I have a small home based business. I am just getting started and I had a request for a 6 inch zebra print cake with a fondant bow. I have been chatting with the customer for a few days now about details and I get an e-mail this morning telling me that she found someone cheaper and I don't fit her budget. I quoted her $60 for this cake and I thought this was fair considering I make everything from scratch. She said that she found another person that can do it for $28. I am just wondering if I am crazy but $28 doesn't even cover supplies for this cake. Is $60 too extreme? I'm having such a difficult time with pricing, seems that some people are not willing to pay for the service I am providing. Sigh.....

It depends on what city your business is located. Do tell. Have you priced your competition yet to determine if your prices are at or above their?

Many bakeries that have high volume can charge in that range or slighter higher that type of cake. In NJ some bakeries are slightly higher but there is no fondant/gumpaste accects. The stripes would be done in gumpaste. The restaurant where I worked would charge $20 for a scratch cake with just a simple border and writing on top of the cake.

I don't know of any cake decorating studio that would charge this little as many have a minimum price which would be well above the cost you quoted her.

I agree it depends on where you live. That is $5 per serving - using Wilton's chart. I don't sell cakes but there is no way anyone would pay that much where I live (unfortunatly). Even custom bakeries don't get that much here.

I would probably charge between $30 and $40 for that cake, but again, depends on where you live.

I agree with everyone else, you have to price your competition and be competitive. I live in Southern California, and our prices are really high here. I charge $20 for a $6 buttercream covered cake, and my cost is only $6. For a fondant covered 6" cake I charge $30, and my cost is only about $10. When you are costing your supplies, are you counting the entire bag of flour, the entire box of eggs, or just the bit that you use for the cake? If your supplies are really close to $30, you should really consider what ingredients you are using and see what you can do to be more cost effective. It doesn't matter if you make the most outstanding, flavorful cake in the world, in today's economy, most people simply aren't willing to pay that much for that small of a cake. You have to find a way to be competitive and still offer a quality product.

Thanks for your helpful hints everyone. I have checked into local business pricing and I am on par or a bit lower than my competition. I am in Calgary Alberta. I have worked out the cost of supplies based on what I use. A block of butter alone here is $6.00 and I need 2 blocks to make one batter and one icing, so thats $12 on just butter. If the 6 inch cake takes less than one full batter then I was still charging for the full batter. The cake was to be covered in buttercream and fondant with fondant stripes and a fondant ball border with a fondant bow on top. All that fondant would cost $30 here. So I thought I was being generous with that price since I didn't even factor in my time to make it and put it all together. What am I doing wrong? I am going in the hole with every cake I make and I am getting frustrated because I don't know how anyone makes any money at this. I love making and decorating cakes but I am thinking this is not for me!

I live in Ontario. I have been told so many times how amazing my cakes are...but when it comes time to pay ..most people just cannot justify the price that I would love to charge. I still basically charge 3 dollars per serving..regardless of buttercream or fondant. I make it all from scratch to save money. I am making nothing for my time and effort but doing it for the love of the result. I agree with you and wish you luck. It would be so awesome to be able to charge what we are all actually worth!

To calculate your price for a cake, you'll want to add up your costs for ingredients, labor (how much time it will take you multiplied by a reasonable hourly wage), and overhead (things like liability insurance and utilities on a per-order basis), then add 20-30% for your profit margin.

Here are some prior CC threads that discuss pricing:

http://cakecentral.com/cake-decorating-ftopict-680890-.html

http://cakecentral.com/modules.php?name=Forums&file=viewtopic&p=6389860&sid=5236cb18adc1114558950e76c037a399

HTH

I'm also in Canada, Winnipeg. So far I just bake for family and friends/coworkers. I only charge for ingredients and if they give me something more, great. I haven't posted any pics for a while, but I do make sculpted cakes and gumpaste flowers. I still get people saying "You could get at least $40 for this" when that is how much the ingredients cost, and my time has been at least 8 hours, with baking, decorating and cleanup. People really have no idea. Still hear comments like "I'd never pay over $30 - $40 for a cake" it's only a cake" Unfortunately we don't have a large enough population to get enough people with money that they can spend on custom cakes.

I think it depends on the customer. I have some customers that give me grief over a $50 cake and others that don't bat an eyelash at $200 birthday cakes. They just say, "we have to have it".

I am also in Canada and now have a $75 min for all fondant cakes (unless I offer a special on a holiday cake) I also do a $50 min on buttercream cakes. The way I see it, you pay almost $45 at the grocery store for a buttercream slab cake, so if they are willing to pay that for an ordinary cake then my starting prices are not that bad

You have to make it worth your time.

