How to price equipment into your cake pricing.

Businesses will usually handle this by dividing the cost of the equipment over the life of the equipment. So if you buy $1000 worth of cake supplies (not consumables) that you expect to last 5 years, your cost for the supplies is essentially $200/year. If you average one order per week, the cost for each order should include $4 to cover supplies.

Now if you buy equipment that will only be useful for one cake, you should be charging the full price of the equipment plus markup to that customer. If you're not sure how much use you will get out of an item, just use your best judgment and err on the side of getting less use rather than more. For example, if you think you will be able to use an item on one cake a year, you can charge 20% of the cost of the item (plus markup) since you will probably recoup the rest of the cost down the road. But for simplicity's sake unless the equipment is a true one-off it might be easier to just include it in the supply overhead allocated to all orders.

The net profit margin will vary depending on your costs and market prices for your targeted customer segment, but they are usually between 10-30%.

Generally anything that's not consumable and not directly related to a specific order can be allocated this way. Ingredients would be costed separately based on the recipe, but the overall cost of storing ingredients would be allocated out, as would things like professional fees, insurance, utility costs, web site costs, and so on.

When charging back the cost of one-time use equipment, by markup I was referring to making sure your standard profit margin is applied to the chargeback. For your $10 broach example (assuming a 20% profit margin), if I worked out the cost of the broach separately the price would be $12. If you include that $10 in the cost of the cake before you apply the markup you would reach the same result.

Note that the cost of the broach would typically not be separated out on the invoice even if you separated the cost for your internal calculations.

The same would apply to something like an oddly-shaped cake pan...even if you charge the customer for the full cost of the item plus markup you are under no obligation to give them the item. In the case of the pan they would have already benefited from a lower labor charge for the cake.

Hope this helps! And BTW the only dumb question is one that hasn't been asked.

i don't include the cost of stencils or other speciality equipment that I will keep dollar per dollar into the cost of the cake. I will reuse a stencil again on another cake, and charging $60 extra on a $400 cake just doesn't seem competitive. I was in the stencil situation for a damask cake a few months back, and I basically absorbed the cost of the requested stencil set as business overhead and adjusted my charge for the per price piece of cake. This is why I have 'fondant 'starts at' $X.XX a slice' in my information. I was able to take what i wanted to get from the supplies (i thought 30% total cost would be equitable) and increased the cost per slice to get that covered. When a customer is asking for a speciality technique, and if they understand it requires extra molds or tools or time, you can upcharge from your 'starting at' price for the design and it is accepted.