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Pricing of Cupcakes

post #1 of 36
Thread Starter 
I am just starting my little business adventure and only selling my "classic" cupcakes for now, to get my recipes fine tuned and get people actually liking the cupcakes themselves before I start the fancy decorating.

I am wanting to know how much to charge??

I am making a standard size cupcake and just icing and sprinkles for now.

I was thinking $1 a cupcake... $12 a dozen if you buy two dozen I knock off two dollars $22..

THEN I started pricing the BOXES (which I am having a hard time deciding what kind and where to buy) ...I'm going to have to buy bulk or I'm going to be loosing money.

suggestions?? I told everyone that prices are subject to change and obviously special flavors, fancy cupcake liners, decorations would up the price.

Just wanting to know a reasonable price for a basic bakesale type cupcake!
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post #2 of 36
I think most of the people here sell their basic cupcakes from $2.50-$3.00 each. That seems to be the average price. Then add on an amount for each cupcake if it's a specialty cupcake or if it has a filling or a gumpaste/fondant design.

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post #3 of 36
If you plan on paying taxes, state and fed, on them... and insurance, boxes, electric, etc, this is not even close. You need to look into what is required to be legal in your area before you decide pricing. You also need to know where you fall in the market based on your competitors.
post #4 of 36
At $1.00 a cupcake you will lose money, whether out of your home or not. You still have all the overhead to consider, it is just conveniently being paid for out of your home expenses. But more baking means you use more electricity. You should be charging at least 2.25, as you have discovered exploring the cost of boxes. Just because it is not an ingredient that goes into a cupcake does not mean it is not an expense.
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post #5 of 36
Thread Starter 
ah yeah, I am working full time and going to grad school full time so I doubt I'll be filling enough orders to pay taxes on them ...at least for right now. I am also not becoming a full blown business--just a hobby right now. So insurance, etc. I haven't even looked into it..,but I do agree just the electricity etc WOW! I am def short changing myself.
Nothing is better than watching a loved one smile after eating one of my cupcakes
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Nothing is better than watching a loved one smile after eating one of my cupcakes
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post #6 of 36
Uh, that thinking can get you in trouble. You are required by law to pay taxes on all income, minus expenses. You can not set it up on the side and expect to collect so little that you don't have to pay income taxes. You are setting up yourself for big trouble for very little money.

What you should do is at least set up some rudimentary books. It needs to be nothing more than a spread sheet with all your expenses and income. At the end of the year, take it to an accountant. And unless you are already paying at least 90% of your income taxes through another means, you will need to file quarterly taxes as set up by law from the federal government. There might, and say this hesitantly, be a line where if you only make so much you don't have to do quarterly payments. But I am not an accountant.

What you are saying in your last message is that you are going to set up a side business illegally. I'm not talking about getting a license for your kitchen or anything like that. I'm talking collecting an income and not reporting it. Different legal thing, but probably more dangerous than not having the proper kitchen. The fed govt has no soul. They will do what they want to get the money they want. And right now they need a lot of it. I would not go around boards advertising that this is how you intend to do business. You never know who is reading these places.
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post #7 of 36
Also, if you don't keep proper records, the IRS will be happy to make up an appropriate number and assess you the interest and penalties accordingly. You will have to work for years just to pay the attorney to dispute the number, as tyour interest and penalties grow. You must prove your business did not make enough money. And at some point, it must become profitable.

Business licenses, following the health department requirements, and paying taxes are the law. Someone will eventually turn you in. The longer it takes to get caught, the higher the penalties.
post #8 of 36
Thread Starter 
I work FULL TIME...I pay my taxes. I've worked on the side before. I'm a personal trainer and if you make under $500 you don't have to file a 1099, I'm not slow.

Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job.

You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if:

Your net earnings from self-employment (excluding church employee income) were $400 or more, or

I don't plan on making THAT much money right now... wow, a simple question asking how to price some cupcakes because my coworkers LOVE them turns into a lesson in fraud. I work for the government icon_smile.gif

Thanks for the concern everybody!


PLUS, I am planning on keeping books. I've already got them set up-just so that I can keep tabs on my expenses and income so that if I do need to file taxes.

In the state of NC I cannot be a bakery business out of my home unless I have a permit and health inspection. Our requirements are NO ANIMAL shall come into your home, even over night. I have two dogs. I cannot commercially sell my cupcakes in the state of NC as long as I have animals in my home, unless I find a commercial kitchen.

Which is why I am for now, hobby baking. I cannot however GIVE my cupcakes away to people...that would take a hit!
Nothing is better than watching a loved one smile after eating one of my cupcakes
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Nothing is better than watching a loved one smile after eating one of my cupcakes
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post #9 of 36
sweetbeesbakeshop, you should have included in your post that the license required for all other people in your state did not apply to you. There is a reason why the HD does not allow DOGS in the kitchen. You missed another point. The law DOES NOT STATE that you can do any illegal activity as long as you don't go over $400.00 per year. If you are going to provide information vs. ask for information, it would be nice if you didn't present it in a way that suits you, but isn't necessarily legal. There are people that come to this site to get information. Your insinuation was that as long as you sell under $400.00, you are ok.

