Replies to This Discussion

Permalink Reply by Teneisha Williams on May 9, 2012 at 2:57pm

I'm no expert pricer...but you may want to know what your cost is...and set your mark-up on that. Some folks charge by the hour for their time (added to the cost). Whatever method you use make sure you don't lose a penny!

Good luck...

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Permalink Reply by Scott S. Smith on May 9, 2012 at 8:35pm

Hi Grace I agree with Teneisha, you need to figure out your cost of materials first, then figure out how much time you are going to have to devote to this cake. If you are looking to start a business you should also know what your local bakers are charging ( not the supermarkets! ). As a new baker you will have to charge less than the seasoned bakers are charging but not below your costs. This will help with building client relationships. Returning clients are willing to pay more as you grow your business if you take care of them, meaning providing a good product, great customer service, and a personal touch. If this is just for a friend, charge for cost and time. Hope this helps.

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Permalink Reply by Grace Fischer on May 9, 2012 at 11:15pm

Thanks Teneisha and Scott for your help. I spend a lot of time on the cakes that I make and I enjoy the looks on the faces when they see the finished product. So charging for my time would make the price too high. I was wondering if there is maybe something like cost plus a dollar amount per person that the cake is to serve.

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Permalink Reply by Melanie on May 10, 2012 at 9:14am

I have a huge family! I go through this a lot, because I like to take my time off the price as a gift for showers, weddings, birthdays. I usually get a rough figure of what I had in the cake including baking time (approx. $1.20 per hour your oven runs). For me, a 3-tier 6, 8, 10 I would have invested $30.00 of product to make it. That includes all my ingredients, oven time, support, cardboard, icing, fondant, etc. the only thing it doesn't include is my time. That's in my area, things might cost more or less in your area. So from there, you need to decide what you feel is fair for your time that you have invested in the cake. For family, that may be as little as $5 an hour, and for non-family you can go as high as you feel necessary with in reason to prices in your area. Hope this helps, figuring price is never easy when you're starting out. Google helps a lot when you're trying to break down your prices. :)

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Permalink Reply by Grace Fischer on May 13, 2012 at 8:47pm

Melanie said:Thank you Melanie, When you go to google what do you write for the search?

I have a huge family! I go through this a lot, because I like to take my time off the price as a gift for showers, weddings, birthdays. I usually get a rough figure of what I had in the cake including baking time (approx. $1.20 per hour your oven runs). For me, a 3-tier 6, 8, 10 I would have invested $30.00 of product to make it. That includes all my ingredients, oven time, support, cardboard, icing, fondant, etc. the only thing it doesn't include is my time. That's in my area, things might cost more or less in your area. So from there, you need to decide what you feel is fair for your time that you have invested in the cake. For family, that may be as little as $5 an hour, and for non-family you can go as high as you feel necessary with in reason to prices in your area. Hope this helps, figuring price is never easy when you're starting out. Google helps a lot when you're trying to break down your prices. :)

• ▶ Reply

Permalink Reply by June Kowalczyk on May 13, 2012 at 9:09pm

Thought you might like this link Grace.   :o)

How much should I charge for my cakes?

    This is one of the most frequently asked questions by cake decorators    when they begin to sell their cakes.  The simple but frustrating answer    is that no one can tell you how much you should charge.  Setting a price structure    is one of the most difficult parts of any business.  As with real estate, the    price of cakes varies widely by location and is largely determined by your local    market.  Finding the right price point requires research of your competitors'    prices, and a solid understanding of your own costs.
    As artists, it is hard to know what value to place on our work.  We don't want    to sell ourselves and our talents short, but neither do we want to shock our customers    with high prices, leave them feeling like they paid too much, or even worse - have    a customer argue with us about the price of our cake.  In this article I will    address some of the common questions about the pricing issue.

        Am I charging too much for my cakes?

    It's doubtful.  The most common problem with pricing is underpricing.    

