By Barbara Barrows for SugarEd Productions
Oh, this is hard. How do you know how much to charge? How do you know what people will pay? How do you handle discounts, refunds and freebies?
The whole money thing can be one of the toughest hurdles to get over when you’re starting a cake business. Since the goal is for you to love cake decorating, and to love it for a long time, you’ll need to set a price that keeps you in business, covers your time and supplies, and makes you happy.
Cake prices have a huge range, probably even in your own area. Discount stores sell quarter sheets for as little as $6.99 (check the discount rack). The people you see on TV get a bit more… Charm City Cakes will set you back a minimum of $1,000 if it’s sculpted, or about $15 per slice for a stacked wedding cake.
Hopefully, somewhere in between will keep you in business and make you happy. The first thing you have to do is cover your costs. You won’t stay in business long if you charge less than you spend to make a cake.
What a Cake Costs You in Money
Here’s a math exercise for you. (Yes! Math! An integral part of any business.) Let’s find out what it costs you to make an 8” round cake. Take a look at your grocery store receipts and figure the approximate costs of:
All-Purpose Flour (1 cup = 4.25 oz, so about 1/18 of a 5 lb. bag)
Cake Flour (1 cup = 4 oz, or 1/8 of a 2 lb. box)
Sugar (1 cup = just about 8 oz, so 1/8 of a 4 lb bag – and most bags are now 4 lbs, not 5)
Powdered Sugar (1 cup = 4.25 oz, or a little over 1/8 of a 2 lb. bag)
Vanilla (6 teaspoons in an ounce)
Eggs
Sour Cream
Butter (2 cups per pound, 8 tablespoons per ¼ lb stick)
Baking Soda (48 teaspoons in an 8 oz box)
Salt (48 teaspoons in an 8 oz container)
Shortening (1 cup = about 7oz, or about 1/7 of a 3 lb can)
Milk
Chocolate
Fillings
Flavorings and colorings
Fondant
Every other edible thing you put in or on that cake
Okay, so there’s your ingredient cost.
Now how about disposables used in construction? Parchment sheets? Paper towels? Piping bags? How much did you pay for that cake board? Do you include candles? Are they keeping the cake drum? Do you supply a box? Non-skid for the journey? Add it up!
Certain “intangibles” can raise the price as well. You might want to add in a dollar or two for power usage (mixer, oven and dishwasher), trips to the grocery store, dish soap, hot water, etc.
Now you know what a cake costs you to make in dollars and cents. And it’s probably already more than the “geez, it’s only eggs and sugar” customers want to pay. Probably over the discount store’s price as well. And you still haven’t counted your time!
What a Cake Costs You in Time
This exercise is very similar to your grocery pricing. How long does it take you to make a cake? Think of the time you actually spend on baking and construction.
Prepping your work area
Collecting, measuring and mixing ingredients
Preparing pans
Filling pans
Checking for doneness
Mixing frosting
Coloring frosting
Making filling
Torting
Damming and filling
Crumb coating
Smoothing
Covering
Decorating (of course!)
Packaging
Washing dishes
Cleaning your work area
Putting everything away
Shopping for more ingredients
More than you thought, right? Wow! What an enormous effort for “just something simple.”
What Your Time is Worth
Time is priceless. It is one thing you can never get more of. Isn’t yours valuable?
As of January 2012, minimum wage in the U.S. is $7.25 an hour. That’s for an unskilled worker with no experience. Don’t you deserve more? According to Glassdoor.com, grocery store decorators in the U.S. generally get from $9 to $16 an hour. Judge your experience and skill, and price your time accordingly.
Total it Up
Add your costs and the value of your time. This is your baseline. This is what you need to charge to make it worth your while to make a cake. How does this number compare to what you’re already charging?
- This is so much less than what I charge! Bravo! You’re not only covering your costs, you’re paying yourself a decent wage for your work and can even cover some business overhead.
- This is right about what I charge! Bravo again! For you, making cakes is sustainable and worth your while.
- This is more than what I charge! Hmm. Is it time to raise your prices?
