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Quick pricing help!

post #1 of 12
2/29/12 at 7:50pm
Thread Starter 
Hey everyone!

Okay, so I have a potential cake order coming in. She wants a carrot cake for around 45 people. She said she had imagined that would be a sheet cake, but I told her a 12" square would be plenty (my carrot cake is 2 layers, about 5 inches high, and pretty rich), and honestly I don't do sheet cakes normally and don't really want to start.

The normal cost of ingredients for that cake, that size, are $54 (it's a pretty fancy carrot cake, includes some $$ extras), but she wants all organic, which is not what I normally do. And she wants it Saturday morning, which is going to be a stretch for me this week, as I already have a lot going on.

My overhead is my time, right now, as my kitchen space is "paid" for through a barter.

She wants the decor to reflect the invitations for the party, and while it's not really complicated, it is a bit more complicated than normal.

Any direction on pricing this out? I figure with the decor she wants, and all the normal time I put into this specific cake, I will have close to 3 hours of time on it.

Please help icon_smile.gif Thanks!
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post #2 of 12
2/29/12 at 8:13pm
12 inch square serves at least 60, so it'll be 60 x your per serving price +tax.
Hope this helps, P
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post #3 of 12
2/29/12 at 8:18pm
$54 of ingredients for a 12" square seems extremely high, is that a typo?

Re your kitchen space, just because you are bartering doesn't mean it's free. You need to include the cost of what you are bartering as if you were paying by cash. (Also make sure to correctly record your barter transactions and report them to the IRS on your income taxes.)

For your barter let's say you provide a service where the cost is labor only at an exchange rate of 1 hour of service for 1 hour of kitchen time, and your time for both the barter service and cake decorating is valued at $10/hour. If you spend 4 hours on the cake (including cleanup time) your labor cost and rent would be $80. You should have other overhead costs that need to be broken down on a per-order basis (liability insurance, advertising, accounting, inspection fees, licensing, etc.) so we'll estimate $20 there.

Add the ingredient cost and you're at $154, then add a 20% profit margin and you have a price of $185.
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The Bakery Business Perspective
An experimental blog with new content every Tuesday!

Recent Articles: The Magic Pricing Formula • Copyright Law
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post #4 of 12
2/29/12 at 8:45pm
Thread Starter 
Thank you both. Because a few of my cakes vary greatly in ingredient cost, I don't have a set per serving price. Wish I could, though!

Yes, that figure was correct. I double checked my ingredients list, though, and found I had the walnuts priced quite a bit too high, so the cost is closer to $49. It is still my most expensive cake, though. The majority of the cost comes from cream cheese ($9), walnuts ($icon_cool.gif, maple syrup ($6) and butter ($5). And yes, that is buying in bulk. And she wants organic, which means it will be even more expensive.

I would be interested to hear the costs of other people's cakes, if anyone wishes to share! I know we're all over the country (and world!) so it might be irrelevant in a lot of ways, but could be interesting, nonetheless.

You're right, I do need to factor in my kitchen time, even if it is a barter, which is mostly why I was asking icon_smile.gif I just didn't know how to put a cost on that...

Thanks! If anyone else wants to chime in, feel free!
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post #5 of 12
2/29/12 at 8:48pm
Thread Starter 
Haha I see the internet has gotten smart, and replace my walnut price with a very cool smiley face. It should read 8 dollars. Ha!
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post #6 of 12
2/29/12 at 10:38pm
Quote:
Originally Posted by rubiarubia

I would be interested to hear the costs of other people's cakes, if anyone wishes to share! I know we're all over the country (and world!) so it might be irrelevant in a lot of ways, but could be interesting, nonetheless.



This isn't completely about cake ingredient costs, but there's a lot of valuable "insider info" if you will about other business' pricing info here: http://cakecentral.com/cake-decorating-ftopict-739725.html
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 #7 of 12
2/29/12 at 10:41pm
Quote:
Originally Posted by rubiarubia



I would be interested to hear the costs of other people's cakes,



Also, my carrot cake costs $12 in ingredients for a 8" circle. Not wholesale ingredient prices.
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 #8 of 12
2/29/12 at 10:48pm
Thread Starter 
Thanks for the input! I have been following that thread, it's great!

My 9" 2-layer round costs $15 to make, it's just that a 12" sq is so much bigger, I guess... Thanks for sharing, though icon_smile.gif
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post #9 of 12
3/1/12 at 7:44am
Quote:
Originally Posted by rubiarubia

Thank you both. Because a few of my cakes vary greatly in ingredient cost, I don't have a set per serving price. Wish I could, though!



What can't you?

1. You can do two price sets, Premium cakes vs basic cakes.

2. You pick the middle to high numbers and use those. When you make a cheaper cake, you make more money, and when you make one fo the expensive cakse you may make slightly less profit, but it will even out over time.

I fee the same about decorations. Really easy cakes save you time, so some of your labor costs becomes profit. Ones that are a little more detailed, may take a little more time, which will take away from profit. Unless you are doing really detailed cakes all the time (then you need to up your labor costs) you will average out in the end.
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post #10 of 12
3/25/12 at 8:30pm
Thread Starter 
Just wanted to follow up on what happened. I charged her $170 for an all-organic cake, and here's a photo of the cake on display. It all went over very well!
LL
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post #11 of 12
3/26/12 at 2:02am
rubiarubia, my ingredient costs are up there too, even on 9" cakes. One cake has almost $60.00 in ingredients. Tiramisu is very pricey. I found that mascarpone cheese not purchased in gourmet markets at about $14.00/lb are noticeably inferior. Mine takes 1.5 lbs.

I look for the best ingredients, often subbing a pricier ingredient if I find it tastes better and I just increase the price of the cake.

Like you, I have a different price for almost every cake. The variables are not close. I have no problem having a different pricing structure from other bakeries, even on a bid.

You have a lot of decorating talent. That cake is beautiful and elegant. The style fits your baking style.

For the organic part of it, that market segment is not price sensitive. The better ingredients are what they want. These clients spend plenty feeding their families quality food and that cake isn't going to have them bat an eye. My point is that offering organic may be a great niche for you along with your regular gourmet cakes. When I am asked about organic, I just give the alternative price and they don't say no if that is what they want. I make sure I'm up on pricing and availability of products at the organic markets.
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post #12 of 12
3/26/12 at 1:41pm
rubiarubia,
That cake is amazing!!! What an incredible decorator you are and I suspect it tasted equally impressive!!
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