        I don't feel right charging very much - I'm just starting out.

    It is natural, when you are starting your cake business, to feel unsure of your    skills, and hesitant about charging very much for your cakes.  The first thing    to remember is that we are our own worst critics.  When YOU value your cakes    and price them appropriately, your customers will too.    

        I have read that a good way to price cakes is to charge for the cost of ingredients        times 2 (or 3).

    We firmly believe that the "ingredients times 2 or 3" method of pricing is arbitrary    and not rooted in any kind of business theory.  In our experience, this method    results in grossly underpricingyour product.  The cost of    the cake lies not in the ingredients, but in the labor invested.

        Should I charge by the cake or by the serving?

    Charging per serving is the standard in the cake industry.  Just like    bread is sold by the loaf and milk is sold by the gallon - cake is sold by the serving.     Find a serving chart you like, and stick with it.  Two popular serving charts    are Wilton's    and Earlene's.  Earlene's    chart has slightly larger serving sizes than Wilton's, so you will want to adjust    your price-per-serving appropriately if you choose this chart.  Most caterers    are trained to cut wedding cakes to Wilton's standards.  If you have a customer    base that enjoys a more generously sized piece of cake, Earlene's chart is a great    choice.

        I should charge more per serving for wedding cakes than for party cakes, right?   

    Well, here at CakeBoss we believe that a cake is a cake, no matter what the occasion,    and that there should be no price difference.  Brides are already told in bridal    magazines and web sites that vendors are ready to rip them off at the mere mention    of the word "wedding".  (Watch        a funny YouTube video).  Charging a higher price for a wedding cake    just reinforces this misconception.  However - there could be an argument made    for charging more for wedding cakes - wedding cakes require a tasting and consultation    which party cakes usually do not.  They require more time for delivery and    setup, and of course, more stress.  IFyou decide to charge    more per serving for wedding cakes, be sure you understand why you are doing it    so you will be able to explain when your bride asks you why her "wedding" cake costs    more than a "party" cake would.

        How do I know what people will pay for a cake in my community?   

    Call other custom bakeries in your area and ask them how much they charge per slice    for wedding, party and sheet cakes.  Set your prices close to theirs, or maybe    slightlylower if you are still building your skill level.  Do NOT    undercut them - this is a disservice to them, and to other decorators in your community.    

But I called the local cake shop, and their prices are way too high.  I can do it so much    cheaper than that!

    The local cake store is charging what they need to charge in order to pay rent, utilities, make    payroll, and keep a roof over the head of the owner.  If you significantly undercut their prices,    you are not only lowering the value of cake in your community, but you could affect their business    enough that they have to lay off employees, or even close.  Even though you don't have the overhead of a cake shop, you owe    it to the cake decorating community to maintain the value of your goods.  There is no honor or pride    in being the "cheap cake lady".  Also, you run the risk of antagonizing them if you undercut their    prices significantly.  You never know - professional networking is a powerful thing.    You may want to build a relationship with that cake shop.  Professional relationships can enhance    your business reputation and increase your bottom line through referrals!  Don't think: "Their prices are    way too high." Think: "Wow!  Look what a custom cake is worth!"
    Here's a real-world example:  What if your home were paid off, so when it came time to sell, you put    it on the market for much less than your neighbors' homes just because you didn't "need" the full market value?    Not only would that not make any sense, but you would lower the value of everyone's homes on your street and    make your neighbors angry.     

        Wal-Mart sells their cakes for $15!  I can't match that price, much less beat        it!   

