Thread for People Who Like Pricing! - Page 6

Me too basically. My pricing allows for a good amount of detail. So if someone wants something that's relatively simple, then I'm making out good that day.

I don't know who it was (sorry, it's the screen names that get me) but someone emailed me from this thread, so I thought I'd post my response. It just explains how I do my pricing and why I don't have a price chart on my website:



Since I do everything custom I don't put prices on my site because it's too complicated. I do have a basic range listed on this page http://www.acaketoremember.com/flavors-and-pricing.html but what was happening was I used to have a price per serving, then people would come in and not understand that fondant cost more, or the design they wanted wasn't as "simple" as they thought, etc.



I changed to a per-cake price a while ago, not a per-serving price. This is an article I wrote about that: http://acaketorememberva.blogspot.com/2009/11/how-i-price-my-wedding-cakes.html I actually have a blog entry going up (I think next week), that has my serving chart on it. It gives a range of servings, and what I did was just use the average and multiply that by a price per serving to get the cost of the cake. So it's one flat price per cake, with a serving range, and the bride can decide if she wants that range or wants to go up or down. I hope that makes sense, it makes sense to me, but not always when I try to explain it!



If people call me or email and want to know how much a cake will be, I can look at the chart and tell them that it would be this much without having to mess around with design issues, since I've included the cost of most designs in the price per cake. If something is simple that's an easy day for me, but if someone wants something more complicated I'll still be getting a decent profit for it.



It actually works better for me to have people call and talk to me, or send me email photos of cakes they want and ask how much it would be. Once you get a personal contact with people you can start to sell to them, but using a chart on a website doesn't give you the chance to tell them WHY they should pay you your price for a cake. If they see a higher price in print they'll just say "I can't afford that", but if they talk to you they might understand that they're paying for your experience and skill, not just for the cake.

Well duh, that shows how alert I am, haha!

OMG!!! I love this topic!! It seems like so many people don't want to discuss specifics?? We are all responsible for doing our own market research but, this has been so helpful to me!!! Thank you!!! Keep the comments coming!!

BTW-what would you/whomever charge for this: 8" 2 layer, choc/choc, covered in fondant, roses, etc.
http://www.linkedin.com/redirect?url=https%3A%2F%2Fwww%2Efacebook%2Ecom%2Fphoto%2Ephp%3Ffbid%3D356159617739240%26set%3Da%2E315828135105722%2E79985%2E308382942516908%26type%3D1%26ref%3Dnf&urlhash=BqUV&_t=tracking_disc
Thanks!!!

To come up with an accurate price you need to add up your costs for the product (ingredients, labor, and overhead) then add a profit margin (usually in the 15-30% range).

We would probably charge around $100 for that cake, but that doesn't really help you much since our costs will be different from your costs.

Thank you so much!! I just want guidance in this arena...I would never get upset if someone quoted what I felt to be high or low. I did this cake for my mother but, she asked what I would normally charge for this and I told her $75-80 and she about fell over...lol! I just wanted to know if I was on the right track. Thanks so much!!!!!

I'm going to jump in and ask a pricing question to: Im just getting my prices ready to really start advertising and such: When it comes to the margin (correct word?) for the ingredients cost, what is your mark up? I went through 20%,33%,60%,80%and 100%, and decided (possibly not sure really) to go with 33% mark up and then add for the time it would make to make the batter/frosting/fondant/bake it/frost it/fondant it...etc...and went with $20 an hour..so for my 8inch cake covered in fondant (just the basic 4 inch/filled (another ?..do you torte all your cakes, so it has 3 fillings?) covered in fondant I would be charging the customer $30. And my cost would be $15 (for ingredients). does this seem like enough mark up? I don't do wedding cakes (right now) so most of my cakes are for birthday's and do include a lot of fondant decorations (ie figures, lots of designs, etc) so on top of that I was thinking of saying an additional $25 design fee per hour...but it's obvious it will be more than the $30 because there most likely will be more designs...am I rambling now? Anyways, $30 starting cost of a fondant covered 8inch round, too high, too low? Also, should i just bump up the price to something higher to already cover decorations? Thanks guys!

I'm not sure how you're getting a price of $30 if ingredients are $15 and your labor is $20/hour, unless you can put together an 8" cake with fondant in 5 minutes. $20-25/hour is a little high but may be doable, if the order takes 2 hours to complete with $20 in overhead you are looking at a cost of $75-85 and a price in the $90-100 range with a 20% profit margin.

I believe in applying markup to all your costs (ingredients, labor, and overhead). This makes the calculation easier since you can just add up your costs and apply the markup to the total instead of marking up some cost components and not others, plus it builds in extra padding to account for less than perfect efficiency. 20% is a good goal for a profit margin if your market supports it, and home-based businesses with less overhead and no rent may be able to hit 30%. (These numbers are for a comprehensive markup, if you are marking up only ingredients these percentages will be much higher.)

Yeah, $30 for an 8" fondant cake is waaaay too low. Mine is $110 which includes the decorations etc, but if they want it plain white then they still pay $110 unless I'm feeling nice that day. Although most people who want an 8" fondant cake want something fancier.

mystsparkle, it's also important to notice how labor expense is different from profit margin. For example, in jason_kraft's formula, paying yourself $20/hour is your labor expense, but you still want to include a profit margin on top of that. A lot of people treat the hourly wage as their profit, but thinking about it from a business owner's perspective, if you had to pay that hourly wage to an employee, you aren't keeping any profit for your business. I think using a formula where you apply a profit margin to all costs is a much more sound business model.