Hi all, I've been a hobby cake decorator and getting ready to start an at home cake business (according to Texas Cottage Law). I know a lot of people are worried about pricing. Do you think some of these cakes of mine are good enough to charge reasonable prices for? Like $40 to $65 depending on cake? Too low? Too high? I was thinking of 40 for a 2 layer, goes up as you can see from pics. Please be honest. Mine are not those super outstanding cakes, but I don't want to undercharge either. Thanks in advance.
I can't see your pictures well enough to say. Pricing a cake is nicely explained below by Jason Kraft. I put part of it in bold in order emphasize that market prices are what actually determines your price. But that doesn't mean that you compare prices of cheap cake ladies, you will have to discern the difference. It can be best to avoid home bakers' prices and look more at prices by brick and mortar bakeries with comparable work. It's very tempting to undercharge. It's the easier way to go into "business" because you don't have to really learn what cakes should sell for, find the right customer and muster the courage to ask a fair price.
Keep in mind what you're going to charge for a cake is probably more than you can afford to pay for one, so your subjective ideas of "about what it should cost" are going to work against you.
But if you charge too little, you do a disservice to yourself and others who are trying to put food on the table by selling cakes.
To answer you specifically, I think $40-65 is not even in the ballpark for a 2 tier cake. Way too low. But I can't see the level of detail and whether the work is clean. I'm in your state and I average $225-$275 for a two tier 5-8, 32 serving cake.
Speaking of your state, beware of organized cake groups. I know of two Texas groups whose members pat each other on the back for undercharging. These groups are like the blind leading the blind.
By Jason: Your profit margin is determined by market value both on the demand side (what the customer is willing to pay for your product) and the supply side (what competitors are charging). To figure out your hourly wage, you can look at cost of living and salary surveys to see what market wages are, but the market value of your product factors in here as well, as does your efficiency.
For example, let's say a cake has $50 in ingredient costs, $30 in allocated overhead, and will take 8 hours start to finish of hands-on time. Salary surveys indicate that cake decorators average around $15/hour, so a starting point for your cost could be $50 + $30 + ($15 * eight) = $200.
Now you factor in market research and see that your competitors sell a similar cake of equivalent quality for $250, so you can add another $50 to match that price and end up with a healthy 25% markup for profit (15-45% tends to be the norm).
If your market research tells you that a similar cake sells for $200, you may be able to adjust your wage downward slightly to $12, leading to a cost of $50 + $30 + ($12 * eight) = $176. To match that $200 price your markup would be 14%, which is on the low side.
However, as your skills improve you may get more efficient over time, so the same cake six months from now might take you 6 hours instead of 8, resulting a new cost of $50 + $30 + ($12 * 6) = $152, and a new markup of 31% to hit the $200 price point. Alternatively you could bump your wage up to $15, so the cost would be $170 with an 18% markup. Your markup will also increase over time as you start filling more orders, since the allocated overhead for each order drops if there are more orders to carry the weight of your total overhead.
If market research tells you that this cake is typically sold for $100 in your area, it's time to shift to a new market, a new product, or both. Or just keep cake decorating as a hobby.
ACan you post your pictures individually? Upload them to your profile & we can look from there.
HowSweet's advice is excellent, also check out Jason's personal site & other forums about pricing.
State requirements aside, if you don't have your pricing structure in place then you are not ready to go into business. That's a difficult part for many people, especially as HS said, when you have the mindset that $150 or $350 is too much for a cake. You are making custom cakes, if you do not value your time then neither will your customers so please charge accordingly.
I won't go into a lot of pricing info since HS gave you so much to start with. However, I live in a rural community in IL and the prices you've stated are closer to Walmart (probably even less) then I would charge for a smaller, one tier cake.
It can be tempting to take any order because you want to get your name 'out there', you love decorating cakes, etc. this typically backfires and turns you into the 'cheap cake person'. That's no way to run a successful business.
Having a minimum order requirement, contract, recipes you can count on, a portfolio, etc. are very important things to have down.