    Never, ever compare your prices to Wal-Mart, Sam's Club, Costco, or a grocery store.     People can'tget the same cake at Wal-Mart that they get    from you.  That cake at Wal-Mart was made months ago, flash-frozen, and shipped    to the store, where an employee working as quickly as he/she could frosted it with    icing from a bucket, and maybe added some airbrushing or buttercream roses.     That employee probably had 50 other cakes to complete in the same shift.  The    difference between your cake and Wal-Mart's cake can be likened to the difference    between custom garments and off-the-rack clothes. Say you went to a seamstress,    consulted with her about the perfect fabric and cut for your body type, discussed    your coloring, took measurements, went back for several fittings, and in the end    had an exquisite dress, hand-made with excruciating attention to detail, perfect    for your body and your coloring.  When the seamstress required payment, you    would not tell her that a Wal-Mart dress costs $14.99, so that's all you should    pay. The two products are not comparable.    

        People around here are used to Wal-Mart prices, they won't pay much more than that.   

    You'd be surprised.  It won't take long for your customers to realize that    you are providing the kind of cake that Wal-Mart simply can't. Will Wal-Mart match    a baby shower cake to an invitation? Will they accept fabric swatches of bridesmaids'    wedding dresses to ensure a perfectly color coordinated wedding cake? Will they    respond to multiple emails from a mother who's worried about making her daughter's    bridal shower perfect in every way? No!   

        Someone complained about the price and said I charge too much!   

    Then that person is probably not meant to be your customer.  Do they complain    about the price at the hairdresser?  At the grocery store?  Probably not.      If they will complain to you about the price, imagine what else they will    complain about. If you let them talk you down in price, you are setting a very bad    business precedent.     

        I can't charge that much, it's just cake!

    "Just cake" can be found in the cooler at Wal-Mart for $15.  If you are going    to sell your cakes, it's important to eliminate the phrase "it's just cake" from    your vocabulary.  Custom cakes and cookies are edible works of art that require    skill and artistry, and can take days to complete.  Duff Goldman, the "Ace of Cakes", has a    $1,000 minimumfor a Charm City Cake.    

        If I charge too much, I might lose the sale!

    And?  Do you need to take a sale where you end up making below minimum wage    or even losing money?    

        I never know what to charge friends and family.

    Yeah, that's a tough one.  There are a lot of factors at play here. Things    to consider:  do you have time to do the cake?  Do you WANT to do the    cake?  How close are you to the person requesting the cake?  Do you owe    them a favor?  Is he/she always requesting favors and free stuff from you?     We can't tell you how much to charge friends and family, but here are some options    to consider:

1. Have a standing arrangement - if you offer to do the cake, it is free.  If            they request the cake, they pay for it (either full price, discounted some percentage,            or ingredients only).
2. Different standing arrangement - if the person requesting the cake lets you have            free reign of the design, the cake is free (or charged ingredients-only).             If the person is going to get picky about design and act like a customer, then he/she            can pay like a customer.  This is a great way to practice new techniques you've            been dying to try, and get some new cakes in your portfolio.
3. Offer all friends and family a standard discount off your regular prices (15%, 25%,            50% - whatever you are comfortable with).
4. Friends and family pay full price like everyone else.             Whatever you decide, don't feel obligated to make a cake for every family function,            or every family/friend who wants one.  There are only so many hours in the            day!  It's ok to say you're too busy, especially if it's a last-minute request.

    To price your cakes, there are four elements to be aware of:

• The first element:  Ingredients and supplies To know how much to charge, you             must understand how much you are spending.  It takes a time            investment to calculate your ingredient costs, but it is vital to understanding            what a cake costs you to make.  Don't forget the cost of the boards, boxes,            foil, and dowels.
• The second element:  Time When you start thinking about it, the time you spend on a cake is so much more            than just the time spent decorating.  There is time spent consulting with the            customer, planning a custom design, shopping, baking, cooling, making fillings,            frostings, fondant, and sometimes custom work like fondant or gumpaste toppers or            figurines.  You deserve to be compensated a fair hourly rate for the time you            spend on a cake.  Don't forget cleanup time!  We've all seen what our            kitchens look like after a big cake! 
• The third element:  Overhead When you bake a cake,  you use your oven, your utilities, your pans, your            mixer, your dishwasher, and soap.  These things all required an initial investment            by you, and a nominal fee for their use should be added to the cost of the cake.       
• The fourth element:  Delivery Your customer lives two hours away and wants the cake delivered?  Then            you must certainly be compensated for your time, your gas, wear and tear on your            vehicle, and any tolls that are incurred on the trip.  The current federal            reimbursement rate for mileage is 58.5 cents per mile, so this is a good place to            start.  Remember to charge for the entire round-trip!

