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How do you price your cakes?
Posted: 28 February 2008 11:04 AM   [ Ignore ]
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Hi, everyone—

I am a newbie here.  I’m an experienced home baker who got into cake decorating in 1991, when my baby sister insisted on my making her wedding cake, because she wanted a fresh, moist, delicious homemade cake instead of the often dry and tasteless bakery ones.

Since then, I’ve made many wedding and special occasion cakes as gifts to friends and family, but now I find people coming to me wanting to buy the cakes I make.  The school where I took cake decorating lessons tells me that, for a wedding cake, today’s bare minimum is $4 a serving (more for elaborate cakes).

How do you determine the prices to charge for the cakes you make?  Mine aren’t usually elaborately decorated, but I always use top-notch ingredients—the best chocolate, butter, etc.  How do you factor in the cost of ingredients, the number of servings, and so on?

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Posted: 28 February 2008 01:16 PM   [ Ignore ]   [ # 1 ]
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I have heard that the typical for desserts is to charge 3x your cost.  the problem is that with wedding cakes, there is a lot more work involved and 3x just doesn’t cover the labor.  I would call around your local business that make cakes, specialty ones as well as the ones that bake in larger volumes to get an idea of price ranges for both high quality custom cakes, high production bakeries (which are usually lower in quality since their main concern is quantity) and everything in between.  then decide on your price.  Don’t sell yourself short, you seem to know what your a doing and you have done it for many years, AND, their is a reason why people want to hire you, it’s not beacuase you cheap, but obviously because you make great cakes!!!

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Posted: 28 February 2008 01:18 PM   [ Ignore ]   [ # 2 ]
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BTW, keep in mind the clientelle you are trying to reach.  This can also determine price.  If you client base is on the lower budgets, they might not be willing to pay the higher price for a cake filled with the more exotic type fillings.  On the other hand, for some client base, the sky is the limit!

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Posted: 28 February 2008 04:54 PM   [ Ignore ]   [ # 3 ]
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Thanks so much, Rose!  Your advice makes a lot of sense.  The 3 x cost of ingredients idea is a good one, particularly for the smaller (9” x 13”, 10” x 15” rectangular) ones people like to order for birthday parties.  I can make it a rule to itemize the cost of ingredients and include it in my invoice or price quotation form (3 4-oz. bars Ghirardelli bittersweet chocolate @ $2.50; 2 lb. Land-O-Lakes unsalted butter @ $3.99, and so on).

?Donde vive usted, Rose?  Vivo en Connecticut central.

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Posted: 28 February 2008 10:13 PM   [ Ignore ]   [ # 4 ]
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Hane, I don’t think itemizing the cost of the ingredients will help.  Butter is only a few bucks, and eggs, too.  But perhaps you can itemize only the most expensive items like chocolate and liquors, as additional charge from your base price.

Actually, I like to price by labor, since THAT is where all the effort goes even if it isn’t an elaborate wedding cake.  I’ve had a difficult time understanding this.  It isn’t just the “quality ingredients” that the customer wants when looking for a home made cake, the customer also pays for the “made to order” concept.  You are not making hundreds of sheet cakes of the same thing, neither a dozen, you are baking one at a time at only made to order once an order is placed.  The cake is not sitting there until someone buys it.

Another scenario is comparing your cake with an equally well made cake from a retail store (like a boutique gourmet bakery, not a generic grocery store).  The price the retail store charges includes the price of running the store (lease for example).  Your price does not if you do this from your own home, generally speaking.  If you charge the same price for the same cake, your cake MUST be superior.  Rather than charging less for the same cake since you don’t have store expenses, try to work out your recipes so they WILL be superior.  It takes time and to this day I only have a dozen or so cakes that I think I do better than any retail store.  For example if anyone asks me for a chocolate cake, I suggest the Triple Chocolate Cake.  Or for a carrot cake, I suggest the carrot ring with white chocolate cream cheese frosting.  The customer will appreciate if you add brand names of your ingredients, specially for example for the carrot cake saying that you are using fresh whole wheat flour and organic honey plus white chocolate with real cacao butter.  Or for chocolate saying “using Frangelico from Italy” or “dark chocolate Valronha from France” etc.  You can browse this blog, many will freely tell you what they consider is the best of the best type of cakes.

If someone wants me to make a cake that is comparable to a $15 grocery store sheet cake.  I just don’t make it.  It is impossible.

