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Cupcake Costs

post #1 of 17
Thread Starter 

After reading EvArt's post on the 'Frustrated' thread I wanted to help her out and maybe this will help other people too.

 

So I bake completely from scratch, the reason I tell you this is: my cake batter weighs more then a cake mix and it doesn't rise quite as high when baked (depending upon the recipe). So that means people who bake using mixes will get MORE Yield then scratch bakers.

 

I know it's hard for our society because we are raised using cups verses weights, but the only true way to bake and compare apples to apples is to use weight only. So for this thread to be helpful, you must determine the weight of your batch, then divide it by the number of weighed scoops of cupcake batter/yield per recipe.

 

So here's how to cost your cupcakes and by looking at it you should be able to take theses numbers and compare them to what your slice of cake weighs. So then you can compare your pricing between a cake and a cupcake....and help you determine what you should be charging for either.

 

(I'm going to post this, then add more content so I don't loose anything pulling out files)

post #2 of 17
Thread Starter 

My Vanilla Cake Recipe costs $1.49 per recipe and the yield in cupcakes=

 

Yield is 17.33 mini cupcakes per batch. $1.49 divided by 17.33= $0.859 which I round up to $0.09 per mini cc

 

Yield is 10 standard cupcakes per batch. $1.49 divided by 10= $0.149 which I round up to $0.15 per

standard cc

 

Yield is 9 larger tulip cakes per batch. $1.49 divided by 9= $16.55, which I round up to $0.17 per large cc

 

 

 

My Frosting Recipe costs $14.98 per recipe and the yield is 6 lbs or 96 oz.= $0.156 rounded to $0.16 per oz.

 

Mini cupcakes takes 1 oz. frosting= $.016 + $0.09 cake= $0.25 each, my cost, plus liner and boxing

 

Standard cc takes 2.25 oz. per cc= $0.36 + $0.15 cake= $0.51 each, my cost, plus liner and boxing

 

Lrg. tulip cc takes 3.6 oz per cc= $0.58 + $0.17 cake= $.75 each, my cost, plus liner and boxing

 

 

My retail pricing is:

 

$1. per mini. So I'm making 4x my cost in ingredients

$2.5 per standard. So I'm making almost 5x my ingredients cost

$3.79 large Tulip. So I'm making 5x my ingredient costs

 

My labor to bake them and frost them is easier then baking a regular cake. I'm certain I save money there too. (I definitely don't spend any real time consulting with the client. I save 2 hours of my time.)

post #3 of 17
Thread Starter 

Now when I make a decorated cake it's not as clear cut, but it looks sort of like this:

 

1, 9" cake layer is $1.49, I make my cakes 3 layers tall= $4.47 cake cost

1, 9" frosting is 5 cups (aprox,) so each cup weighs 12 oz. (depending upon frosting type)= $9.60 worth of butter cream

 

So a non-decorated 9" vanilla cake costs me= $14.07 ingredients only. ($14.07 x4= $56.28 is what I should yield on a my ingredient costs alone to compare it to a cupcake, but that's getting ahead of things. )

 

Now I have to add all the subjective stuff, like what I spend in labor on the cake.

 

  • I know I waste at least 2 hours (unpaid) just figuring out in emails what the client wants.
  • It takes longer for a 9" cake to bake then a 24 pan of cupcakes, so my over head is more then a cupcake.
  • I have to wait longer for it to cool before I can frost it and get it out my door.
  • The cardboard cake circles cost more then cupcake liners.
  • Box cost a couple pennys less because it's a little smaller then cupcake box.
  • The whole decorating thing is at the least 3 hours of my time
  • I won't use anything but butter cream frosting to decorate the cake, so it's equal to the cupcakes
  • I'll use at least 4 cups more of frosting decorating.............BECAUSE when I mix each color I have waste on every color. I might only use 2 cups of frosting but I've spent 4 cups out of my pocket
  • I'll need one disposable bag per color, that's 4 bags at $0.50 each

 

Now it's up to you to assign what you charge for each of the above "service" you provide making that cake.

 

My pricing looks like this:

 

  • I know I waste at least 2 hours (unpaid) just figuring out in emails what the client wants. (not yet paid)
  • It takes longer for a 9" cake to bake then a 24 pan of cupcakes, so my over head is more then a cupcake. ($0.10)
  • I have to wait longer for it to cool before I can frost it and get it out my door.
  • The cardboard cake circles cost more then cupcake liners. ($0.80)
  • Box cost a couple pennys less because it's a little smaller then cupcake box. (-&0.50)
  • The whole decorating thing is at the least 3 hours of my time. (not yet paid)
  • I won't use anything but butter cream frosting to decorate the cake, so it's equal to the cupcakes
  • I'll use at least 4 cups more of frosting decorating.............BECAUSE when I mix each color I have waste on every color. I might only use 2 cups of frosting but I've spent 4 cups out of my pocket ($9.60)
  • I'll need one disposable bag per color, that's 4 bags at $0.50 each. ($2.00)
  • Plus I know I'm missing other small expenses like food colors)

 

 

Extras + the base cakes ingredient costs, $11.90 + 14.07= $26.60 I've got into this 9" round cake and I haven't paid myself, overhead or profits.

