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How to price cakes? - Page 4  

post #46 of 104

OP~~What may have been deemed a fairly civil and straightforward question, "how do I price my cakes?" is actually a huge red flag to business persons who must obtain all or a significant portion of their income from "cakes".  Perhaps a good way to begin to answer this question is to ask yourself one or two questions: 

 

"How much would I need to charge to make the same take home-pay provided by a PART-TIME job (20 hours a week, for example)  at McDonalds?"  How much would I need to charge per cake, and how many cakes would I need to sell, to make the same net dollars generated by a part-time job in food service with no benefits such as insurance, vacation pay, sick leave, etc? 

 

"How much would I need to charge to support my family if custom cakes were the only FULL TIME job and no one else in the household worked at a regular job?"  (There is an old joke with the punchline, "Don't quit your day job!")  How much would you need to charge to provide health insurance, car payments, utilities, mortgage, savings, vacation, emergencies, etc.

 

 

 

* * * * * *

 

Here is a superb response, dated 4/3/12, post 3 of 19 from a business person, leah_s:

 

(original thread link:)  http://cakecentral.com/t/742057/new-cake-business-at-home-help

 

"Well, the first thing you need to do is check your zoning/deed restrictions/HOA covenants, etc. to make sure that you can have a biz in your home.

Second you need to contact your Dept of Health/Dept of Ag to get certified/licensed if you are in a state that permits home kitchens. You might have a Cottage Foods Law in your state - I just don't know.

Then you should get liability insurance.

Then you might want to think about setting up banking accounts, booking procedures and of course, look in incorporating. You might be able to put that off, but it's frequently fairly easy to DIY. The Secretary of State in my state actually provides forms and templates.

Next, you'll likely need to register with the state sales tax/revenue commission and ditto any local taxing authorities.

Oh, and check into getting a federal EIN. You won't need it right away,. but it's easy to do online, and you'll need it at some point.

Then of course there is the baking."

 

 

* * * * * *

Compliments to everyone for the civility maintained!!!   Happy Holidays!

post #47 of 104
While you won't have rent/lease and an entirely separate utility bill, you also won't have the purchasing power of a storefront bakery. While those are not entirely equal, it's inaccurate to say home bakers are able to charge so much less.

I recommend that you start a list. In your mind, bake a cake. Add to your list every single item you touch. This includes: paper towels, hand towels, soap, laundry soap (for hand towels & aprons), parchment paper, pencils. This will be a very long list.

When I started, I was very serious about investigating the profitability. I even looked up how much energy my oven would use to bake a cake & the cost of that energy.

A cake is so much more than the ingredients. Your costs will be more as well.

Now here's the really scary part....all those predictions are only an insight. I keep a ledger which includes every dime I spend and every some I earn. I charge $4.50 per serving and still sometimes don't make enough profit on a cake. When I look back at the profits of this year and compare them to the hours I worked .....I have to remind myself that this is only the second year on my own.

I've seen some others mention they can't affine thier own cakes. I'll take that one step farther. Many people sell or work for companies which produce products they can't themselves purchase. My husband sells roofs. No way we could afford one. A friend of mine installs pools. Doesn't/can't afford one.

Best advice: no your REAL COST and know your REAL CLIENT.

www.VeryDeliciousDesserts.com

https://www.facebook.com/pages/Delicious-Desserts/207874222593145

 

It's never "just cake!"

 

You may get a cake for $way to little but you won't get this cake!

Animal
(4 photos)
 

www.VeryDeliciousDesserts.com

https://www.facebook.com/pages/Delicious-Desserts/207874222593145

 

It's never "just cake!"

 

You may get a cake for $way to little but you won't get this cake!

Animal
(4 photos)
 
post #48 of 104

This should be a sticky! So much good information, and all civil.

Beginners, be sure to parrot advice and get your post count up as fast as you can. After all, it's not what you know, it's what people THINK you know.
Beginners, be sure to parrot advice and get your post count up as fast as you can. After all, it's not what you know, it's what people THINK you know.
post #49 of 104
Quote:
Originally Posted by AZCouture View Post
 

Oh no kidding. Chaos was when I saw another decorator's website that actually said they went into business because of the exorbitant pricing a bakery dared to charge her for a "simple" two tier cake, something like that. Say what?? Really? And you're asking US advice on your site? Oh boy.......

Yes I remember her too. Sweet lady. I heard she took the advice she got here, changed her website and her way of thinking. She is doing very well and able to do giveaways. Even added another aspect to the business from the advice she got here. The advice you get will not be sugar coated. That does not mean that it is not valid. Take the good and leave the rest. If you do what these ladies tell you then you will succeed. I was always told "if you want o be skinny, do what skinny people do" The same applies to success. Good luck!

post #50 of 104

"I also read up that you shouldn't price too low because it is unfair to all others"

 

 

Let them eat cake.