Maybe you should give us a break. You want information from business people on how to price your unlicensed cupcakes.
post #10 of 36
sweetbeesbakeshop - I can see why people are getting hot under the collar. Aside from the financial tax side, you are unlicensed, and selling cakes from a kitchen which you yourself state would not meet requirements in your state. Most people (I am assuming) on this site are business people who have gone to great measures to be licensed and legal - and they are giving you advice.

I'm in the UK, our laws are different, but you should maybe give some thought to the issue of health and safety, eg in the event that someone (god forbid) gets sick from one of your cakes, or even complains that there is a foreign body, eg a dog hair in their frosting. How would you stand then?
post #11 of 36
Thread Starter 
I understand where you are coming from and everyone else at that. They are just trying to keep me out of trouble, which I appreciate greatly! I guess I should have posted in the "I'm a hobby baker..baking for my friends and coworkers" forum. I would LOVE to make my business legit, just can't afford to do so. I don't advertise for my cupcakes, it's all word of mouth. I guess I shouldn't have called it a business adventure, because in all actuality I am not trying to make this a lucritive business at the moment. I am just making cupcakes for my friends birthdays, our office parties, etc. I do however charge the cost of the ingredients plus my time, which I think is reasonable. As you can see, I don't even charge people enough for me to make a profit! I wanted to see what cupcakes go for in the REAL BUSINESS market-for when I do get to that point.

I guess I got defensive because I didn't expect to be jumped on like that...
Nothing is better than watching a loved one smile after eating one of my cupcakes
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Nothing is better than watching a loved one smile after eating one of my cupcakes
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post #12 of 36
Sweetbee,
"In the state of NC I cannot be a bakery business out of my home unless I have a permit and health inspection. Our requirements are NO ANIMAL shall come into your home, even over night. I have two dogs. I cannot commercially sell my cupcakes in the state of NC as long as I have animals in my home, unless I find a commercial kitchen.

Which is why I am for now, hobby baking. I cannot however GIVE my cupcakes away to people...that would take a hit!"

THAT's our point!
1. Where you are located you can not have a licensed home kitchen for selling baked goods.
2. You have stated that you plan to sell baked goods from said kitchen, but will try not to make more than $400 from this endeavor.
3. You stated you can not give your cupcakes away to people, therefore you will be selling them.
4. Selling them = business. Period.
5. You are not allowed to have this business under the laws of your state.

Therefore, you have asked for our advice in pricing a product which we all agree is being made and sold illegally. Hard for a legitimate business to play in that game.

I have a licensed kitchen. I pay for licenses (I have dual licensing) inspections, insurance, payroll and the payroll taxes, income taxes and all other costs associated with producing my product. My standard cupcake with creme filling and a swirl of icing costs $2.75 each.
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Answers to the most often asked questions re: SPS. SPS instructions are on Page 15 of the Sticky at the top of the Cake Decorating Forum. Supplies can be ordered from Oasis Supply, Global or BakeryCrafts.
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post #13 of 36
Quote:
Originally Posted by sweetbeesbakeshop

I understand where you are coming from and everyone else at that. They are just trying to keep me out of trouble, which I appreciate greatly! I guess I should have posted in the "I'm a hobby baker..baking for my friends and coworkers" forum. I would LOVE to make my business legit, just can't afford to do so. I don't advertise for my cupcakes, it's all word of mouth. I guess I shouldn't have called it a business adventure, because in all actuality I am not trying to make this a lucritive business at the moment. I am just making cupcakes for my friends birthdays, our office parties, etc. I do however charge the cost of the ingredients plus my time, which I think is reasonable. As you can see, I don't even charge people enough for me to make a profit! I wanted to see what cupcakes go for in the REAL BUSINESS market-for when I do get to that point.

I guess I got defensive because I didn't expect to be jumped on like that...



In other words you're selling them...which is illegal for you to do!
post #14 of 36
Your "reasonable" equals illegal no matter how you word it. You keep trying to re-phrase the post but it is all the same. You just don't get it. Actually you do. You just think re-wording it will somehow trick us into going along with your scenario... as if we will reconsider and you will be redeemed.

I think you need to quit asking the question, as your justifications are a little insulting to those of us who respect the law. Make sure they pay you cash... wouldn't want to share any of that "reasonable" profit with Uncle Sam.
post #15 of 36
Thread Starter 
okay, I wasn't trying to trick anyone or do anything illegal. I didn't realize it would all get this serious..I GIVE UP! wow. I was just trying to figure out how to price a cupcake to cover my electricity cost, the cost of goos, etc without going into the negative. There was not any profit to be made for selling cupcakes for $12 a dozen..believe me.

I'm not going to argue anymore because apparently everyone in this forum has too much time to pick apart my posts and rearrange my words to turn me into some fradulant monster.
Nothing is better than watching a loved one smile after eating one of my cupcakes
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Nothing is better than watching a loved one smile after eating one of my cupcakes
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