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Thread for People Who Like Pricing! - Page 3

post #31 of 104
The difference in pricing is unbelievable, milk cost from 3.89 to 4.39 where I live in the East coast. Looking at your competitor's pricing and your costs is a basic start.
post #32 of 104
Quote:
Originally Posted by GarciaGM



Jenmat, do you also have a minimum for dessert cakes? I think it was Indydebi who said she wouldn't even turn her oven on for $50 (or was it more than that?). Seems like some of the other posters here have echoed that same policy.


Sorry, wasn't getting updates. My dessert style cakes start at $25 and go up by size. I allow icing polka dots or icing roses in 2 colors- that's it.
I agree that you shouldn't turn your oven on for just anything. However, I am baking anywhere from $500-$1500 worth of cake per week, so another quick $25 is fine by me!!

Cheatize, you are now one of my new "I want to be her when I grow up" people. Wish I had the motivation to do the spreadsheet thing. I am in awe. In the beginning I did sit down and figure out costs, but to have it at my fingertips would be amazing!
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post #33 of 104
also, another thing in pricing I learned pretty quick is "perceived value."
A sheet cake with a hand drawn picture of the birthday boy may take a while, but it's still just a sheet cake in your customer's eyes. So the perceived value is low.

Since I began offering minimums, more custom type cakes and limiting sheet cakes, the perceived value has been less of a struggle, since Sam's club doesn't offer 3D backpack cakes...
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post #34 of 104
Thread Starter 
[quote="jenmat"]
Quote:
Originally Posted by GarciaGM

Cheatize, you are now one of my new "I want to be her when I grow up" people. Wish I had the motivation to do the spreadsheet thing. I am in awe. In the beginning I did sit down and figure out costs, but to have it at my fingertips would be amazing!



I have a spreadsheet with MY ingredient costs broken down to the tsp or 1/4 cup. I can send it to you if you want. But you'd have to tweak it and I need to make it more user friendly for sharing.

When I started making cakes I weighted out how much 1/4 cup of everything weighed in grams and then divided the package price down by how many servings. Lol
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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post #35 of 104
Along the same lines as figuring the unit price of each ingredient, I timed myself doing everything! I was seriously underestimating my time! Now I know exactly how long it takes me to mix up batter, make fondant animals, pipe 100 buttercream flowers! Obviously most carved cakes are designs new to me but, since I have written down how long it took to make the previous carved cakes, I can estimate pretty well!

Question: Do you assign overhead based on a percentage of the total or a flat rate per order? For example, I'm charging each order $10 for a portion of my insurance, accounting, advertising, etc. That seems steep, though, for a $40 8" cake and too low for a 4-tier wedding cake. Interested to hear how everyone does it! TIA!
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post #36 of 104
Thread Starter 
Quote:
Originally Posted by ajwonka

Question: Do you assign overhead based on a percentage of the total or a flat rate per order? For example, I'm charging each order $10 for a portion of my insurance, accounting, advertising, etc. That seems steep, though, for a $40 8" cake and too low for a 4-tier wedding cake. Interested to hear how everyone does it! TIA!



I haven't had overhead until now (I mean sure I have my home electricity but I wasn't charging) so I haven't done this. I need to. I feel like a % would be better but I also need help with this!
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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post #37 of 104
Thread Starter 
Sorry dup post.
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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post #38 of 104
Quote:
Originally Posted by ajwonka

Question: Do you assign overhead based on a percentage of the total or a flat rate per order? For example, I'm charging each order $10 for a portion of my insurance, accounting, advertising, etc. That seems steep, though, for a $40 8" cake and too low for a 4-tier wedding cake. Interested to hear how everyone does it! TIA!


We assign overhead based on a flat rate per order, since it covers fixed costs that have very little to do with the size of a specific order. Overhead is supposed to be steep for small orders, that's why we price smaller cakes at a higher per-serving price than larger cakes.

If you do mostly smaller orders you will probably fill more total orders per year, meaning you can lower the overhead component of each order. Conversely, if you focus on larger orders you will have a smaller number of annual orders meaning each order will need to contribute more to overhead.