 

(hold on.....there's still more factors)

 


Edited by Stitches - 4/26/13 at 1:12pm
post #4 of 17
Thread Starter 

$26.60 in costs for this 9" cake not including my time, overhead or profits

 

$26.60 x4 (like the cupcake)= $106.40 I should get for this cake if it's compared to the cupcakes with-out my labor, etc..

 

I know from experience that I'll put at least 6 hours of my time, from start to finish making that 9" cake. I also know from experience the most I can get is $85.00 in my area for a 9" round. I'll make $58.60 for my 6 hours of work $85.00 - $ 26.60 in costs.

 

Now with the cupcakes I make over 200 cupcakes in 6 hours (easy and multiple flavors too). 200 cupcakes cost me=$102.00. in ingredients I sell them for $500.00 and I profit $398.00 for 6 hours work.

 

Which would you rather do?

 

(.........so I know you'll will find wholes in my math.....and I'm missing stuff....but this does basicly illustrate the differences)


Edited by Stitches - 4/26/13 at 1:39pm
post #5 of 17
Quote:
Originally Posted by Stitches View Post

$26.60 x4 (like the cupcake)= $106.40 For all the same amount of ingredients/some costs, BUT I'VE YET TO PAY MYSELF, OR MY OVERHEAD, OR MAKE A PROFIT as all business need to do!

Instead of multiplying your ingredient cost by a random constant and figuring out how to fit your labor and overhead into that price, you need to build your price starting with 1 x ingredients and adding labor and overhead.

Also, do you just toss the unused colored frosting after you're finished decorating with it? BC keeps for a long time in the fridge, we would always have small containers of frosting in just about every color available.
post #6 of 17
Thread Starter 

Hi Jason, I'm know I'm screwing up as I go. Please feel free to adjust my math, because I know you'll do a better job.........and help illustrate the two examples with me.

 

I try to keep left-over colors but it's pretty darn rare based on the work I do, that I wind up getting to use them. Usually now that I think of it, my hubby eats it on my scraps.

post #7 of 17
It's difficult to quantify cost components without an estimate of how long it takes you to complete an order of cupcakes (work time only, not baking time) vs. a basic cake vs. a cake with a premium design, as well as an estimate of per-order overhead. For the sake of simplicity I tend to cost out cupcakes by the dozen for regular cupcakes or per 2 dozen for minis.

You also need to look into the demand for cupcakes from a custom-order shop. In my experience most people who order from a custom shop will want a cake...if they want cupcakes at all, it would be basic ones to supplement a cake order or premium cupcakes with a custom design. For cupcakes there usually isn't that much of a differential between what a custom order business will offer and what you can find at the cupcake storefronts down the street, again unless you have a premium custom design (which will present the same issues as a custom decorated cake).
post #8 of 17
Thread Starter 
Quote:
Originally Posted by jason_kraft View Post

It's difficult to quantify cost components without an estimate of how long it takes you to complete an order of cupcakes (work time only, not baking time) vs. a basic cake vs. a cake with a premium design, as well as an estimate of per-order overhead. For the sake of simplicity I tend to cost out cupcakes by the dozen for regular cupcakes or per 2 dozen for minis.

You also need to look into the demand for cupcakes from a custom-order shop. In my experience most people who order from a custom shop will want a cake...if they want cupcakes at all, it would be basic ones to supplement a cake order or premium cupcakes with a custom design. For cupcakes there usually isn't that much of a differential between what a custom order business will offer and what you can find at the cupcake storefronts down the street, again unless you have a premium custom design (which will present the same issues as a custom decorated cake).

It takes me 6 hours start to finish for 1, 9" butter cream decorated cake

                   6 hours start to finish for 200 cupcakes frosted

 

skip the premium decorations for now

 

My demand for cupcakes is higher then decorated cakes, because wholesale accounts want them, my corporates do (who I sell at wholesale prices because of the volume they buy) and cheap people who won't buy custom cakes.

 

Why do we need to look at demand at this point? I'm looking at time and energy and what that profits me as a business person. It's funny because writing this down is making a better case for me to get out of decorated cakes all together and focus on other things.......they just zap my time and profits.

