I've been in business with my friend for about a year now we started out just doing cake pops and I make cakes for friends and family but lately I have been getting a lot of cake requests so have been doing more and more cakes for clients.  I always have trouble pricing my general rule had been $3 a serving for fondant and $2 a serving for buttercream and adding on for additional large or detailed fondant or gumpaste work.  I just got this email asking me to make a baby shower cake that is butter cream with just blue fondant buttons decorating it.  They want it to serve 40 so with my pricing guidelins it would be $80 am I charging to much not enough??  Heres the pic

Any help greatly appreciated this is the hardest part of the business or me I can decorate and bake all day but I hate quoting prices!  I am in Northern California by the way if that makes any difference.

AHow much would the ingredients cost for this cake, and how long would it take to make? What is your per-order overhead cost (license fees, insurance, etc.)?

A$35 in ingriedients, 2-3 hours including baking, icing and molding all the buttons out of fondant. Then cake board and box another $5 I work outing my home so minimal overhead licensing ect $200 a year

AIf you don't already have business liability insurance I strongly recommend purchasing coverage ASAP. Along with other items you didn't mention (utilities, accounting) this will probably bring your annual overhead up to about $1000, so if (for example) you have one order per week that's $20 in overhead per order. Add $40 in ingredients and supplies and you are at $60.

A price of $80 leaves only $20 for labor and profit. With 3 hours of labor (does that include prep and cleanup?) and a low 15% markup for profit you are paying yourself an hourly wage of $3.33/hour.

Your biggest issue is probably ingredient cost, $35 seems way too high for that cake. If you break out what makes up that $35 figure we may be able to figure out ways to cut that down.

AA simple "make sure to only count the ingredients you used" probably would have sufficed.

I would reconsider my pricing per slice. I work out of my home in northern California, too, and have raised my prices to meet the average prices for the area. Not only will I make a bit more money, I don't want to undercut the other businesses in the area. It's just plain unprofessional, and devalues all the work we do. I know I make a great product, and my prices should reflect that, as well.

I agree with the undercutting and don't want to do that which is why I was asking.  Local business in my area charge $3 a serving for butter cream but I figured I don't have as much overhead as they do and I was posting on my phone sorry guesstimating on cost.  My cost now that I am home with pencil and paper is more like $18 including cream, and all that good stuff, fondant cake board and boxes.  Sorry didn't mean to start an argument I genuinely wanted to know what you would charge.  What is the average cost per serving for a butter cream cake with simple decoration.  I'm used to people asking me for princess castles with fondant figurines and all so it just seemed hard for me to put an $80 price tag on this as simple as it is but maybe I am wrong?  I only do about 4-6 cakes a month but have a ton of cake pop orders so cakes was kind of an extra hadn't really figured in all overhead for the cake part as I already had a pricing system down with the cake pop business.  I do have insurance and work under the cottage foods law now prior I used a commercial kitchen.

Thanks

ASince I don't know exactly where you live, who - if any - competitors there are, it's tough to really say what you should charge. For my town, some people scoff at $3/serving, but it's really what is fair. Even some of the 'real' bakeries have increased minimum prices to $3.50 - 4. I guess it all comes down to what you are comfortable with. Of course, you have to make some money too! :)

ASince I don't know exactly where you live, who - if any - competitors there are, it's tough to really say what you should charge. For my town, some people scoff at $3/serving, but it's really what is fair. Even some of the 'real' bakeries have increased minimum prices to $3.50 - 4. I guess it all comes down to what you are comfortable with. Of course, you have to make some money too! :)

AI live in Northern California about 1 hour north of Sacramento. I live in a fairly rural area no bakery in town they would have to go to the next town over which is about 30 minutes. It seems I get requests all the time and about 40% say nevermind once I give them the price they want something for nothing. I have a lot of repeat customers and have had rave reviews from them on my site and facebook page but it seems like a lot of people don't realize what a good cake costs I would be working for nothing if I went with the prices they are wanting

For a 12" cake assuming it has buttercream filling as well I would be $115.  They didn't use a mold on that picture for the buttons, it looks like they just used the end of a decorating tip to cut the circles then a smaller to make the inside marks and a toothpick to make the thread holes.  If the client was happy with the way they look it would cut way down on the time to do the embellishments.

A

Sorry Chick :-) we get all sorts of people on here, I am sure you have seen them, that ask how to price a cake, then ask you how to bake it, too! I wasn't sure if you were one, or not, but I am glad you have an understanding of how to get to the actual cost!! $18 seems much more like it, lol!

AChick, I think we are in the same town. People can be cheap, but look around. Prices are going up everywhere, & if customers don't want to pay for a great cake, they can go get a cheap cake from Raley's that won't taste or look as good. We have a smaller customer pool here, but there are people who will pay for quality, we just have to find them.

AI charge $3.50/serving for buttercream cakes w/fondant accents as long as it's a simple design.

A$18 is a more reasonable ingredient cost, and given that OP has additional orders over which to spread fixed overhead her resulting hourly wage should be more in the ballpark with an $80 price.

ALooking at the numbers, $18 ingredients/supplies + $10 overhead leaves $52 for labor and profit. With a wage of $12/hour the cost is $64, and a 25% markup hits the $80 price point. For rural CA those numbers look pretty good.

APlease try to stick to the topic, if you have something personal to say it is probably better off sent via PM (as I probably should have done in my original reply to you). Thanks!

AI don't mean to get off topic, but I have seen Jason push people's buttons and then get them banned for responding. Be careful what you say. :-)

I see you are in Boise, my aunt lives in Mountain Home, does all her shopping in Boise.

Please refrain from personal attacks on other members in the forums.

This type of behaviour is not permitted under the Cake Central forum guidelines, and unfortunately will result in threads needing to be edited, as I have done above, in order to remove all offending comments.

If you have a problem with a member on CC, we respectfully ask that you take it off site, or at least use the PM function.

Thank you.

Thank you everyone for your help.  I quoted her a price of $80 and she said thank you for getting right back to me but I am going to have to pass for now!  Ugh they all want to get something for nothing guess they will be hitting up costco:)  I appreciate all of the helpful responses its nice to know other people realize cakes actually have a value and a lot of work go into them.

Thanks