I live in Southwest IA and run a cottage bakery. I'm considering raising my prices at the first of the year and just wondered what everyone else is charging. I price cakes per serving. I also sell cupcakes, cakeballs (or pops), sugar cookies and drop cookies. Your input would be greatly appreciated!
What's a girl gotta do to get an answer to a post? Maybe you are all scared to reveal your conservative midwestern prices? Still looking for some input...
I currently charge $1.50 per serving on buttercream cake, $1.00-1.50 per cupcake, $.50 per cakeball.
I'm really cheap with my prices! I'm not licensed, so I really only sell to family and close friends. All my cakes are iced in buttercream. I sell a lot of small cakes that serve 12-15, and I charge $20. Another popular size is a 12x18 sheet cake, and I sell those for $40. Nothing very fancy. My decorated sugar cookies are the priciest thing I sell, and those are generally $2 each (about 3" to 4" size).
An Omaha cupcake shop opened last year (they competed on Cupcake Wars) and they sell their cupcakes for around $3 each. They don't seem to have any trouble selling them! They have an extremely attractive shop, and it just begs you to step inside. Once there, you can't help but buy a cupcake!
The best way to set prices is to look at your own costs and add a profit margin (usually 20-30%). Your cost for each product includes ingredients, labor, and overhead (liability insurance, licensing, etc.).
Nebraska doesn't have a cottage food law, so it is hard to say what a good home bakery price is. You actually have to have a commercial kitchen or pay for a rental kitchen... so either way, you will have overhead costs to account for. I have plans to build a commercial kitchen and have been running a program to account for all of my costs, supplies, ingredients, etc... and come close to $2.25/serving for cake. However, a idea is to really research your competition. not grocery stores or big box stores, but the bakers that provide the specialized business and service that you provide. From there, have a good number of what you need to cover your costs, pay yourself a decent wage, and see where you fall next to them. If you are close, then by all means... raise your prices. if nothing else, may open yourself up to a much ritzier clientele...?
I don't really have any direct competition and am super busy, so I'm thinking if I raise my prices, I will get fewer orders, yet bring in the same amount of income. But I don't want to get so high that I get no orders!
P.S. It is my understanding of Iowa law that you can bake in your home as long as you are not wholesaling, or selling items that require refrigeration.
I'm in central Iowa and bake out of my home. I have recently increased my cupcake prices to $2 for a basic buttercream swirl. I pretty much work by word of mouth at this point, so I don't have a lot of orders yet. If and when I decide to pursue this more aggressively, I may rethink my prices. Where I'm located, $2-$3 for cupcakes and $3-$4 per serving for buttercream cakes seems to be the norm.
Yes, in Iowa, home based bakeries that sell only non-potentially hazardous baked goods are exempt from licensing. 
It basically means that you can sell baked goods that do not require refrigeration.
I'm in Northwest Iowa and I charge $2/serving for basic buttercream,
$2.50 for fondant, and $1.25 for cupcakes with just a BC swirl. I only get a few orders a year though because people do not want to pay that much. I used to work at a Wal-Mart bakery and I had people complaining on a daily basis over those prices. *sigh*
I used to work at a Wal-Mart bakery and I had people complaining on a daily basis over those prices. *sigh*
Everybody wants something for nothing! They look in the grocery aisle and see what a cake mix and a tub of frosting goes for and think they should get a decorated cake for that amount. These are the people you do not want as customers!!! They have no clue and no appreciation for the work and skill that go into a nicely decorated cake.
I'm in Northwest Iowa and I charge $2/serving for basic buttercream,
$2.50 for fondant, and $1.25 for cupcakes with just a BC swirl. I only get a few orders a year though because people do not want to pay that much. I used to work at a Wal-Mart bakery and I had people complaining on a daily basis over those prices. *sigh*
With prices that low you might just be attracting the wrong kind of customer (the kind that shops based on price instead of quality). If you double your prices and start targeting more affluent areas you may be able to increase your profit significantly, assuming there are enough affluent customers in your area of course.
I'm in Northwest Iowa and I charge $2/serving for basic buttercream,
$2.50 for fondant, and $1.25 for cupcakes with just a BC swirl. I only get a few orders a year though because people do not want to pay that much. I used to work at a Wal-Mart bakery and I had people complaining on a daily basis over those prices. *sigh*
With prices that low you might just be attracting the wrong kind of customer (the kind that shops based on price instead of quality). If you double your prices and start targeting more affluent areas you may be able to increase your profit significantly, assuming there are enough affluent customers in your area of course.
You also have to look at the area of the country, Jason. The Midwest doesn't command the prices that Californians demand. And a market that is saturated with unlicensed home bakers has a lower price margin than those states that have no cottage food laws. If prices are too high at one location, one only has to drive around the block to find someone willing to work for less, and a lot of of those cheapies do beautiful work.
