Hi all,

I was wondering what is the standard profit for cupcakes? And also fondant cakes.

I'm at home based biz for about 4 months in Canada. I recently raised my cupcake prices...for basic swirls 2.25, swirls with fondant detail $2.67, and fondant covered domes $3.00

On average I make $17 for the basic cupcakes to $25 for fondant covered cupcakes. Is that a good profit?

I bake from scratch. I only use swiss merig. buttercream so that alone costs $6. I don't like icing sugar so I pretty sw buttercream even thorough its pricy.

What is considered a good profit for a beginner?

Here is some of my work:
www.cupcakesundercover.com
http://www.flickr.com/photos/44609246@N07/sets/

My profit margin is about 75% on tiered fondant cakes. I'm not sure what's the "norm". I've also been curious if I'm average or what? So i'm not much help, sorry.

Mark Mexicano

You need to figure out how much it costs you to make a cupcake. For me, I know it costs me $0.16 to make a basic vanilla or chocolate cupcake with basic buttercream icing.

net profit = gross profit - overhead - ingredients - taxes - payroll

gross profit = the total amount the customers pay you for all the product sold.

overhead = fixed costs you have to pay even if nothing goes out the door: rent/mortgage, utilities (water, gas, electric, phones, internet connection, website domain hosting service, waste disposal/dumpster, grease trap cleaning, etc.), equipment (fridges, ovens, mixer, pans, spatulas -- everything you use to make the product), business liability insurance, permits, inspections, professional services (attorney, accountant, web site designer, etc.), apparel (yes all the aprons, jackets, etc.), advertising (biz stationery, cards, signs, web site, blog, %-off promotions, sales, referral credit program), "good will" (donations, family/charitable discounts, etc.), delivery vehicle(s) and associated maintenance/fuel/insurance/registration/etc., maintenance on equip and facility, contingency fund (yes, have money in reserve), fees (banking, charge card, payment processing fees, etc.).

ingredients = the flour, the sugar, the eggs, the butter, the oil, the milk, the mix, the wrappers, the boards, the ribbon, the SPS or other supports, (and on and on -- all the stuff that becomes a part of the cake or cuppies or....)

taxes = sales, income, unemployment, workman's comp, your matching share of FICA and Medi, etc.

payroll = the amount paid to every employee -- and YOU ARE AN EMPLOYEE! as well as the owner. While you may only pay someone minimum wage to wash up everything, you as the designer, CEO, president and owner MUST pay yourself a commensurate wage. Double, even triple minimum wage is not too much. Once read an article on the ideal wage structure for businesses. It said there should be 5 tiers. lowest, 2 x that, 3x that, 4x that, and finally the top honcho should get 5x what the lowest is paid. So if following that would be about $35/hour for your time. Consider how much lawyers and doctors charge for their time. Heck look at what a plumber or mechanic or electrician charges. Your skill is every bit as valuable!

of course the question is raised -- but it only takes 4 hours for me to make a cake. LOL what a crock.

You're running a business, you're on the clock whether baking, decorating or not. There are still those forms to fill out, taxes to file, cakes to design, calls to make, emails to answer, sites to visit for inspiration, deliveries to make, inventory to take, orders to place, etc. etc. etc. -- ALL your time counts and should be paid. Better to think of it just like in any business. You clock in at.... and you clock out at.... That could be 8 hour days or 12 hour days sometimes! Thus if you find yourself doing 50 hour weeks just to keep the cake business a going concern, at $35/hour you should be paying yourself $1,750 a week!

Realistic when starting out, probably not. Even at $10/hour it would be $500/week.

Only when you've run the numbers can you get an idea of what your profit will be.

your cupcakes are adorable !!

Thanks Mark!~ I like the idea of adding a percentage to my final cost, so I can ensure I'm always making a profit relative the price {hence if it costs more to make, then I should make more money}. Its a simple but effective strategy! =)

Thanks Catty~!only $.15 per cuppies...how??? mine are closer to $.80 including boxes, etc

Thanks Doug!~ there are soooooo many items I never considered! Today I spent 8 hours on 12 fondant covered cuppies and earned $17. I even used a cake mix, which I never do, only so I could save some money ($4). The order was placed before I raised my rate. But going foward I will earn close to $25

Thanks Tesso!

Bottom line, I think to line of my bottom line.

Wow, Doug, that was awesome. I'm saving that!

I am not a scratch baker. I use the WASC recipe from this website. I can get approximately 36 cupcakes out of one batch. One batch costs me approximately $3.10 in ingredients. I basically use the wilton recipe for buttercream...although lately I've been using IndyDebi's recipe so I need to price that out...but 2 batches of wilton style buttercream costs me $2.75. So for ingredients, it costs me $5.85 to make 36 cupcakes = $0.1625 per cupcake. That doesn't include any overhead or my time of course.

On an unrelated topic...

Cupcakes Under Cover, what tip do you use for the swirl on your cupcakes. I really like the way it looks.

I think Doug mentioned everything involved in it.
I found out the best way of keeping track is a spreadsheet where you write down your expenses by month, then at the end of the year you can see if you made profit or not.
Just because you make expensive cakes that can cost up to$1500 doesn't mean you are going to make profit, after you take in consideration everything Doug mentioned, you can easy end up in red numbers at the end of the year.

I recommend reading a book about finances for small business, it helps you understand sooooo much.

On an unrelated topic...

Cupcakes Under Cover, what tip do you use for the swirl on your cupcakes. I really like the way it looks.

You just read my mind, unrelated as well...What tip did you use to achieve that look? Beautiful cuppies