 

 

Don't worry about them sweetie.

 

 

 

Happy New Year.

post #51 of 104
What great advice :eyeroll:
elsewhere.
elsewhere.
post #52 of 104
Quote:
Originally Posted by scott312 View Post
 

"I also read up that you shouldn't price too low because it is unfair to all others" ... Let them eat cake. ... Don't worry about them sweetie.

 

Huh? 

VISIT US at BAKINGFIX

 

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VISIT US at BAKINGFIX

 

             Bookshelf    Consulting    Classes    Blog    Facebook  

    

 

 

post #53 of 104
Quote:
Originally Posted by MimiFix View Post
 

 

Huh?

Double huh?

post #54 of 104
Quote:
Originally Posted by BatterUpCake View Post
 

Double huh?

 

Go back to the beginning of the thread girls and read.

 


Happy new year.

post #55 of 104

Well I don't have time to reread all of that.. It's not so much a matter of whether it is "nice" or not. The issue is that undercutting devalues the market of the very industry that we (a lot of us) are trying to make a living in. If I want to be a car mechanic because car mechanics make x amount of dollars per year, but I go in offering the same service for X-3 per year..then why would anyone want to pay X anymore? I have just set a new, lower standard for my industry. People should charge what the market is willing to bear for the product that they produce, taking quality into consideration of course.

 

(can you tell I am in algebra class right now with my X-3?)

post #56 of 104
Quote:
Originally Posted by BatterUpCake View Post
 

Well I don't have time to reread all of that.. It's not so much a matter of whether it is "nice" or not. The issue is that undercutting devalues the market of the very industry that we (a lot of us) are trying to make a living in. If I want to be a car mechanic because car mechanics make x amount of dollars per year, but I go in offering the same service for X-3 per year..then why would anyone want to pay X anymore? I have just set a new, lower standard for my industry. People should charge what the market is willing to bear for the product that they produce, taking quality into consideration of course.

 

(can you tell I am in algebra class right now with my X-3?)

Don't take the bait, Batterup!! Flock of Seagulls wants to stir the pot on a great pricing thread. 

Let's eat grandma. Let's eat, grandma. Punctuation saves lives.
Let's eat grandma. Let's eat, grandma. Punctuation saves lives.
post #57 of 104
Scott312 if you want to pay for the cakes you're 'selling' out of your own pocket go ahead, telling others to undersell themselves is poor advice.
elsewhere.
elsewhere.
post #58 of 104

You need to be charging to all of your ingredients, as well as ALL of your time.  You need to know what it is that you would like to earn per hour for your labour and become totally aware of how long a cake takes, right through from consultation, to shopping, to baking, clearing the kitchen and then delivery or collection.  If you do not have the figures for the ingredients and the sundry items that you have outlayed for your contract - as well as the amount of time it took and the amount per hour you are willing to work for, you WILL be loosing money.   I would use the value that the bakeries with a high street presence charge, as a guide line, and certainly I would ensure that for me I was not undercharging for my services.   I know that the cake decorating community get very passionate about how much to charge - and sometimes I have found that the problem comes - not from the value of the total contract, but the fear of asking for the price and selling the cake design to the customer.  I have even known a cake decorator who used to slice £20 off the price when the money was handed over, because she was too embarrassed to stick to her guns.   Hey ho.  So my advice would be, do some research, price all your ingredients up for each design and start to keep track of exactly how long a cake design takes you.  Once you have this in mind, it is far easier to quote for future similar designs.  Knowing how much you want to earn per hour too.  (There are other things to consider too - like overheads, utilities too, but in the first instance you MUST know exactly how much you are going to expend from your purse to create a cake.  Value yourself, and your time too and have the confidence to ask what you feel you are worth.  And do not undercut yourself.  Start as you mean to go on.   Hope that helps.  Kx   PS I use the value that the bakeries charge - within a sales technique that never fails to secure the order, when selling my cakes! 

post #59 of 104

I've been on this forum for several years, and I have to say, I'm a little embarrassed at the way a new person is treated when asking a valid question.  Can't we educate others without mocking them?

post #60 of 104
Quote:
Originally Posted by LoriMc View Post
 

I've been on this forum for several years, and I have to say, I'm a little embarrassed at the way a new person is treated when asking a valid question.  Can't we educate others without mocking them?


Don't be embarrassed, but rather check out some of his other posts through out the site.  A bit antagonistic.

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