Also, be careful about copyright issues-liscenced characters like Mickey Mouse & Brave are off limits without permission.
Good luck! It's great that you are asking for advise rather then jumping in. I've learned so much from this community.
AAlso, I recommend making/buying some sort of backdrop/photo box for your portfolio. It will help put the focus on your cakes.
From what I can see, your cakes look clean and your icing seems smooth-but if you want some real feedback on your cakes uploading them separately will make things easier.
Thank you all. I will upload photos later today so you can see better. I had a feeling the prices were going to be low, but I was basing it on tripling the cost of ingredients. Just to let y'all know more info I am in a very rural area in Texas, population 200. Neighboring town is population 10,000 where I would probably get most of my business from. The cakes at Walmart are extremely cheap, like some of them $16 and then $24 for the larger ones.
I will say a lot of my inspiration has come from a lady who did my wedding cake, look at her website if you want to get an idea of her pricing "The Best Little CakeShop in Texas". And she does charge around $100 for a 2 layer beautiful custom cake.
I just worry that my skills are not up to par. I've been caking for about 9 months. Maybe I should wait longer but I have been doing them free for awhile for friends and family I was starting to think about getting paid ;)
But thank you--will upload my pics later today and see what y'all think
yoiks -- that's a super tiny area to build a business in -- best of the best to you --
i think i'd wanna try some cookie packages--there's a lot to it to ship food products but it's a thought to widen your horizon--or pound cakes shipped out--or something like that maybe--
Thank you all. I will upload photos later today so you can see better. I had a feeling the prices were going to be low, but I was basing it on tripling the cost of ingredients. Just to let y'all know more info I am in a very rural area in Texas, population 200. Neighboring town is population 10,000 where I would probably get most of my business from. The cakes at Walmart are extremely cheap, like some of them $16 and then $24 for the larger ones.
I will say a lot of my inspiration has come from a lady who did my wedding cake, look at her website if you want to get an idea of her pricing "The Best Little CakeShop in Texas". And she does charge around $100 for a 2 layer beautiful custom cake.
I just worry that my skills are not up to par. I've been caking for about 9 months. Maybe I should wait longer but I have been doing them free for awhile for friends and family I was starting to think about getting paid ;)
But thank you--will upload my pics later today and see what y'all think
On one 2 tier cake she shows a 3d palm tree, a huge 3d fondant giraffe holding a gift, 3d elephant with a party hat, a 3d lion and a waterfall and says she charges only $30 to add that stuff? That would mean she may only charge $105 for that cake like that? Let's hope not, but if it's true then:
1) If that's the best anyone can get for custom cake, then it wouldn't seem to be viable business in that area. The cake decorator at WalMart makes more than that. A person could not support themselves on prices like that. I would be shocked to learn that this lady lived by herself and this was her sole source of income.
2) When I say a person could not support himself, I don't mean that you wouldn't be making a little money, I mean it would make more sense to get a job somewhere. The responsibilities and duties of running a business are greater than most people realize until they actually do it. $100 may sound like a lot to you, but after you subtract your costs and all the time and effort spent creating your business and talking with potential customers, there's not any real profit left.
Is there no one with higher prices?
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I don't charge the "high" prices I mentioned up thread to bilk my customers or because of a high cost of living, by the way. It's because I can't survive if I charge less.
it's ok, cake buddy 
we getcha--it's what we all have to do if our livelihood is dependent on this business--you're right and it's ok
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Original message sent by -K8memphis
yoiks -- that's a super tiny area to build a business in -- best of the best to you --
i think i'd wanna try some cookie packages--there's a lot to it to ship food products but it's a thought to widen your horizon--or pound cakes shipped out--or something like that maybe--
Keep in mind you can't ship if you are a cottage food producer in Texas.
yoiks -- that's a super tiny area to build a business in -- best of the best to you --
i think i'd wanna try some cookie packages--there's a lot to it to ship food products but it's a thought to widen your horizon--or pound cakes shipped out--or something like that maybe--
Keep in mind you can't ship if you are a cottage food producer in Texas.
yes you're right of course--i had forgotten that part of op's post--and that's what i meant by saying 'there's a lot more to it' than it just even being a retail shop--but man, that's a sparse population to serve--
i think there's still regulations about even delivering fresh cakes across state lines not that they're enforced but anyhow--
AK8memphis- yes, we can't cross state lines either.