 

           

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Permalink Reply by Christie Ray on May 14, 2012 at 2:26am

Hi Grace,

I recently started my own bakery and this was a problem for me at first too. I eventually either called or went to all the cake shops in my area and compared the prices. In my area  I noticed that most places charged $2.50 per serving. $5.00-$7.00 for wedding cake servings. I felt that to be a little high  for most of my customers so I added my cost and multiplied it by three. I found it easier to decide on one price per serving for buttercream and add $1 to that for fondant.  good luck!

• ▶ Reply

Permalink Reply by Grace Fischer on May 15, 2012 at 9:10pm

June Kowalczyk said:

Thought you might like this link Grace.   :o)

How much should I charge for my cakes?

    This is one of the most frequently asked questions by cake decorators    when they begin to sell their cakes.  The simple but frustrating answer    is that no one can tell you how much you should charge.  Setting a price structure    is one of the most difficult parts of any business.  As with real estate, the    price of cakes varies widely by location and is largely determined by your local    market.  Finding the right price point requires research of your competitors'    prices, and a solid understanding of your own costs.
    As artists, it is hard to know what value to place on our work.  We don't want    to sell ourselves and our talents short, but neither do we want to shock our customers    with high prices, leave them feeling like they paid too much, or even worse - have    a customer argue with us about the price of our cake.  In this article I will    address some of the common questions about the pricing issue.

        Am I charging too much for my cakes?

    It's doubtful.  The most common problem with pricing is underpricing.    

        I don't feel right charging very much - I'm just starting out.

    It is natural, when you are starting your cake business, to feel unsure of your    skills, and hesitant about charging very much for your cakes.  The first thing    to remember is that we are our own worst critics.  When YOU value your cakes    and price them appropriately, your customers will too.    

        I have read that a good way to price cakes is to charge for the cost of ingredients        times 2 (or 3).

    We firmly believe that the "ingredients times 2 or 3" method of pricing is arbitrary    and not rooted in any kind of business theory.  In our experience, this method    results in grossly underpricingyour product.  The cost of    the cake lies not in the ingredients, but in the labor invested.

        Should I charge by the cake or by the serving?

    Charging per serving is the standard in the cake industry.  Just like    bread is sold by the loaf and milk is sold by the gallon - cake is sold by the serving.     Find a serving chart you like, and stick with it.  Two popular serving charts    are Wilton's    and Earlene's.  Earlene's    chart has slightly larger serving sizes than Wilton's, so you will want to adjust    your price-per-serving appropriately if you choose this chart.  Most caterers    are trained to cut wedding cakes to Wilton's standards.  If you have a customer    base that enjoys a more generously sized piece of cake, Earlene's chart is a great    choice.

        I should charge more per serving for wedding cakes than for party cakes, right?   

    Well, here at CakeBoss we believe that a cake is a cake, no matter what the occasion,    and that there should be no price difference.  Brides are already told in bridal    magazines and web sites that vendors are ready to rip them off at the mere mention    of the word "wedding".  (Watch        a funny YouTube video).  Charging a higher price for a wedding cake    just reinforces this misconception.  However - there could be an argument made    for charging more for wedding cakes - wedding cakes require a tasting and consultation    which party cakes usually do not.  They require more time for delivery and    setup, and of course, more stress.  IFyou decide to charge    more per serving for wedding cakes, be sure you understand why you are doing it    so you will be able to explain when your bride asks you why her "wedding" cake costs    more than a "party" cake would.

        How do I know what people will pay for a cake in my community?   