- This is way more than I could possibly charge! Is it because you’re not confident in your skills? Or because your area can’t sustain these prices? Can you target a higher-end market? Is it possible to get your ingredients wholesale? If there’s nothing you can do to cut costs or raise prices, you might want to re-think a cake business at this time. You might not be able to make enough profit to keep you happy with caking – eventually you’ll either run out of money or get tired of giving away your time.
Happy Caking! Sharon Zambito
SugarEd Productions
www.sugaredproductions.com
I decorate ice cream cakes as a part time job. But I am at the stage of “making regular cakes for friends” and don’t charge near enough! So I know I’m selling myself short and getting burned out. I definitely need to take the time and figure out expenses better. Your checklist will come in handy! Thanks for the blog
I find that when we sell ourselves too cheap those people will never agree to paying for our value and worth. That’s why my cakes start at $45 for a pound cake and go up from there. I only want customers that appreciate quality and good taste. I refuse to be known as the cheap cake lady. My time, utilities, vehicle and all that is required to bring forth the cake is worth a lot more than $25- $30. If someone complains that my prices are too high; I simply tell them that apparently they don’t appreciate great quality or maybe they just can’t afford me. I refuse to lower my prices for anybody.
Good for you!!! Don’t sell yourself short… From an Irish caker ?
Thank you for this! I’ve been decorating for many years and selling cakes here and there but have recently decided to focus on making a business out of cake decorating which I love so much! I will definitely spend a few hours working on pricing to make sure I’m able to not only sustain my business, but also pay myself!
Amazing information, this has always been an issue for me. My problem is “i would never pay that for a birthday cake” so i feel so bad charging. I need to get over that!!
yes you do!! 🙂
I have made that statement so many times!!! Charging for my work is the hardest thing I do!!!
I have the same problem. I started making cakes because custom cakes were so expensive. If I would not pay that price, why would other people. I Got over my thoughts when I started my business, I have not had one person question my pricing. I did have 2 great decorator friends who helped me who helped
me.
Thank you so much for this info. It’s way more involved then what I thought. I have way under paid my self because I was doing it out of love and for friends and to put myself out there. My children tried to tell me I was under paying my self. As my skills improve I see I must raise my prices. What’s love got to do with it. Lol
Thank you for this blog!! It matches exactly what my husband says to me, “Tell that customer to go to their local grocery store and see how much–if any–they charge for custom cakes; not to mention the delivery of the cake!”
Have A Blessed Day!
Amen!!!
Totally what I try to tell people! I have 5 children under 6 as well as making cakes on the side… what’s crazy to me is they want me to make an elaborate custom cake in a day or two notice but when they don’t like my pricing or can’t do it in the time alotted, they go to the local grocer pay an arm and a leg and get a generic cake!
I have been using the “Cake boss” soft wear since I started selling cakes and have never under charged myself. It was great to go through your list to make sure I wasn’t forgetting something. Thank you for posting that. My cakes start at $100.00 and go up, that is why I call them specialty cakes.
I do a good job with pricing for ingredients and supplies, but I really fall short on charging for time. I spend hours. On some cakes and I need to remember that my time is as valuable as my talent. I think often times people don’t realize what goes into cake making and decorating.
Really True
Hello I m so guilty of undercharging, this information is so helpful. What are yalls thoughts about taste testing prices. If instances I have a lady who wants 250 cupcakes and 100 cakeballs but wants 6 different flavors and wants to taste test each with a sample for her, her husband and her mom, I I thought ok maybe do cupcakes 4 of each kind which makes 2 ‘s dozens, but she felt as if she shouldn’t be charged for taste testing. What is the best way to go about this issue?
um, no she doesn’t get to taste all that unless she buys them. do NOT make all that without her paying you. One sample flavor, period.
In my area, an 8″ round 2 layer cake usually sells for $40. After I added up my ingredients, supplies, time, and skill level, I have noticed I am no where near charging enough. This weekend I will be adjusting my prices. Do you have any helpful tips on how to break it to my customers?
do NOT defend yourself. “Due to the increasing costs of supplies and materials, my prices will be “X” effective date “X”.
