How Much to Charge for Tiered Cakes?

I charge $3.50 for buttercream and $4.50 for fondant for tiered cakes. This does not mean that's how much you should charge, though. Click the link in my signature for an article on this subject that a lot of people find helpful.

There are many, many, many posts about pricing. I suggest doing a quick search in the forums.

Basically, you must calculate what you have in the cake (and this is not just flour, sugar, eggs...it is also electricity, water, paper towels, soap, insurance, licensing fee...) and your hourly rate x hours you worked on the cake.

For the sake of easy math I am using round numbers for a simple 8" round cake:
cost of cake including absolutely everything: $30
hourly rate: $15 hours invested in the cake: 4 total of $60 for labor

Total for cake: $90

According to wilton an 8" round will serve 24 people. $90/24 servings is $3.75/serving.

Now, you will plug your own numbers in to get the real total for the cake.

OP:
When people call you can either say the cake is $90 (or whatever you end up calculating) or $3.75/serving and the cake in the picture feeds 24. This will depend on the client calling you. I mostly get calls for weddings and people are use to small cake pieces at weddings. So when I say the smallest 3 tier cake I offer (10", 8" and 6" round) serves 75 they are fine with that. But when I get a call for a birthday cake and I tell them an 8" round serves 24 they think I am insane because a birthday cake is usually served by the mom or friend who has no idea a piece of cake is 1" x 2" x 4". Keep that in mind when talking with customers.

That's a good strategy, as long as you set a realistic hourly wage, both in terms of fair compensation for yourself and staying near market price.

Also don't forget to add a profit margin, depending on your market you should be charging 10-30% above your cost.

When I first calculated my prices I figured up all my expenses (thank you cake boss software!) for each recipe. Then I calculated all other expenses. I wanted to know the cost per serving for these expenses as well since I charge per serving.

Insurance is a yearly fee, so I divided it by 12 (12 months in a year). Paper towels I calculated how many rolls I went through in a month, same with bottles of soap...and other such items. I took the total calculated and divided that by the average number of servings I whip up for people each month. By adding the price per serving for the recipe and other expenses together I got the true cost of business. Now, I know that the number of servings produced will change some of the numbers. For example, insurance. If I have a month that I make 1000 servings the cost for insurance is $0.03/serving. If I make 1 serving that month the cost for insurance is $30/serving. This is why I did an average # of servings. Now when I have a slow month I know I have the money for the insurance in the account because I more than made up for it during a busy month.

I also checked the prices with local bakeries (both home bakeries and store bakeries). As long as I am producing the same quality as store bakeries I am not going to undercharge which hurts everyone.

Now, as for the per hour charge. I knew what I wanted to make per hour, I also knew that I was the slowest decorator ever. It wasn't fair to charge someone $20/hour for 10 hours when a few months later it was only taking me 6 hours to complete the same task. So I set my prices more on cost per servings for my cakes and what other bakeries in my area that offered the same thing I did charged. In the beginning I made less per hour because I was slow. Every couple months I would time myself doing specific things, like icing an 8" round tier or making a specific sugar flower or figurine to see if I was getting faster (which I was). This meant that I was also making more per hour because I was spending less hours on a cake.

I have raised my prices as ingredient cost has increased. I haven't raised my prices because of skill level because I didn't start selling cakes until I was comfortable with what I could do.

One last thing... For my business I decided to have 1 price per serving for buttercream cakes and 1 price per serving for fondant covered cakes. Doesn't matter the cake flavor or filling picked - same price. Now, sugar work or a very detailed designs will incur a design fee but that is because of the time involved.
Here's the thing, even though I have my per serving prices on my website I get people calling me all the time with "I read on your website you charge $3/serving, how much for a cake to feed 100 people?". So I figured asking people to know how to add one price for certain flavors and another for others to different prices for fillings was going to be a nightmere. Plus, there is less for me to keep up with and remember having 1 price for buttercream and 1 price for fondant. For some recipes I make less and others more but my price per serving covers my most expensive cake flavor paired with my most expensive filling - so I am okay with it.

It will be up to you to decide how you want to go about this.

Jason,
Good point about the profit margin.

The profit from the cake is not your income. Here is an example (I am a number person so I like to see numbers when people explain something):

Expense for cost of cake for everything: $30
Hourly rate of $15 for 4 hours: $60
Total: $90
20% profit margin: $18
Total price paid by customer: $108

The profit margin is left in the business account so it continues to grow to handle growing expenses/replacement of items...

