No one can tell what you should charge. This is a simple but frustrating answer. Pricing is one of the most challenging aspects of running a business. The price of cakes can vary greatly by location, just like real estate. It is also largely determined by the local market. To find the best price, you need to research your competitors and understand your costs.
It is difficult for artists to determine the value of their work. We don’t wish to undervalue ourselves or our talent, but we also do not want to overcharge our customers, make them feel like they have paid too much for our work, or worse, cause a dispute with a customer about the price. I will answer some common questions regarding pricing in this article.
Do I charge too much for my cakes?
It isn’t very certain. Pricing under is the most common problem.
I feel uncomfortable charging a lot – I am just getting started.
When you first start your own cake business, it is normal to be unsure about your abilities and reluctant to charge a lot for your cakes. Remember that you are your own worst critic. Your customers will value and pay for your cakes appropriately when YOU do.
I read that the best way to price a cake is to multiply the cost of the ingredients by 2 or 3.
We are convinced that the method of pricing based on “ingredients multiplied by 2 or 3” is arbitrary and has no basis in business theory. This method, in our experience, results in grossly overpricing the product.
Why would it be a bad idea to base my price on ingredients?
What is the most expensive component in your cake, according to you? What about the butter? Is it the butter? You should know your costs and include them in the price. Please take a look at our recipe, where we have provided a cost breakdown. The most expensive component in your cake will be Your Time. The cost of your cake is not determined by the price you paid for the ingredients. It’s because of this that it is so difficult to price cakes and why CakeBoss Software will be essential for your cake business.
Do I charge per serving or by the cake?
In the cake industry, the norm is to charge per serving. The cake industry charges by serving, just like milk and bread are sold in gallons. Choose a chart that you like and stick to it. The Wilton chart and the Earlene chart are two popular serving charts. Earlene’s chart is slightly bigger than Wilton’s chart, so adjust the price per serving accordingly if you select this chart. The majority of caterers have been trained to cut cakes according to Wilton standards. Earlene’s chart will work well if you have customers who like a larger piece of cake.
Should I charge more for wedding cakes per serving than for party cakes?
CakeBoss believes that no cake should have a different price, regardless of the occasion. In bridal magazines and on websites, brides are warned that vendors will take advantage of them at the mention of “wedding.” This misconception is reinforced by charging more for a cake. There is an argument for charging more for wedding cakes – they require a consultation and tasting, which party cakes do not. Your wedding cake could be a premium product, with four layers of cake plus three layers of filling. Party cakes only have two layers of cake. Wedding cakes require more time to deliver and set up, as well as more stress. If you decide to charge more for wedding cakes per serving, make sure you know why. This will help you explain to your bride why the “wedding” or “party” cake is more expensive.
No, really. What should I charge to sell my cakes?
I know, I know. There is no answer to the question you’ve asked. In the United States, you can charge anything between $2.00 and $10.00 per serving. You can set anywhere from $2.00 per serving (please don’t go lower!) Your ability to sell the cake, your cost, and your local market will determine where you fall on that wide range. You’ll know what to charge for your cake when you use CakeBoss Software.
How can I find out what people in my area will pay for a piece of cake?
Ask other bakeries around you how much they charge for sheets, wedding, and party cakes.
Set your price close to the competition’s or maybe slightly below if you still need to improve your skills. Undercutting them is not a good thing for them or other decorators.
The local cake shop’s prices were way too high. I can do that so much cheaper!
Local cake shops charge what they have to in order to cover rent, utilities, and payroll and to keep the roof over their owner’s head. You could not only lower the value of cakes in your locality but also cause them to have to lay off employees or close their doors if you undercut their prices. You owe the cake decorating community the right to keep your products at a fair price, even if you do not have the overhead costs of a bakery. It is not a badge of honor to be the “cheapcake lady”. You also run the risk that you will be oppressed if you significantly undercut their price. Professional networking can be a powerful tool. You might want to develop a relationship with the cake shop. Referrals can increase your bottom line and enhance your reputation as a business. Do not think, “Their prices are too high.” Instead, think, “Wow!” What a custom-made cake is worth!
Let’s look at a real-world example. What if you had paid off your house and, when the time came to sell it, you listed it for much less than the homes of your neighbors just because you “didn’t need” the full value? This would not only be illogical, but it would also lower the value of all of your neighbors’ homes and make them angry.
Wal-Mart’s cakes are $15. I cannot match or beat that price!