There are many other factors, like baking for free to get to be known, or as practice recipes, etc.  These you can do only for so long but not for ever!

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Posted: 04 March 2008 12:15 PM   [ Ignore ]   [ # 5 ]
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I have heard the same 3x factor.  Also, search online - some people have posted Excel spreadsheets where you enter your ingredient costs, etc. and it spits out a suggested retail price.

I personally use top-notch ingredients and do not buy in bulk… so if I applied that factor, I would end up with one expensive cake.  Cakes are a labour of love for me, for the most part.

My friends who are bakers rely on suppliers that sell wholesale to keep food costs low.

You could become a specialty baker and cater to client?le willing to pay for the price of quality… which would be viable if you are in a large metropolitan area.

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Posted: 05 March 2008 12:18 AM   [ Ignore ]   [ # 6 ]
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Hane, both Hector and Julius have great ideas.  I agree with Hector on not listing each and every ingredients you use along with their cost.  You also would not want to disclose any “secret” ingredients as such list would expose them.  I too would refuse anyone who thought my cakes should be priced at $15, I would redirect them to Wal Mart, no offense…

BTW, vivo en El Valle Central de California!!!

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Posted: 11 March 2008 05:58 AM   [ Ignore ]   [ # 7 ]
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Hi Hane and others. I was taught that if you have access to wholesale cost for your ingredients, you should charge 2x the ingredient cost for wholesaling yourself ( i.e. selling to restaurants, cafes, etc.) and 4x your ingredient cost to retail customers. That way, you cover your overhead and give yourself a little profit hopefully.

But in practice, I’ve found that you also have to keep a good eye on “what the market will bear.” That is, what the competition is charging for similar products. If you use top quality ingredients and customize every order, don’t use the price of supermarket cakes as your comparison. Look at websites of people offering a similar level of service in your local area. Or make a few calls, if the info isn’t available online.

When you’re calculating ingredient cost, it’s important to include EVERYthing! A bit of vanilla here and there can really add up. If you go through your recipe and get everything into the same unit of cost (kilo or pounds), you can end up with a realistic idea of what you spend to make the item. Don’t forget the cake boards, ribbons and such.

Starting out, I was grateful for the opportunity to practice my craft, when friends asked for a cake. I only charged the ingredient cost and gladly, because those folks were funding my education. But as you gain in experience and skill, you do yourself and other bakers a disservice by giving your skills away except in those instances where you’ve identified a charity you want to support or a friend you wish to honour on their birthday or other special occasion in lieu of a gift.

Just my take on the question. There’s no one way to go at this question of pricing. In the end, it’s what feels comfortable for you.

p.s. If you don’t have access to wholesale costs, you might find that 3x your ingredient cost is about right. But again, check the result of your calculations against what others are charging in your area.

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Posted: 26 February 2009 05:17 PM   [ Ignore ]   [ # 8 ]
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Hane - 28 February 2008 03:04 PM

Hi, everyone—

I am a newbie here.  I’m an experienced home baker who got into cake decorating in 1991, when my baby sister insisted on my making her wedding cake, because she wanted a fresh, moist, delicious homemade cake instead of the often dry and tasteless bakery ones.

Since then, I’ve made many wedding and special occasion cakes as gifts to friends and family, but now I find people coming to me wanting to buy the cakes I make.  The school where I took cake decorating lessons tells me that, for a wedding cake, today’s bare minimum is $4 a serving (more for elaborate cakes).

How do you determine the prices to charge for the cakes you make?  Mine aren’t usually elaborately decorated, but I always use top-notch ingredients—the best chocolate, butter, etc.  How do you factor in the cost of ingredients, the number of servings, and so on?

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Posted: 26 February 2009 07:43 PM   [ Ignore ]   [ # 9 ]
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I think it’s a good idea to check out the competition in your area, and use that information to determine your price.  Hope that helps.

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Posted: 27 February 2009 06:47 PM   [ Ignore ]   [ # 10 ]
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i’ve done what patrincia suggests. my formula is supplies are <30% of total. if price is the only concern for a client then I generally find they aren’t the customer for me. yes, you can get a sheet cake at costco for $25, but you have to be satisfied with a completely synthetic product. if you are, have at it. if you want a high quality, delicious product, come see me.

