We specialize in dessert cakes (although we do birthday cakes, as well) but the majority of our business are dessert banquet style specialty cakes, like our Chocolate Mocha Cream.

Here is my dilemma. I am very new to costing things out and coming up with prices. I can calculate the cost of ingredients, boxes, tags, boards, etc. I can add in the rent and insurance factor as well.

But when it comes to Cost of labor, I am struggling. I am currently adding in $15.00/hour. It takes me about an hours worth of work to make a cake from scratch, bake it, make the buttercream, and frost & decorate it.

When I add the $15 hour price, it pushes my cake Retail price to $32.00 for an 8" round. I am feeling that is a bit high? Or am I pretty safe? I make cakes from scratch, all natural, very high quality ingredients. I can not cut costs on ingredients. I will not budge on the quality.

Should I be calculating a full hour of labor into this cake? Even though I will be doing other things during this hour as well? (I will be tending to other cakes, decorating, frosting, making cupcakes or cookies etc . . while the cake is baking or waiting for things . . )

Making the cake batter - 10 minutes
Do I charge labor for the 35 minutes bake time?
Making the frosting - 12 minutes
Frosting & decorating - 15 minutes

While the cake is baking, I am doing lots of other things . so maybe my labor is only half hour?

I don't consider baking time into my hourly wage... Well I technically do because thats usually when I'm making the frosting, prepping the boards and so on. I think $32 sounds low. $40 would be $2 a serving which is nothing.

My prices are higher than yours. I give myself $20/half hour. I give myself 1/2 hr actual hands-on time for an item, many items higher. So in one hour, I use the down time for one item to be the hands-on time for the other. So in one hour, I make $40.00 labor. This takes really paying attention to time and being conscious of things like not making a mess, always cleaning in idle minutes, and planning what items are best made together. My kitchen is organized into stations where I can have several projects going, and I practice mise en place.

My ingredients are high also. I could be doing something else and make $40.00/hr. The level of skill it takes me to produce these products is at a premium level and I am not giving away a skill that is hard to find in the baking industry.

I have no problem getting my prices, but you must market to upper income clients who appreciate the ingredients and the skill level. To this income level, these prices are inconsequential, as long as the value is there. If you do not target a market, and rely on the masses to walk through your door, the majority will not buy your product.

Everything about your product, including packaging, business cards, flavor placecards, interior decor, and attitude of employees must portray a premium boutique business. And the taste must be the best they have ever had.

[quote="KuyaRomeo"]

No wedding style cakes are like 4, 5, 6 a serving

Thanks, good to know this stuff. . .

So, from the original response, I am guessing that an 8" double layer cake should feed 20 people? Is that truly accurate? I have made tons of 8" cakes where 10 people knocked it out easily . . lol. Ok, so they were not skinny people . . but is 20 really accurate?

Kuya, if you are making homestyle cakes, they don't necessarily have to go by industry standard pricing, but that's another way to look at it. I price it by ingredients, overhead, packaging, and my time. But all of this still must be in line with market pricing in your area, even if you are the highest.

I use this to figure out servings... Of course 1 person can easily put away 2 servings.. I think I can put away 3 or 4! http://shinymetalobjects.net/cake/calculator/cake_calculator.cgi

$32 for a premium quality 8" round cake is definitely not too high. Once you factor in fixed overhead on a per-order basis, the price for smaller cakes will be higher per-serving than larger cakes.

Our price for an 8" is $44, that includes overhead as well as the additional hourly rental cost for our commercial kitchen. If we were able to legally bake from home the price would probably be closer to your $32 figure. We include baking time in our cost at a discounted rate.

Based on our experience with how people cut birthday cakes in this area, we use a more conservative estimate of 10-14 servings in an 8" round double layer cake. If a customer wants to serve cake for 20 people at a birthday party we recommend a 10" round instead. The number of servings for a party cake doesn't really matter too much, since we've already set flat prices for different size cakes.

Pricing multi-tier cakes (which are usually wedding cakes) is different -- customers are used to a per-serving price for this type of product, and we start at $5/serving.

My pricing is closer to Jason's. I do have some basic cakes that are $37.00, but the filling is the same as the frosting and the recipes are low labor. They still have European buttercream and that is always a big expense in a cake. And I have some as high as $58.00.

I just started an at home cake business. For my first (and only so far) 8" 2 layer cake, I charged $20, and my customer was willing to give me $30 for it. I think I'm still at the "undercharging stage", but I think what you are charging is perfectly fine.