OP - Is there a farmer's market in your area? We can sell at those, and it may offer a better opportunity to showcase your items to surrounding areas - bring cupcakes, cookies, and the like to sell, and bring your portfolio book to showcase your cakes.
it's ok, cake buddy we getcha--it's what we all have to do if our livelihood is dependent on this business--you're right and it's ok
Thanks! 
And maybe you don't share my opinion, but I strongly believe it's unconscionable and irresponsible to charge less than a person would have to charge to make a living. And those are the nicest words I can think of to use. Maybe the cost of living is cheaper 40 miles from the outlying suburbs of Houston, but by not half or two thirds. Which speaks to the point I was trying to get across. (The bakery mentioned was in La Grange, Texas)
Okay, loaded some pics in my profile. Yes, I will start using a better back drop than the oven or a Sonic cup! Took those pics when I was purely for hobby and just posting them on facebook for friends. Good advice from all.
I will certainly go for a much higher price when I get ready to open. In answer to some questions, the "Best Little Cake Shop in Texas" is the only at-home business I know of in this area. The others are actual brick and mortar bakeries and most don't seem to list prices on their website except for Olde Town Bakery http://brenhamotb.com/ which quotes a $150 minimum on any cake order and are probably more along the pricing you guys are talking about. Of course all of their cakes are more grand than what I can probably do.
So maybe I'm not really "Almost ready to start business" I wonder if I need to build my skills more before I start that. But eventually I do want to sell my cakes, so it will be a matter of time and gaining some knowledge.
BTW on the gumpaste figure of "Dad" in my profile, I do see the wooden skewers sticking out of dear Dad but I didn't have time to fix it that time, and it was my own father and we had a good time with the cake, I wouldn't sell a cake with skewers sticking out. My bald dad did love the squiggle of hair...
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Thanks!
And maybe you don't share my opinion, but I strongly believe it's unconscionable and irresponsible to charge less than a person would have to charge to make a living. And those are the nicest words I can think of to use. Maybe the cost of living is cheaper 40 miles from the outlying suburbs of Houston, but by not half or two thirds. Which speaks to the point I was trying to get across. (The bakery mentioned was in La Grange, Texas)
i absolutely share your opinion for retailers--and since texas has allowed cottage cake industry that just divides that already fractured retail pie into shards--
just like for example the jewelry business--we can get all the stuff we want at the craft stores and online -- put it together ourselves and sell it anywhere--but a diamond's still a diamond and gold is out the roof--so established jewelers have less inventory, fewer buyers and more competition than they can handle too-- etsy for example--but that's the way it is now--sink or swim--
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i believe hobbyists are a different thing -- and i personally believe hobbyists often get a bum rap on here--people are still saying if you get paid you are a business--bullsh*t -- but it's just like the jewelry--hobbyists can charge anything or nothing or sky high--i'm not debating anyone--this is my belief--
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anyhow i think it is an AMAZING thing (and i rarely use caps ;) that you exposed the low ball pricing fiasco in your area--wowzers--that was stun.ning and heart breaking too--borders on legalities--
Thanks, for the feedback, K8memphis. Do you mind taking a peek at the old towne bakery website for brenham http://brenhamotb.com/ and letting me know if you think their pricing is more along the right line?
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Original message sent by Tessie2135
Okay, loaded some pics in my profile. Yes, I will start using a better back drop than the oven or a Sonic cup! Took those pics when I was purely for hobby and just posting them on facebook for friends. Good advice from all.