    Call other custom bakeries in your area and ask them how much they charge per slice    for wedding, party and sheet cakes.  Set your prices close to theirs, or maybe    slightlylower if you are still building your skill level.  Do NOT    undercut them - this is a disservice to them, and to other decorators in your community.    

But I called the local cake shop, and their prices are way too high.  I can do it so much    cheaper than that!

    The local cake store is charging what they need to charge in order to pay rent, utilities, make    payroll, and keep a roof over the head of the owner.  If you significantly undercut their prices,    you are not only lowering the value of cake in your community, but you could affect their business    enough that they have to lay off employees, or even close.  Even though you don't have the overhead of a cake shop, you owe    it to the cake decorating community to maintain the value of your goods.  There is no honor or pride    in being the "cheap cake lady".  Also, you run the risk of antagonizing them if you undercut their    prices significantly.  You never know - professional networking is a powerful thing.    You may want to build a relationship with that cake shop.  Professional relationships can enhance    your business reputation and increase your bottom line through referrals!  Don't think: "Their prices are    way too high." Think: "Wow!  Look what a custom cake is worth!"
    Here's a real-world example:  What if your home were paid off, so when it came time to sell, you put    it on the market for much less than your neighbors' homes just because you didn't "need" the full market value?    Not only would that not make any sense, but you would lower the value of everyone's homes on your street and    make your neighbors angry.     

        Wal-Mart sells their cakes for $15!  I can't match that price, much less beat        it!   

    Never, ever compare your prices to Wal-Mart, Sam's Club, Costco, or a grocery store.     People can'tget the same cake at Wal-Mart that they get    from you.  That cake at Wal-Mart was made months ago, flash-frozen, and shipped    to the store, where an employee working as quickly as he/she could frosted it with    icing from a bucket, and maybe added some airbrushing or buttercream roses.     That employee probably had 50 other cakes to complete in the same shift.  The    difference between your cake and Wal-Mart's cake can be likened to the difference    between custom garments and off-the-rack clothes. Say you went to a seamstress,    consulted with her about the perfect fabric and cut for your body type, discussed    your coloring, took measurements, went back for several fittings, and in the end    had an exquisite dress, hand-made with excruciating attention to detail, perfect    for your body and your coloring.  When the seamstress required payment, you    would not tell her that a Wal-Mart dress costs $14.99, so that's all you should    pay. The two products are not comparable.    

        People around here are used to Wal-Mart prices, they won't pay much more than that.   

    You'd be surprised.  It won't take long for your customers to realize that    you are providing the kind of cake that Wal-Mart simply can't. Will Wal-Mart match    a baby shower cake to an invitation? Will they accept fabric swatches of bridesmaids'    wedding dresses to ensure a perfectly color coordinated wedding cake? Will they    respond to multiple emails from a mother who's worried about making her daughter's    bridal shower perfect in every way? No!   

        Someone complained about the price and said I charge too much!   

    Then that person is probably not meant to be your customer.  Do they complain    about the price at the hairdresser?  At the grocery store?  Probably not.      If they will complain to you about the price, imagine what else they will    complain about. If you let them talk you down in price, you are setting a very bad    business precedent.     

        I can't charge that much, it's just cake!

    "Just cake" can be found in the cooler at Wal-Mart for $15.  If you are going    to sell your cakes, it's important to eliminate the phrase "it's just cake" from    your vocabulary.  Custom cakes and cookies are edible works of art that require    skill and artistry, and can take days to complete.  Duff Goldman, the "Ace of Cakes", has a    $1,000 minimumfor a Charm City Cake.    

        If I charge too much, I might lose the sale!

    And?  Do you need to take a sale where you end up making below minimum wage    or even losing money?    

        I never know what to charge friends and family.