Thanks for sharing some of your pricing and opinions. I appreciate the support. I am going to keep my business going for now and see if I can appeal to those people that are willing to pay what my cakes are worth. It's just a bummer to see a cake that I have worked on for hours go out the door for less than its worth.

Gracie, I was just wondering why it would take 2 blocks of butter to make a six inch fondant cake??? Also, have you considered making your own MM fondant? Much much cheaper than buying commercial fondant and it tastes way better...quick to make too. It sounds like you are well versed in it but you need to find a way to scale down your costs so you can come down a bit in pricing. Buy your butter at a discount grocery store and not the higher end ones that sell the same items but charge much more. I also try to buy items when they are on sale and stock them. I live in Toronto ON and I'd maybe get 30-40 max for a cake that size. Also being at home peope figure you dont have the overhead costs that a bakery does so they usually arent willing to pay that much...not saying its right but it is what it is....

I also ask for their budget first. Once someone comes to me for a cake, that is the first thing that comes out of my mouth. People think that because I don't have a "bakery," then I can't charge the prices I do. I am based at home, but I do use a commercial kitchen and people don't realize that you have to PAY for it! I always get comments like: "I might as well go to a real bakery" or "You would get so much more business if you charged less." *sigh* such is life

You should definitely check out the big box stores and making your own fondant like the others suggested. I only use commercial fondant when I need dark colors. Even if you do it out of your home, you still have to pay for electric, gas, paper towels, etc. but most people don't think about those things! It is hard at times, but if you don't compensate yourself what your time is worth, then you'll soon hate what you once loved!!!

Things are worth what you can get people to pay for them. This company:

http://sugarbloomcupcakes.blogspot.com/

charges A$170 for the 6 inch cake at the top of their cupcake towers.

That's obviously not going to happen in all locations. You need a large enough population of people who are willing to pay such prices. If you can get people to pay $60 for a 6inch cake, then that's what it's worth. If you can't, then it doesn't matter how much you paid for ingredients.

People often advise others here to ask about budget first. However, I wouldn't assume that someone who has a small 'budget' won't spend more if you show them what's available.

Before I started caking, I had absolutely no idea what a custom cake would cost. Why would I? I'd never bought one. I would have grossly underestimated how much a cake would be. That doesn't mean I wouldn't have been willing to spend more, just that I didn't know what a reasonable price for cake would be.

If someone had asked me what my budget was as the first question, I would have given a ridiculously small figure, I'm sure. If you only worked within that amount, you would have lost a larger order.

The best advise that has worked for me is to set a minimum price. It does matter where we live and what others are charging for a similar cake. I do not take many cake orders (work full time) so I make nothing smaller that an 8" double layer buttercream frosting and filling, basic decorations (add costs from there depending on design) at $50.00. Telling someone a minimum up front lets them decide if you are in there budget they decide right then and there and no time is wasted on either part. I do not go smaller on my cakes because I do not want to waste material and I notice most people are really happier at the end with a slightly larger cake. Good luck,,, if you don't make some kind of profit at some point in time this will not be enjoyable and once customers get used to your prices it will be very hard to increase them later.

A minimum price and size of order. The smallest stand alone cake I offer is an 8" cake. One recipe makes an 8" cake and that is my minimum. Sure I could scale it down, but honestly... turning on my oven for an order that is less than $100 is not worth my time so I don't. If someone truly only wanted a 6" cake they would still have to pay $100.00.

The OP said that one recipe makes more than a 6" cake so that is why it takes all the butter she stated, but she would be out the ingredients no matter what so she should be compensated. If you aren't at a point where are making multiple orders in a week, that extra batter won't get used. It costs me $1.10+ per serving to make a cake... this includes fondant, the thick base board and all internal supports. All baking from scratch using real vanilla beans and high quality chocolate... all butter never shortening... meringue buttercream... real fruit... the whole 9 yards and then some. It's expensive to bake like this and even more so since I am small scale and don't have a wholesale account. There are people who will pay for the quality... you just have to find them and market yourself to them. It is all part of my marketing plan... you have to make it work for you. I could easily cut costs, but then I would be compromising on my baking integrity and I just can't/won't do it.