I will certainly go for a much higher price when I get ready to open. In answer to some questions, the "Best Little Cake Shop in Texas" is the only at-home business I know of in this area. The others are actual brick and mortar bakeries and most don't seem to list prices on their website except for Olde Town Bakery [URL=http://brenhamotb.com/]http://brenhamotb.com/[/URL] which quotes a $150 minimum on any cake order and are probably more along the pricing you guys are talking about. Of course all of their cakes are more grand than what I can probably do.
So maybe I'm not really "Almost ready to start business" I wonder if I need to build my skills more before I start that. But eventually I do want to sell my cakes, so it will be a matter of time and gaining some knowledge.
BTW on the gumpaste figure of "Dad" in my profile, I do see the wooden skewers sticking out of dear Dad but I didn't have time to fix it that time, and it was my own father and we had a good time with the cake, I wouldn't sell a cake with skewers sticking out. My bald dad did love the squiggle of hair...
I was just pointing out ways to showcase your work, I didn't mean to offend you :)
I think your right, about waiting a while. Aside from your CF requirements, the fact that you aren't comfortable charging appropriately makes me think you need to work on your confidence as well as your business plan.
Your work is clean. Cake decorating is an expensive hobby! You can practice on styrafoam cake dummy's and use those to build your portfolio and work on your technique, as long as you have your recipes perfected and understand structure.
Figure out how much your recipes will cost, how long it takes you to complete certain designs, etc.
Just because you work from home doesn't mean your prices shouldn't be comparable to a designer/decorator with a storefront. You just won't have as much overhead-but you will have overhead. Taking the extra time to organize, practice, decide what you want to specialize in, etc. will help. You wouldn't want to take a wedding cake order to practice on-not that you would but people do!
Little things like a fondant covered board with ribbon, backdrops, etc. will really make a difference.
AThe BOTB is close to my base pricing.
You need to figure in boxes, dowels, ingredients, overhead...into your pricing too. I honestly can't imagine how the other bakery is making much profit. I was thinking her base charges, plus the '$15/hour for fondant decorations' plus the $30 would make more sense-I'm referring to the jungle cake HowSweet mentioned
Oh, I wasn't offended, didn't want you to think I was. Actually we (friends) were laughing cuz I think I had a prescription bottle of pills in the background on one cake. Like the pills were in the cake or something. I'll be careful about what I post on a website when I make one. I will have to look into the dummy cake thing cuz I haven't done that so far and sounds like a good way to display what a person is able to do.
Hope I didn't offend the cake community by suggesting low prices. Actually I would, (and have) paid over $200 for a nice custom cake. Think I will build some skills and actually need to acquire a good portfolio before I get into business; I think I can feel more confident charging regular prices if I feel my work is up to par with my competitors. I really look forward to it. I do think my direction will be celebration cakes rather than wedding cakes. Not ready for that level yet!
In the meantime as far as building skills--do you guys think going to classes is super helpful or do you think its just as well learning off of the internet? I have taken one Wilton level 1 course and felt like it was a little bit too basic for me at the time and I had already learned from internet tutorials.
Tessie, as I mentioned above, comparing prices to home bakers can be a terrible idea. And you can't rely on their website . You're going to have to get some actual quotes. Pretend to be a customer and take as little of their time as possible. (give them a picture and tell them how many servings --- ask for the same number of servings as the picture seems to be, so they don't have to redesign it). Don't feel bad about doing that. They would much rather have that than have you under cutting them.
In my opinion your cakes are really, really good beginner cakes. They are sell-able, but they may take as much time as a more professional cake, in which case you're not going to make any money.
I would recommend some training. If Brenham is close to you, then Houston is not so far away that you can't go into Houston for workshops. The Houston Cake Club and Pearland Cake Club both sponsor high level cake artists like Mike McCrary, Ron Ben-Israel and Debbie Brown. Also Austin is not that far away and coming in February is their annual sugar art show, That takes the Cake where there will be similar classes.
You really can't learn as much form online tutorials as you can from these classes. You'll learn stuff you never thought to ask. Things you're doing the hard way, but didn't realize. Even if you can only afford one class a year, it's worthwhile.