    Yeah, that's a tough one.  There are a lot of factors at play here. Things    to consider:  do you have time to do the cake?  Do you WANT to do the    cake?  How close are you to the person requesting the cake?  Do you owe    them a favor?  Is he/she always requesting favors and free stuff from you?     We can't tell you how much to charge friends and family, but here are some options    to consider:

1. Have a standing arrangement - if you offer to do the cake, it is free.  If            they request the cake, they pay for it (either full price, discounted some percentage,            or ingredients only).
2. Different standing arrangement - if the person requesting the cake lets you have            free reign of the design, the cake is free (or charged ingredients-only).             If the person is going to get picky about design and act like a customer, then he/she            can pay like a customer.  This is a great way to practice new techniques you've            been dying to try, and get some new cakes in your portfolio.
3. Offer all friends and family a standard discount off your regular prices (15%, 25%,            50% - whatever you are comfortable with).
4. Friends and family pay full price like everyone else.             Whatever you decide, don't feel obligated to make a cake for every family function,            or every family/friend who wants one.  There are only so many hours in the            day!  It's ok to say you're too busy, especially if it's a last-minute request.

    To price your cakes, there are four elements to be aware of:

• The first element:  Ingredients and supplies To know how much to charge, you             must understand how much you are spending.  It takes a time            investment to calculate your ingredient costs, but it is vital to understanding            what a cake costs you to make.  Don't forget the cost of the boards, boxes,            foil, and dowels.
• The second element:  Time When you start thinking about it, the time you spend on a cake is so much more            than just the time spent decorating.  There is time spent consulting with the            customer, planning a custom design, shopping, baking, cooling, making fillings,            frostings, fondant, and sometimes custom work like fondant or gumpaste toppers or            figurines.  You deserve to be compensated a fair hourly rate for the time you            spend on a cake.  Don't forget cleanup time!  We've all seen what our            kitchens look like after a big cake! 
• The third element:  Overhead When you bake a cake,  you use your oven, your utilities, your pans, your            mixer, your dishwasher, and soap.  These things all required an initial investment            by you, and a nominal fee for their use should be added to the cost of the cake.       
• The fourth element:  Delivery Your customer lives two hours away and wants the cake delivered?  Then            you must certainly be compensated for your time, your gas, wear and tear on your            vehicle, and any tolls that are incurred on the trip.  The current federal            reimbursement rate for mileage is 58.5 cents per mile, so this is a good place to            start.  Remember to charge for the entire round-trip!

 

           

• ▶ Reply

Permalink Reply by Grace Fischer on May 15, 2012 at 9:16pm

Thank you for all your help. I like this web site there are a lot of nice people that want to help.

June Kowalczyk said:

Thought you might like this link Grace.   :o)

How much should I charge for my cakes?

    This is one of the most frequently asked questions by cake decorators    when they begin to sell their cakes.  The simple but frustrating answer    is that no one can tell you how much you should charge.  Setting a price structure    is one of the most difficult parts of any business.  As with real estate, the    price of cakes varies widely by location and is largely determined by your local    market.  Finding the right price point requires research of your competitors'    prices, and a solid understanding of your own costs.
    As artists, it is hard to know what value to place on our work.  We don't want    to sell ourselves and our talents short, but neither do we want to shock our customers    with high prices, leave them feeling like they paid too much, or even worse - have    a customer argue with us about the price of our cake.  In this article I will    address some of the common questions about the pricing issue.

        Am I charging too much for my cakes?

    It's doubtful.  The most common problem with pricing is underpricing.    

        I don't feel right charging very much - I'm just starting out.

    It is natural, when you are starting your cake business, to feel unsure of your    skills, and hesitant about charging very much for your cakes.  The first thing    to remember is that we are our own worst critics.  When YOU value your cakes    and price them appropriately, your customers will too.    

        I have read that a good way to price cakes is to charge for the cost of ingredients        times 2 (or 3).

    We firmly believe that the "ingredients times 2 or 3" method of pricing is arbitrary    and not rooted in any kind of business theory.  In our experience, this method    results in grossly underpricingyour product.  The cost of    the cake lies not in the ingredients, but in the labor invested.

