Most decorator's that I have seen charge by the slice, I don't do cakes, but that seems to be how a lot of them do it. DEFINITELY charge for labor, that is tlone of the biggest aspects of decorating a cake. $7.50/hr is incredibly low so no, that part isn't fair to you. I have a friend that does cakes and she charges no less than $15.00/hr.
I agree with ypierce - shoot for a higher hourly rate. The per slice rate should accomodate a good hourly rate + expenses + some profit above that.
I charge at least $30 an hour, and I have a friend who owns a couple of bakeries who charges $100 an hour if she gets involved in the decorating of the cakes. My daughter works as a cashier at Kroger and makes $9.75 an hour, so yeah, $7.50 is too low. That's only the wages part of your pricing, too, you also have to allow for expenses, materials and profit.
I wrote an article for American cake Decorating about pricing cakes, and I just got the proof a couple of days ago (It's going to be in the next issue.) It makes me sound like a big old meany pants dream crusher, which is good because that means that if people follow the formula (which is a lot of work to figure out at first) their pricing will be fair to them. So... Annual expenses+ materials costs+wages+profit.
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