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i absolutely share your opinion for retailers--and since texas has allowed cottage cake industry that just divides that already fractured retail pie into shards--
just like for example the jewelry business--we can get all the stuff we want at the craft stores and online -- put it together ourselves and sell it anywhere--but a diamond's still a diamond and gold is out the roof--so established jewelers have less inventory, fewer buyers and more competition than they can handle too-- etsy for example--but that's the way it is now--sink or swim--
~~~~~~~~~~~~~~~~~~~~~
i believe hobbyists are a different thing -- and i personally believe hobbyists often get a bum rap on here--people are still saying if you get paid you are a business--bullsh*t -- but it's just like the jewelry--hobbyists can charge anything or nothing or sky high--i'm not debating anyone--this is my belief--
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anyhow i think it is an AMAZING thing (and i rarely use caps ;) that you exposed the low ball pricing fiasco in your area--wowzers--that was stun.ning and heart breaking too--borders on legalities--
I have trouble distinguishing hobbyists. If they're here asking for pricing, I assume they are retailers, perhaps incorrectly. If someone is literally only selling cakes to family and friends, I don't care. They just have lucky family and friends. Unlike mine who rarely get anything fancy from me 
I just stumbled across it, more than exposed, but thanks for mentioning that mess. I really didn't know if anyone who wasn't familiar with the area could follow the posts. You may be the only one, because the thread died after that which kind of surprised me.
That business about the freeway price dividing line just made me want to pull my hair out. And she was as adamant and convicted about what she as saying as a person can be. But of course she's going to listen to the people she knows. Personally, if someone near me was getting 2-3 times more for cake than I was, all I'd want to know is how. Go figure. I was positively stunned at some of the things that were said. I considered asking her if I could come speak to her group, still considering it. But I'm sure nothing would change and I continue to cart my cakes 45 minutes to an hour one way across town. At least I know why, now.
Thanks, for the feedback, K8memphis. Do you mind taking a peek at the old towne bakery website for brenham http://brenhamotb.com/ and letting me know if you think their pricing is more along the right line?
AYour fine Tes (I surprisingly didn't even notice the pill bottle in the background lol), that's what these forums are for.
I haven't taken any classes or culinary training, self taught. You seem to know how to build and ice a clean, level cake-which is your foundation (you are ahead already)! As far as structure and sculpting or figure sculpting there is always more to learn.
I would also recommend saving up for a good hands-on class, as HS suggested. Nothing beats those smaller classes with direct contact to some of the best in this business.
Mike M has DVDs you can purchase (he's one of my favorite artists), Crafsty is a nice platform also (they have free classes also), Learn Cake Decorating Online .com also has some of my favorite decorators-Verusca Walker, Handi Mulyana, Jessica Pedmont, etc. (they have some beginner classes as well as more advanced) I think it's $9.99/month.
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...I have trouble distinguishing hobbyists. If they're here asking for pricing, I assume they are retailers, perhaps incorrectly. If someone is literally only selling cakes to family and friends, I don't care. They just have lucky family and friends. Unlike mine who rarely get anything fancy from me
I just stumbled across it, more than exposed, but thanks for mentioning that mess. I really didn't know if anyone who wasn't familiar with the area could follow the posts. You may be the only one, because the thread died after that which kind of surprised me.
That business about the freeway price dividing line just made me want to pull my hair out. And she was as adamant and convicted about what she as saying as a person can be. But of course she's going to listen to the people she knows. Personally, if someone near me was getting 2-3 times more for cake than I was, all I'd want to know is how. Go figure. I was positively stunned at some of the things that were said. I considered asking her if I could come speak to her group, still considering it. But I'm sure nothing would change and I continue to cart my cakes 45 minutes to an hour one way across town. At least I know why, now.
yeah, i mean hobbyists would be the ones who just want a logical reasonable price for a one of sale--they're not wanting the nitty gritty of all the bladeedah to add in the cost of paper towels, hot water, light bulbs, dish soap, etc--and also peeps sometimes outdo and surprise themselves with a great cake and just for bragging rights want to know 'what would you charge for this'--whoa, nelly--the drama--anyhow--from the board in general not you--
.--i am a former pro but i am a hobbyist now--well i was--i mean i'm typing one handed today--which is better than one finger--ha!
but yeah those other chicks got real quiet--what else could they say after all--i think it's a great idea to 'share' at their club--y'know of course very carefully with everyone arriving at their own conclusions--very good idea--
you gonna do the grocery store deco for a while?