        Should I charge by the cake or by the serving?

    Charging per serving is the standard in the cake industry.  Just like    bread is sold by the loaf and milk is sold by the gallon - cake is sold by the serving.     Find a serving chart you like, and stick with it.  Two popular serving charts    are Wilton's    and Earlene's.  Earlene's    chart has slightly larger serving sizes than Wilton's, so you will want to adjust    your price-per-serving appropriately if you choose this chart.  Most caterers    are trained to cut wedding cakes to Wilton's standards.  If you have a customer    base that enjoys a more generously sized piece of cake, Earlene's chart is a great    choice.

        I should charge more per serving for wedding cakes than for party cakes, right?   

    Well, here at CakeBoss we believe that a cake is a cake, no matter what the occasion,    and that there should be no price difference.  Brides are already told in bridal    magazines and web sites that vendors are ready to rip them off at the mere mention    of the word "wedding".  (Watch        a funny YouTube video).  Charging a higher price for a wedding cake    just reinforces this misconception.  However - there could be an argument made    for charging more for wedding cakes - wedding cakes require a tasting and consultation    which party cakes usually do not.  They require more time for delivery and    setup, and of course, more stress.  IFyou decide to charge    more per serving for wedding cakes, be sure you understand why you are doing it    so you will be able to explain when your bride asks you why her "wedding" cake costs    more than a "party" cake would.

        How do I know what people will pay for a cake in my community?   

    Call other custom bakeries in your area and ask them how much they charge per slice    for wedding, party and sheet cakes.  Set your prices close to theirs, or maybe    slightlylower if you are still building your skill level.  Do NOT    undercut them - this is a disservice to them, and to other decorators in your community.    

But I called the local cake shop, and their prices are way too high.  I can do it so much    cheaper than that!

    The local cake store is charging what they need to charge in order to pay rent, utilities, make    payroll, and keep a roof over the head of the owner.  If you significantly undercut their prices,    you are not only lowering the value of cake in your community, but you could affect their business    enough that they have to lay off employees, or even close.  Even though you don't have the overhead of a cake shop, you owe    it to the cake decorating community to maintain the value of your goods.  There is no honor or pride    in being the "cheap cake lady".  Also, you run the risk of antagonizing them if you undercut their    prices significantly.  You never know - professional networking is a powerful thing.    You may want to build a relationship with that cake shop.  Professional relationships can enhance    your business reputation and increase your bottom line through referrals!  Don't think: "Their prices are    way too high." Think: "Wow!  Look what a custom cake is worth!"
    Here's a real-world example:  What if your home were paid off, so when it came time to sell, you put    it on the market for much less than your neighbors' homes just because you didn't "need" the full market value?    Not only would that not make any sense, but you would lower the value of everyone's homes on your street and    make your neighbors angry.     

        Wal-Mart sells their cakes for $15!  I can't match that price, much less beat        it!   

    Never, ever compare your prices to Wal-Mart, Sam's Club, Costco, or a grocery store.     People can'tget the same cake at Wal-Mart that they get    from you.  That cake at Wal-Mart was made months ago, flash-frozen, and shipped    to the store, where an employee working as quickly as he/she could frosted it with    icing from a bucket, and maybe added some airbrushing or buttercream roses.     That employee probably had 50 other cakes to complete in the same shift.  The    difference between your cake and Wal-Mart's cake can be likened to the difference    between custom garments and off-the-rack clothes. Say you went to a seamstress,    consulted with her about the perfect fabric and cut for your body type, discussed    your coloring, took measurements, went back for several fittings, and in the end    had an exquisite dress, hand-made with excruciating attention to detail, perfect    for your body and your coloring.  When the seamstress required payment, you    would not tell her that a Wal-Mart dress costs $14.99, so that's all you should    pay. The two products are not comparable.    

        People around here are used to Wal-Mart prices, they won't pay much more than that.   