Well said lilmissbakesalot! You have to set limits, order minimums, etc. And if your ingredients are expensive you need to let customers know that you bake from scratch using the finest ingredients available.
Often times people think that home bakers can do it cheaper, but you need to let them know that it's custom work, small batch baking and it is not Walmart assembly line. Not everyone can or will pay for custom. But if you market yourself properly and set yourself apart, you will develop a client base. Don't sell yourself short.

Well said lilmissbakesalot! You have to set limits, order minimums, etc. And if your ingredients are expensive you need to let customers know that you bake from scratch using the finest ingredients available.
Often times people think that home bakers can do it cheaper, but you need to let them know that it's custom work, small batch baking and it is not Walmart assembly line. Not everyone can or will pay for custom. But if you market yourself properly and set yourself apart, you will develop a client base. Don't sell yourself short.

Pleaswe correct me if I'm wrong, but if the OP is using a recipe that takes 2 cups of butter to make a 6 inch cake it might be time for her to cut that recipe in half. I don't know of a recipe that calls for more than 1 cup of butter to make two eight inch layers.

Ok So with regards to the 2 blocks (not cups) of butter. I use 3/4 cup in the batter and 1/2 cup in the icing. Sometimes I need to use a double batch of icing so I use more. I may not use the entire 2 blocks of butter but I still need to purchase them. I do have a base price of $50 for all cakes. and usually will ad $10 for fondant accents. The lady that wanted this cake was aware of my base price and the extra for fondant. I was just baffled by the fact that someone else could charge $28. I am not used to being paid an hourly wage of $2.00/hr or even less that's why I'm trying not to sell myself short. I was actually speaking with a "friend" about it last night and she simply said, "well if I can get it at the supermarket for cheaper then thats what I would do, cake is just cake, right." So this is the mentality of many people I am realizing. I wanted to hang up on her!

Ok So with regards to the 2 blocks (not cups) of butter. I use 3/4 cup in the batter and 1/2 cup in the icing. Sometimes I need to use a double batch of icing so I use more. I may not use the entire 2 blocks of butter but I still need to purchase them. I do have a base price of $50 for all cakes. and usually will ad $10 for fondant accents. The lady that wanted this cake was aware of my base price and the extra for fondant. I was just baffled by the fact that someone else could charge $28. I am not used to being paid an hourly wage of $2.00/hr or even less that's why I'm trying not to sell myself short. I was actually speaking with a "friend" about it last night and she simply said, "well if I can get it at the supermarket for cheaper then thats what I would do, cake is just cake, right." So this is the mentality of many people I am realizing. I wanted to hang up on her!

Ok So with regards to the 2 blocks (not cups) of butter. I use 3/4 cup in the batter and 1/2 cup in the icing. Sometimes I need to use a double batch of icing so I use more. I may not use the entire 2 blocks of butter but I still need to purchase them. I do have a base price of $50 for all cakes. and usually will ad $10 for fondant accents. The lady that wanted this cake was aware of my base price and the extra for fondant. I was just baffled by the fact that someone else could charge $28. I am not used to being paid an hourly wage of $2.00/hr or even less that's why I'm trying not to sell myself short. I was actually speaking with a "friend" about it last night and she simply said, "well if I can get it at the supermarket for cheaper then thats what I would do, cake is just cake, right." So this is the mentality of many people I am realizing. I wanted to hang up on her!

Ok So with regards to the 2 blocks (not cups) of butter. I use 3/4 cup in the batter and 1/2 cup in the icing. Sometimes I need to use a double batch of icing so I use more. I may not use the entire 2 blocks of butter but I still need to purchase them. I do have a base price of $50 for all cakes. and usually will ad $10 for fondant accents. The lady that wanted this cake was aware of my base price and the extra for fondant. I was just baffled by the fact that someone else could charge $28. I am not used to being paid an hourly wage of $2.00/hr or even less that's why I'm trying not to sell myself short. I was actually speaking with a "friend" about it last night and she simply said, "well if I can get it at the supermarket for cheaper then thats what I would do, cake is just cake, right." So this is the mentality of many people I am realizing. I wanted to hang up on her!

Where are you buying butter at $6.00 for a half pound block and what brand is it?

Where are you buying butter at $6.00 for a half pound block and what brand is it?

I shop at Sobeys which is walking distance from my house and they sell Dairyland butter for $5.99. I could get it for $4 at Costco but its a 20 min drive so am I really saving money. I have checked all the local supermarkets and the price ranges from $4-$6 here. And thats even for the no name brands at superstore. Perhaps $60 was a little much to charge for that cake but I don't see how anyone could make money charging much less than that.