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Posted: 30 May 2009 11:25 AM   [ Ignore ]   [ # 11 ]
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I started making cakes for special events at work and have made all my girls birthday cakes. I have made alot of cakes for friends as gifts but never charged for them, so this is a new thing for me. I have now been asked to make cakes by people who want to pay me and I have no idea what to charge. I am making a rather large cake for a friend, and she has provided everything to make and decorate this cake. It is still taking me a good deal of time to make. The cake has 3 tiers and there are 3 layers to each tier it will end up being the size of a wedding cake. Since I have no cost thus far I have nothing to go by to use the 3x rule. Can anyone help me?????

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Posted: 30 May 2009 08:58 PM   [ Ignore ]   [ # 12 ]
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well for a friend i usually don’t charge my labor costs, but if i was going to i would figure out a rough estimate of how many hours it will take me and then price it per hour. truly, you can’t charge enough for your labor, most of the time, so you will have to adjust the price until it comes to something you are comfortable with. 

For a 10/8/6 with no special filling I charge $150 and that is only $3/slice (real slices, not wedding slices). Figure the cost of supplies, ingredients and other consumables at 1/3 of that price and you’re left with $100. Are you comfortable charging your friend $100? For a stranger or acquaintance, absolutely, charge as much as you can get!

where you live will also have some effect on the price, as well.

good luck, jen

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Posted: 02 November 2009 07:11 AM   [ Ignore ]   [ # 13 ]
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My sister prices her cakes depending on the cost and designs of the cakes…You should really take note of the expenses.

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marthawilkins
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Posted: 10 November 2009 09:23 AM   [ Ignore ]   [ # 14 ]
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First, make sure that your state allows you to sell cakes if you don’t have a commercial kitchen. Some do, some don’t. Legalitites aside, the cost of your ingredients is such a small part of you total costs the 3x rule isn’t really a good one to go by. You have to factor in your time, which should be a salary issue, and then think about the cost of any non-food components like boards, equipment, etc. Then there’s electricity, gas to deliver the cake, gas to go shopping, wear and tear on your car, added insurance if you’re using your car a a business vehicle, business licensing and insurance, water to do the cleaning afterward, etc.

Do NOT price based on what you think people can afford. Start with what you think your time is worth and work backward from that, keeping all of your expenses in mind. If you’re going to do this as a business you have to think of it as a business. If you’re doing it as a hobby and your state doesn’t allow you to sell cakes from your home, then keep giving the cakes away and have fun doing them.

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Posted: 30 January 2011 08:12 PM   [ Ignore ]   [ # 15 ]
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My 8” round cakes in buttercream are $80 to $85 as are my 9x13 rectangle cakes.  An 8” in fondant would be around $95.  For tiered cakes my prices start at $3/serving (ie, white fondant with satin ribbon around the base of each tier and the client contacting a florist and the client paying the florist to add flowers).  I then have 3 basic price levels. 

Level 1 is $3 and up/sl
Level 2 is $5 and up/sl and this includes fondant cakes with cut outs (dots, stripes, hearts - if I can cut it out with a cookie cutter or easily cut to fit the design it goes in this category)
Level 3 is $7 and up/sl and this level can include details like fondant flowers and hand painted elements
I have cute names for my 3 levels and full descriptions of the type of details that fits into each.  Some cakes will have elements of 2 different levels and so the price will be somewhere in between (ie, a cake with stripes and then a dome of fondant roses on the top tier is somewhere between a level 2 and level 3 cake) in that case I tell the client that even though those certain elements make it a level 3, I’ll do them a favour and charge them a little less.  In the case of the above example, I’d likely go with $5.50 or $6/sl

It is just NOT worth it to make a cake for $50.  By the time I factor in my ingredients, cake board and box, and time, I’ve made very little money (like maybe $20).  It’s not worth my time to run around getting things for a $50 cake and get my kitchen all messy for that.

Sometimes we think “if I charge too much I won’t have them as a customer.”  So what?  I only want customers who will pay me enough so that I make my minimum $20/hour (and whenever possible, more than this - because as we all know - this is mainly seasonal work).  The rest of the world is entitled to a living, why not me also?  I don’t feel the need to work for $10.25/hour (minimum wage in Ontario).  High school kids flipping burgers make that wage, not someone who has spent hundreds of dollars on classes and equipment.

Set your prices so that you can make good money - you are worth it.  When you value what you do and price it accordingly then other people will also.  Why do some people pay $300 for a handbag at Coach and others only $15 for one at Wal-Mart?  The Coach one might be a bit better, but people attach value to it because it is priced high.  If you price your cake higher, you customers will feel they are getting something special (and they are!!).

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