So you really do have to look at the prices of those around you as well as your cost and profit.
Not saying you can't charge more and do booming business, but the quality of the cake and the skill level have to be there to justify it.
And I haven't looked at anyone's portfolio on this thread, I am speaking in general terms.
You also have to look at the area of the country, Jason. The Midwest doesn't command the prices that Californians demand.
IMO it's not a midwest vs. coastal issue. There are many affluent areas in the midwest that could easily support custom cake businesses charging $5/serving and up, just as there are several lower income areas in California where it would be tough to sell at higher than Costco prices.
And a market that is saturated with unlicensed home bakers has a lower price margin than those states that have no cottage food laws.
Absolutely agree, which is why the competitive analysis portion of the business plan is crucial to see if a business would even work in a specific area.
Of course it's a lot easier to deal with the problem of illegal bakers than it is to increase a region's affluence. 
I'm in Northwest Iowa and I charge $2/serving for basic buttercream,
$2.50 for fondant, and $1.25 for cupcakes with just a BC swirl. I only get a few orders a year though because people do not want to pay that much. I used to work at a Wal-Mart bakery and I had people complaining on a daily basis over those prices. *sigh*
Your work is wonderful! With the cost of ingredients and all the time you put into your work, how do you make a profit? I was charging less for a short time and finally decided it wasn't worth it anymore. I started charging according to my work and what others were also charging around me. But now it seems everyone has decided to start a baking business from home and its getting harder to get the business. 
I am from Northeast Nebraska and have a licensed kitchen in my home. I charge $1.50 for buttercream frosted cakes and $2.00 for fondant cakes. Cupcakes are $1.25 each and include a filling and small fondant decoration. To be honest, I am not making much profit. I am considering raising prices after the first of the year also.
I am from Northeast Nebraska and have a licensed kitchen in my home. I charge $1.50 for buttercream frosted cakes and $2.00 for fondant cakes. Cupcakes are $1.25 each and include a filling and small fondant decoration. To be honest, I am not making much profit. I am considering raising prices after the first of the year also.
I just saw your cakes and in the most lovingly way I possible, I am saying you are very silly! Girl, you got skills! Raise those prices and make you money, honey! 
Just to clarify, I don't really consider myself a business at this time. I mainly decorate for friends and family as a hobby. I'm a pretty good decorator so I was getting a lot of inquiries so thats why I set up pricing.
I based my pricing on a 8" cake, I use an extended cake mix recipe and Indydebs icing. I use wiltons wedding serving chart. My ingrediant, supplies, and overhead comes to $24 and labor is another $24(2hours@$12/hour). This comes to $48 divided by 24(servings)=$2.00/serving. At this time I do not figure in profit. If I did charge 20% profit it would only add about 50 cents per serving. I do charge extra for figures and gumpaste flowers, and 3d/sculpted cakes are priced seperately with a $150 miminum.
I live in a small town of about 10,000. I've done a lot of research on prices in bakeries and home based businesses in Iowa and I've seen prices as low as 75 cents/serving, the highest prices I've seen are in the $3.50 range and those are in the Des Moines area. The "good" bakery ( AKA not a grocery store) in my town actually charges less than the grocery stores for sheet cakes and cupcakes and their wedding cakes are about the same.
I live in NW Iowa and charge $1.50 per serving for cake. I sell cupcakes starting at $1.25 with a swirl of icing...added decoration is .50 and filling is another .50 Cookies are $1/inch(way too time consuming), and cakeballs with a minimum of 2 dozen are $9/dozen. I used to do weddings, but now only do special occasion cakes. I get 100% business by word of mouth and have a lot of repeat business. My town is small less than 2,500.
I am from Northeast Nebraska and have a licensed kitchen in my home. I charge $1.50 for buttercream frosted cakes and $2.00 for fondant cakes. Cupcakes are $1.25 each and include a filling and small fondant decoration. To be honest, I am not making much profit. I am considering raising prices after the first of the year also.
Where in NE Nebraska are you located?
I live in southern IA and have been doing this for about 2 years now....I am working on getting a shop open since there is nothing around here unless you dirve 45 miles so I will have to incrase my prices a bit then. But for now I do fondant only cakes at $2.45 a serving, and cupcakes range from $1.25-$2.50 depending on size and if they want a filling in them. I also do cookies that I sell at $2.50 a piece and cakeballs aat $2.00 a piece. I also do cheesecakes, pastries, pies, breads and all that which all vary, and it was really hard at first to get anyone to buy, but if you can just get one customer it really changes their minds!
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