    You'd be surprised.  It won't take long for your customers to realize that    you are providing the kind of cake that Wal-Mart simply can't. Will Wal-Mart match    a baby shower cake to an invitation? Will they accept fabric swatches of bridesmaids'    wedding dresses to ensure a perfectly color coordinated wedding cake? Will they    respond to multiple emails from a mother who's worried about making her daughter's    bridal shower perfect in every way? No!   

        Someone complained about the price and said I charge too much!   

    Then that person is probably not meant to be your customer.  Do they complain    about the price at the hairdresser?  At the grocery store?  Probably not.      If they will complain to you about the price, imagine what else they will    complain about. If you let them talk you down in price, you are setting a very bad    business precedent.     

        I can't charge that much, it's just cake!

    "Just cake" can be found in the cooler at Wal-Mart for $15.  If you are going    to sell your cakes, it's important to eliminate the phrase "it's just cake" from    your vocabulary.  Custom cakes and cookies are edible works of art that require    skill and artistry, and can take days to complete.  Duff Goldman, the "Ace of Cakes", has a    $1,000 minimumfor a Charm City Cake.    

        If I charge too much, I might lose the sale!

    And?  Do you need to take a sale where you end up making below minimum wage    or even losing money?    

        I never know what to charge friends and family.

    Yeah, that's a tough one.  There are a lot of factors at play here. Things    to consider:  do you have time to do the cake?  Do you WANT to do the    cake?  How close are you to the person requesting the cake?  Do you owe    them a favor?  Is he/she always requesting favors and free stuff from you?     We can't tell you how much to charge friends and family, but here are some options    to consider:

1. Have a standing arrangement - if you offer to do the cake, it is free.  If            they request the cake, they pay for it (either full price, discounted some percentage,            or ingredients only).
2. Different standing arrangement - if the person requesting the cake lets you have            free reign of the design, the cake is free (or charged ingredients-only).             If the person is going to get picky about design and act like a customer, then he/she            can pay like a customer.  This is a great way to practice new techniques you've            been dying to try, and get some new cakes in your portfolio.
3. Offer all friends and family a standard discount off your regular prices (15%, 25%,            50% - whatever you are comfortable with).
4. Friends and family pay full price like everyone else.             Whatever you decide, don't feel obligated to make a cake for every family function,            or every family/friend who wants one.  There are only so many hours in the            day!  It's ok to say you're too busy, especially if it's a last-minute request.

    To price your cakes, there are four elements to be aware of:

• The first element:  Ingredients and supplies To know how much to charge, you             must understand how much you are spending.  It takes a time            investment to calculate your ingredient costs, but it is vital to understanding            what a cake costs you to make.  Don't forget the cost of the boards, boxes,            foil, and dowels.
• The second element:  Time When you start thinking about it, the time you spend on a cake is so much more            than just the time spent decorating.  There is time spent consulting with the            customer, planning a custom design, shopping, baking, cooling, making fillings,            frostings, fondant, and sometimes custom work like fondant or gumpaste toppers or            figurines.  You deserve to be compensated a fair hourly rate for the time you            spend on a cake.  Don't forget cleanup time!  We've all seen what our            kitchens look like after a big cake! 
• The third element:  Overhead When you bake a cake,  you use your oven, your utilities, your pans, your            mixer, your dishwasher, and soap.  These things all required an initial investment            by you, and a nominal fee for their use should be added to the cost of the cake.       
• The fourth element:  Delivery Your customer lives two hours away and wants the cake delivered?  Then            you must certainly be compensated for your time, your gas, wear and tear on your            vehicle, and any tolls that are incurred on the trip.  The current federal            reimbursement rate for mileage is 58.5 cents per mile, so this is a good place to            start.  Remember to charge for the entire round-trip!

 

           

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Permalink Reply by June Kowalczyk on May 15, 2012 at 9:24pm

No problem. That's what were here for   :o)

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