For example, let's say you have $5000/year in overhead. If you focus on large wedding cakes and you make 50 per year, each cake will have an overhead component of $100. But if you make mostly smaller cakes and have 300 orders per year, the overhead per cake is only $17.
post #39 of 104
Thread Starter 
Quote:
Originally Posted by jason_kraft


We assign overhead based on a flat rate per order. Overhead covers fixed costs that usually have very little to do with the size of a specific order, such as insurance, accounting, advertising, utilities, etc. Overhead is supposed to be steep for small orders, that's why we price smaller cakes at a higher per-serving price than larger cakes.



Oh, okay. I have been pricing all my cakes at the same price per serving. How did you figure out how steep the slope should be from 8" cake to 12" or whatever?
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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post #40 of 104
Quote:
Originally Posted by Bridgette1129

Oh, okay. I have been pricing all my cakes at the same price per serving. How did you figure out how steep the slope should be from 8" cake to 12" or whatever?


We didn't set a specific percentage to decrease cost per serving as the cake size increases, the price just naturally works out that way if you use the cost + profit margin formula.

Also note that this is only for our single tier cakes, which have flat prices. For multi tier cakes the overhead is such a small component (thanks to the smaller cakes) we don't bother adjusting per-serving prices based on cake size, only for premium fillings and design complexity.
post #41 of 104
Perhaps this is not what the OP intended, but this is the BEST pricing thread I have read on here. Kudos to all of you!
post #42 of 104
Thread Starter 
Quote:
Originally Posted by cheatize

Perhaps this is not what the OP intended, but this is the BEST pricing thread I have read on here. Kudos to all of you!



This is precisely what I intended icon_smile.gif I wanted a place to just talk pricing. You can post specific or vague questions or just post a cake and say what you charged and ask others what they would charge. Anything and everything pricing icon_biggrin.gif
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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post #43 of 104
Thread Starter 
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by Bridgette1129

Oh, okay. I have been pricing all my cakes at the same price per serving. How did you figure out how steep the slope should be from 8" cake to 12" or whatever?


We didn't set a specific percentage to decrease cost per serving as the cake size increases, the price just naturally works out that way if you use the cost + profit margin formula.



*PHEW*!!! Okay, when I was trying to figure out my prices I tweaked, worked and re-worked my prices on single tier/flat price cakes for hours trying to make it work so that the little ones were high enough in price but the bigger ones weren't insane. I love that I can just use the figure that comes out of the equation! Sometimes the simplest things are the hardest haha. For some reason I thought they should all be the same price per serving.

So if a customer were to calculate it and ask why it was cheaper per serving for a bigger cake, you just tell them you get a discount for buying more kinda thing?
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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post #44 of 104
Quote:
Originally Posted by Bridgette1129

So if a customer were to calculate it and ask why it was cheaper per serving for a bigger cake, you just tell them you get a discount for buying more kinda thing?


In four years and 700+ orders that has never come up, in my experience customers don't usually question why they are paying less than expected. icon_wink.gif

If they did ask I probably would sell it as a discount for buying more. This form of pricing for smaller cakes is also a great upsell opportunity -- when someone asks for a quote for a basic 8", I always mention the price for the 10" as well since it's only $10 more.
post #45 of 104
Thread Starter 
Quote:
Originally Posted by jason_kraft


In four years and 700+ orders that has never come up, in my experience customers don't usually question why they are paying less than expected. icon_wink.gif



I meant more in the opposite way, as in "why is your 6" cake so expensive?!" icon_wink.gif

Another random question, what do you guys charge for smash cakes? My 6" cakes are pretty expensive (in my eyes) for a 6" cake. But it's not worth my time to do one for $15. But smash cakes I would assume are 6". So do you give them a deal on one since they're buying a bigger cake for their guests? I've seen some bakeries even include it.
Started my business legally February 2012! Commercial kitchen and all!
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Started my business legally February 2012! Commercial kitchen and all!
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