I’ve been lurking here for some time and have learned a lot! I finally made an account because I cannot seem to figure this out! I am getting close to starting to accept real paying order s for my cakes. I actually have people that are already calling (friends of friends) but I’m confused on pricing. I have figured my overhead and know what my material cost is and how much actually baking a cake costs me. The problem is do I charge my time by the hour or by the serving? By the hour I was thinking it would be like 3 hours total charged for a simple 3 layer 8 inch cake with minimal amount of decoration. At $12/hour which seems fair for my area would give me a $36 profit. Does that sound right? To charge by the serving....I have no idea how to figure. Please help me here. My head hurts from this!

what about when you get real fast and can do five 8" cakes in three hours you gonna give 'em away for pennies?  you want to charge by servings so you can profit -- buttercream is about $3 to $5 per srvg give or take across the fruited land and fondant is about a dollar more for the most part -- if you lop off the very highest and very lowest prices

then it's up to you to get efficient enough to make it work -- people on here want to make pricing all spooky and hard -- if you are in it for the money -- you need to make enough to make it worth your while and let folks understand you have a quality product -- you need to be a little more than the highest price in your area -- you can start a little lower and be there with two to three price increases of about a quarter each --

I agree - by the serving.  AsK8 said, when you imporve your timing (and you WILL as you do more & more cakes) you would be losing money if you charge by the hour. 

Definitely by serving.  And figuring out serving will not be hard because you have all the you need.  Just take the complete cost you figured out for, say, an 8 Inch cake and divide that by the number of serving that cake provides.

Now I would charge by the hour when it comes to intricate and time consuming things like gum paste flours or elaborate cake toppers.  For example (just throwing random numbers out there) if you decide that your labor is worth $10/hour and a customer wants 50 gum paste flowers and you estimate that, that would take you 10 hours then charge that customer $100 on top of the cost of the base cake.

yes what lynne and freckels said -- and you have to be able to look at a cake or picture and determine how long it will take you -- so you can price it effectively -- which comes with time -- several years probably -- like for sculptures and complicated cakes -- because the easiest looking cakes can be real barn burners -- like baby block cakes for example -- they are very difficult to do well -- but they look so simple