charge about $2.00 per cupcake.. very basically decorated.  They are a regular sized cake, with a simple swirl on the top, and a simple... premade garnish (mini peanut butter cup, mini oreo, etc)  Anything fancier has to be special ordered (they also do wedding cakes, etc).  

If someone tells you that your cupcakes are too expensive after you've given them the per cake breakdown, then they aren't the client for you and can go elsewhere to purchase cakes.  I've had folks not order before, because they thought my product cost too much.  I've turned around and had someone else order and think that they are getting a great bargain.  

Remember to mention that you use quality ingredients (costly) and that this process takes a great deal of your time (your time is worth money woman!) when you produce your cakes.  

My most recent cupcake order is priced at $3.75 per cake.  I used the $2.00 per cake base (since that's the local 'average') and added $1.75 on top for the hand piped, royal icing apple blossoms and leaves that top each cake (three different colors of icing required to produce the blossoms, one separate color for the leaves... that's four separate colors.  In cookie decorating, each color of icing used adds to your overhead, why not with cupcakes?)  The are boxed and ready for delivery and will be hand delivered by my (using my car, my car insurance, my gas) to get them there.  Part of that additional $1.75 accounts for this service to the client.  

Price what you're worth and rock on with your bad bakin' self.  

cheers    

Seriously, there's someone who sells near me is advertising a Groupon for a little over a dollar for a dozen cupcakes and $14 for two dozen minis!  I guess she wants to build a customer base, but if I did that every cupcake would taste like resentment.

Mine would taste like anger AND resentment at that price!

For the OP-- If you have figured out your costs, and what you need to charge to make a profit, that's what you should charge. My suspicion is that a lot of the people who are selling cakes and cupcakes at super low prices have no idea that they're operating at a loss because they probably don't have separate business and personal accounts. They'll pick up a couple of boxes of cake mix at the store when they're doing their grocery shopping, make the cupcakes and sell them, and think that they're making money because someone put cash in their hand. I refer to this as "grocery store money laundering," and it's the bane of the legitimate businessperson who's trying to do things the right way. You can't compete on a price basis with people who don't know how to price things, so don't try.

Rereading what I wrote... not right.  That's a little over a dollar for EACH cupcake in a dozen, so $13/dozen regular cupcakes!

That's actually how I read it to begin with, I had to go back to see what you corrected! STILL TOO CHEAP!!!