Never compare your prices with Walmart or other stores like Costco or Sam’s Club. People cannot buy the same cake from Wal-Mart as they do from you. This cake was made at Wal-Mart months ago and flash-frozen. It was then shipped to the store, where an employee worked as fast as they could to frost it using icing. This employee had probably 50 cakes to finish in the same shift. Your cake and Wal-Mart’s cake are like custom clothes and off-the-rack clothing. Imagine you visited a sewist and discussed with her the best fabric and cut to suit your body type. You also discussed your color and took measurements. After several fittings, she made an exquisite dress with meticulous attention to detail. You wouldn’t tell the seamstress that a Wal-Mart gown costs $14.99 and that you only have to pay that amount. These two products aren’t comparable.
Wal-Mart is the price that people in this area are familiar with. They won’t pay more than Wal-Mart.
You would be surprised. Your customers will quickly realize that Wal-Mart cannot provide the quality of cake you do. Wal-Mart matches a cake for a baby shower to the invitation. Will they accept fabric samples from bridesmaids’ wedding dresses in order to create a wedding cake that is perfectly coordinated? What about answering multiple emails sent by a mother worried that her daughter’s bridal show will be perfect in all ways? Of course not.
Somebody complained that I was charging too much.
You will have to accept that people will complain about the price if you are in the cake business. Even if you only charge half the amount you should, some people will still complain. The complainers probably aren’t your customers. Do they complain to the hairdresser about the price? Do they complain about the price at the supermarket? Most likely not. Imagine what else they’ll complain about if they complain to you over the price. You are setting an extremely bad precedent if you allow them to talk you down on price.
It’s only cake, I can’t ask for that much!
Wal-Mart sells “Just Cake” for $15 in their cooler. It’s crucial to remove the phrase “it is just cake” if you plan to sell your cakes. Custom cakes and cookies can be edible works of artistry that take many days to create. Duff Goldman is the “Ace of Cakes” and has a 300 minimum for a custom-tiered 15-serving cake.
I could lose sales if I charge too high!
And? You need to make sales that result in you earning less than minimum wage or even losing money.
What should I charge my friends and family?
That’s tough. Many factors are at play. Do you have the time to make a cake? Do you want to make the cake? Are you close to the person who requested the cake? Do you owe them something? Do they ask for favors or free things from you all the time? Here are some options you can consider.
- If you agree to make the cake for free, then it will be. They pay for the cake if they want it.
- If the person who requests the cake allows you to design it however you like, then the cake will be free. (Or only charged for the ingredients). If they are going to be picky and behave like customers, they can pay as a client. It’s a good way to learn new techniques and add fresh cakes to your portfolio.
- Offer your friends and family an average discount on your regular prices (15%, 25%, or 50%, depending on what you feel comfortable with).
- The same price is charged to friends and family as it is for everyone else.
You don’t have to bake a cake for every event or family member/friend. There are only so few hours in a day! You can say that you are too busy if the request is urgent.
There are four main factors to consider when pricing your cake:
1. Ingredients and supplies
you must know what you spend to be able to determine how much you should charge. Calculating your ingredients costs takes time, but it is essential to understand how much a cake will cost you. Do not forget to include the cost of boards, boxes, and foil.
2. Time is a factor.
If you think about it, you’ll realize that the time you spend decorating a cake includes so much more. Consultation with the client, customizing the design, shopping for ingredients, baking and cooling, and creating fillings, frostings, and fondants are all time-consuming tasks. You should be paid a fair rate per hour for the time spent on a cake. Do not forget to include time for cleanup! After a large cake, we’ve all seen how our kitchens look!
3. Overhead
You use your mixer, dishwasher, soap, pans, oven, and utilities to bake a cake. You had to make an initial investment in all of these items, so you should add a small fee for their use to the price of the cake.
4. Delivery
You live two hours from your customers, and they want the cake delivered. It would be best if you were reimbursed for the time you spent, gas used, wear and tear on your car, and tolls incurred. This is an excellent place to begin. The federal mileage reimbursement rate is currently 58 cents a mile. Don’t forget to charge the full round-trip. CakeBoss allows you to itemize the costs of your ingredients so you can know what each recipe will cost you. You can then use the price calculator to calculate the total cake cost, including overhead and delivery. It’s amazing how much these little things add up! One CakeBoss customer recently told us that she was planning to charge $30 for a birthday cake. However, when she added up the costs using CakeBoss, she discovered she needed to charge $60!