 

p.s. mini's are in highest demand wholesale

post #9 of 17

Stiches~~Thanks for putting all the info together.  Whether or not anyone else can apply those figures to their own situation, it gives a very interesting insight that I really enjoyed reading.  Thanks again!

post #10 of 17
Quote:
Originally Posted by Stitches View Post

It takes me 6 hours start to finish for 1, 9" butter cream decorated cake
                   6 hours start to finish for 200 cupcakes frosted

With those numbers you are right that a basic BC cake will never be as profitable as cupcakes, but the labor estimate for the cake seems to be on the high side. For a basic 8" BC cake our labor (hands-on time, not baking time) is about 40 minutes all-inclusive.
Quote:
Why do we need to look at demand at this point? I'm looking at time and energy and what that profits me as a business person.

Demand (and supply) is directly related to market value, which affects your profit margin. If demand for cupcakes is moderate and supply is high, you won't be able to charge much and your volume will be lower unless you can differentiate your products. If demand for a product is expected to drop in the future, your margin and volume for that product will continue to drop, so you may be better off investing in other areas.
post #11 of 17
Thread Starter 
Quote:
Originally Posted by jason_kraft View Post


With those numbers you are right that a basic BC cake will never be as profitable as cupcakes, but the labor estimate for the cake seems to be on the high side. For a basic 8" BC cake our labor (hands-on time, not baking time) is about 40 minutes all-inclusive.
Demand (and supply) is directly related to market value, which affects your profit margin. If demand for cupcakes is moderate and supply is high, you won't be able to charge much and your volume will be lower unless you can differentiate your products. If demand for a product is expected to drop in the future, your margin and volume for that product will continue to drop, so you may be better off investing in other areas.

No way in H_ll you can: consult customer, get the ingredients, mix, put in pans, mix frosting, color frosting, put frost in bags, base frost cake, decorate cake, box cake, write up bill in 40 minutes!

 

There isn't a person in the world that can do that!

 

You can lower your costs by doing everything in volume, but you'd need to be doing what a full scale bakery does volume wise with a full staff....multiple people making the components to get your time down like that.

post #12 of 17
Quote:
Originally Posted by Stitches View Post

No way in H_ll you can: consult customer, get the ingredients, mix, put in pans, mix frosting, color frosting, put frost in bags, base frost cake, decorate cake, box cake, write up bill in 40 minutes!

For basic cakes, customer consult time (including replying to the order form from the web site, entering info into QuickBooks, and generating an invoice) takes about 5 minutes.

Mise en place at the beginning of the shift for all orders being baked that day saves a lot of time in the process. Mixing is mostly hands-off after the mixer is loaded. Frosting is made in bulk, and colored as needed (as I mentioned we typically have most colors already made). The time for making the bulk frosting is allocated out to each order, essentially as overhead.

Note that this is for a very basic BC cake (max one accent color for a border and writing), custom decoration adds to the time but increases the price to match.
Quote:
You can lower your costs by doing everything in volume, but you'd need to be doing what a full scale bakery does volume wise with a full staff....multiple people making the components to get your time down like that.

Our process runs just fine with one baker, most weeks volume was around 10-12 cakes.
post #13 of 17
Thread Starter 

I'm hoping other people will jump in here.

 

Is ANYONE here making a custom decorated 9" cake from start to finish including all the things I've mentioned above (from customer consult to handing the completed cake to the customer) with only 40 minutes worth of labor? I'm talking "average" not basic decorated butter cream cake.....just so we are talking apples to apples.

 

Mise en Place takes time (the prepped ingredients don't show up there on their own), that time is calculated into the costs of making the cake.

 

Earlier I picked 4 disposable pastry bags figuring the average decorated cake used only 4 colors. It's VERY unusual for a decorated b-day or novelty cake to have less then 4 colors (putting white in one of your bags to pipe your base on the cake).

 

Put that to the group here. How many colors are you all using in a 100% buttercream decorated cake?

post #14 of 17
Quote:
Originally Posted by Stitches View Post

Is ANYONE here making a custom decorated 9" cake from start to finish including all the things I've mentioned above (from customer consult to handing the completed cake to the customer) with only 40 minutes worth of labor? I'm talking "average" not basic decorated butter cream cake.....just so we are talking apples to apples.

To clarify, any BC design beyond writing and flowers/balloons (including more than 1 additional color) is an extra charge, usually in the $20-40 range depending on complexity. This translates into an additional 30-60 minutes of labor.
Quote:
Mise en Place takes time (the prepped ingredients don't show up there on their own), that time is calculated into the costs of making the cake.

Agreed, and when you mise once for all the cakes you are making that day, the amount of time on a per-cake basis is considerably smaller.
Quote:
Put that to the group here. How many colors are you all using in a 100% buttercream decorated cake?

It depends on the design. Most custom designs use 3-4 different colors.
post #15 of 17
I am not a pro like you guys. I am a baker who has a business from home. That being said, when I break it down, I spend 4 hours - hands on - on a cake from start to finish. That's a basic crumb coat & finish coat with very minimal decorations in buttercream. Typically only 1 - 2 colors.
Not really sure if that helps anyone.
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