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"........ It can be best to avoid home bakers' prices and look more at prices by brick and mortar bakeries with comparable work........"
You know I so rarely see one that's not inside a grocery store, and the sell mostly donuts when I do find a bakery. Are there really a lot of cake-only brick and mortar bakeries doing business. It seems like those cake-only stores on TV are exclusively in major metropolitan towns. Few and far in between.............
or do I need to travel more.
yeah, i mean hobbyists would be the ones who just want a logical reasonable price for a one of sale--they're not wanting the nitty gritty of all the bladeedah to add in the cost of paper towels, hot water, light bulbs, dish soap, etc--and also peeps sometimes outdo and surprise themselves with a great cake and just for bragging rights want to know 'what would you charge for this'--whoa, nelly--the drama--anyhow--from the board in general not you--
.--i am a former pro but i am a hobbyist now--well i was--i mean i'm typing one handed today--which is better than one finger--ha!
but yeah those other chicks got real quiet--what else could they say after all--i think it's a great idea to 'share' at their club--y'know of course very carefully with everyone arriving at their own conclusions--very good idea--
you gonna do the grocery store deco for a while?
I don't think anyone wants to hear the nitty gritty, even the retailers and I'm almost always happy to give a price, then 10 people come along and discuss geographical differences.
I can be really dense - grocery store deco? Do you mean use cake kits?
You know I so rarely see one that's not inside a grocery store, and the sell mostly donuts when I do find a bakery. Are there really a lot of cake-only brick and mortar bakeries doing business. It seems like those cake-only stores on TV are exclusively in major metropolitan towns. Few and far in between.............
or do I need to travel more.
The one the OP quoted specializes in cakes and it's in a town of about 15,000 and somehow survives even having to compete with under chargers. http://brenhamotb.com/ Well, I say somehow - it's obvious she survives by producing near perfect cakes. But if an undercharging home baker starts doing the same level of work in her area, she'll be out of business. And that happens. It could be why you don't know of one if your state has a cottage food law allowing easy start up. That's what I rant about all all the time.
The undercharging trend is to create a situation where caking is not a viable business, even from home. I bake from home, but my dream was to have a shop. I would be insane to open one even in my large metropolitan area in the present climate. It breaks my heart. And I am sick to death of having this business in my kitchen. Storage also take another whole room and I have a room for my office.
I have come up with a business plan to protect myself from the "ravages of undercharging" (that was supposed to be a funny way to put it, but I can't seem to laugh). And discovering why I don't sell cakes in one the most affluent areas of town lit a fire under me to execute it this spring. Did you see that thread?
i must have mixed you up with someone else--someone said they were ditching their business for a while due to some horrible plumbing problems like flooding over and over etc. and going to maybe go work in a grocery store--
sorry i thougth that was you--
i was thinking about all this opening a business thing and how hard it is for any bakery to open, stay afloat and truly earn a living--i have an answer that i usually say but i thought of another way to phrase it--
there is no product exclusivity--it's wide open--they sell fondant at my grocery store--fondant tools at wal-mart--
it's fully rotted/ruined this market--it is not home cakers -- it's not big boxers & grocery store bakeries--if the population at large had no access to products they would be powerless to dilute the cake economy --'someone' came before them and opened that door--
ranting and raving about prices may help you (in general 'you') feel better--may even show up a price mess in an area (howsweet--that was awesome) but the product availability is where the spewing hemorrhage is --add in cottage laws going in all over and r.i.p. cake industry--except for a very few success stories--imo
the gatekeepers opened the gates -- there is no product exclusivity
nobody moved the cheese--they filled the place up with cheese--there's a yellow ribbon around every tree and seedling
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