I am fortunate enough to not need the money I bring in doing cakes (it is a side business). So, the only money taken out of the business account is to cover than month's expenses. As a result, because I don't use the money for anything, I don't worry about a profit margin. Technically anything after expenses is a profit margin because I don't pull a salary from the account.

One last thought, don't forget about taxes. I don't know how taxes are handled in your area, but here we have to pay income taxes. At the end of the year it tends to be 1/3 taxes, 1/3 expenses and 1/3 profit. Out of the profit you would pay yourself your hourly or set salary amount.

Word of mouth is an excellent form of advertising - and it is free! Here in the states we have tons of websites directed towards parties, weddings and brides. Quite a few will allow a vendor to have a simple free listing. I suggest you sign up for every single one of these (if you have them). I personally pay for a listing on the website The Knot because brides in my area use it heavily. For my business this has been a sound investment. I don't have to sign a contract with them, I pay month to month, which is an I option I really like. That way if I am no longer getting brides from them I can quite whenever I want.

Buy business cards and pass them out all the time. When people find out I decorate cakes they always ask for a card and then a couple extra because a friend is getting married or their cousin is graduating or somthing.

I participate in a large bridal show in my area that brings in mostly quality brides (there will always be a few crazies no matter what). I have had really good success off that.

A website is a must. Now a days people look everything up online. If they can't find you, they can't order from you. Make sure your website looks professional and is kept up to date with pricing and pictures. I have my starting prices on my website. It has worked well for me. When I was planning my wedding I didn't consider any vendor that didn't have prices on their website. I didn't want to waste my time or their time if they weren't in my budget - no price meant no call from me. It will also help reduce the number of calls from people that can't afford you.

Do you have any venues close to you that you could meet with the event planner to discuss suppling the cakes for their events? Or maybe a party center? Near me is this place called Pump It Up. It has all these inflatable bounce houses, slides...for kids. It is open for private parties only. One of the options for parents is to buy a package that includes a cake. Simple design, quick to decorate, but exposure to parents several times a week.

I am having exactly the same problem as you! I'm based in the UK, and I do feel like people want something for nothing. I'm already charging dirt cheap prices (£30 for a 7" round, fondant-covered cake), but because I'm a home baker people think they can take me for a ride. A little while back I made this 3D cake https://www.facebook.com/photo.php?fbid=251274371648461&set=a.195301663912399.39330.195293110579921&type=3&theater for my boss, and only today I had someone asking if I could to a Tinkerbell one... for £20!

To work out my prices I took the recipe I use for a 7" round, then the weight of fondant I'd need to cover it, and the amount of buttercream to cover/fill, worked out the cost for the whole cake, then added on the cost of the oven, water, washing up liquid, etc (minimal costs, but costs all the same), to get a base price for a fondant-covered cake. Then you can divide that by the number of servings to work out the costs of a larger cake and just add the cost of the box/board etc to that for an overall cost. I don't take much for my labour at the moment because I'd rather build up the customer base/word of mouth and get the experience than make a hefty profit on every cake, but I do make it clear to every customer that they're getting a deal - a good way I've found of explaining it is comparing my service to them being a model for a hairdresser. Most of them are happy with that and understand that my prices will go up as I become more confident in my abilities.

Good luck! If you want, PM me or drop me an email (myxstorie at gmail dot com), it would be lovely to have a fellow UK baker to chat with from time to time

$1000?! Wow. I suppose having SUCH a popular cake show he physically couldn't do every order that comes his way, so charging a minimum of $1000 weeds out the ones they WILL have the time to do.

Logically I KNOW my time is worth a hell of a lot more than I'm charging for it, but I'm quite happy to just make double by costs at the moment to be given the opportunity to make different kinds of cake and get people behind me. I have had a couple of people come to me with OFFERS of paying far more than I'd have charged to begin with, which is always lovely to see, but most of my advertising is done through Facebook at the moment - so, people who want something for nothing. There's also a lot of competition, with people charging the bare minimum - I refuse to do that, but I sell myself to them based on being completely legal and approved by the local health authority, and me being a bit of a perfectionist XD; Most people have been happy to pay a little more as soon as I mention being approved by the health inspector! I would like to be able to charge properly for my time in the future though.

Good luck!