Our family’s cake shop is in the process of raising prices. We are still charging what we did 31/2 yrs ago when first opening, My question is: shouldn’t we just go up every 6 months or so in increments, rather than raising them at one time? WE definitely need to increase our 1/4 sheet from $25.00 as we are customizing them or at least using edible images. And we have been charging $50.-75. for a 2 tier custom cake with fondant characters. We have just implemented a $5.00 charge per character.
I think you how u want to raise them is purely up to you and what you are comfortable with and think your customers will accept 🙂
I like the charge per character I’ll have to do that I do charge $20 CDN per large flower. Thanks
Thank you for this very helpful article Sharon and Barbara.
What to charge for cakes is one of the most common and nervous questions I am asked. This list is very helpful in reminding of all the tiny details we just ‘do’ without thinking about it, and they all cost money and/or time. Knowing where your time and money goes is often the incentive needed to encourage newer cake artists to put a suitable value on themselves and what they do.
I seriously under charge but how do yo get over the whole “i feel bad for charging ” i love what i do!
great article – thanks Sharon – I think the main problem is we cakers know this but still don’t have the confidence to carry it out so it’s great to be reminded every so often!
hello I posted a comment yesterday in reference to taste testing prices and I don’t see it anymore could it have been removed? Did I ask something wrong?
Thank you
it’s still there 🙂
Bravo!
Thank you Ms. Sharon! I love your work, you are such a great teacher. I hope to meet you one day. This helps me a great deal. I opened a cake shop I am in my first year, and I was doing some of these things but not all of what you named off. I am going to put this in to action.
Thanks for that information and reminder Sharon. I too use to give away some of the most beautiful cakes for little and nothing but have learnt the hard way. People want the best but are not prepared to pay for it. I have come to realize that in order to survive in this business you have to know when to say no and when to give back. I thought that I would be getting more confirmed orders for my Wedding and Specialty cakes but I think it’s not yet my time. In the meantime, I will continue to focus on my seasonal products and handmade Sugar and Cold Porcelain Flowers.
I think I could make good money for charging a consultation fee and from repairing wedding cakes that did not turn out too well (smile). We have to share what God has blessed us with.
Love and Blessing always.
Hi Sharon Hope you are well.. You are the best. Thank you for your time to put this great info together for us. I have a huge problem. Too many church brothers and sisters and close friends ordering. sometimes I dont want to make their cakes because I dont make a profit. They dont understand the time, effort and money involved in the project. But I will educate all my clients. Thanks again. Have a great weekend
I work out the cost of all ingredients used, plus boards ribbons etc and then I multiply the cost by 3. This is to cover my time. I do not charge an hourly rate as I do like to take my time and enjoy creating the cake. If I were to charge by the hour, my cake would be way too expensive for my clientelle.
I also calculate for time spent in research and development for specialty cakes and custom orders. Planning, drawing, making a mock design can take hours. It took time, but being confidant when I give a quote also helps your customer take you seriously regarding your prices. I don’t haggle or negotiate my prices. My stomach hurts ever time.
Sharon thank you for this information. This will come in handy for me to start pricing the right way and not be scared Of what the customer is going to say or do or if they don’t come back. I thank you once again for all the information you have given.
I STILL have difficulty with this. I decided to share this article on my Facebook page. Maybe it will educate others who do order cakes without realizing the value.
Thank you so much!
https://www.facebook.com/queenanneslacecakes?ref=hl
I have been selling speciality cupcakes and do a pretty good job on the pricing for those. I have recently started doing more cakes and I know I don’t charge enough. I recently have done some half sheet and full sheet/- sheet cakes. How much would you suggest for a full sheet /108 servings.
Thanks
Cindy
hey Cindy, I would use the same formula as described in the article weather a sheet cake or wedding. Cost of supplies, consumables, incidentals, plus your hourly wage. No reason to charge less because it is a sheet cake. Charge for the supplies and your time just the same 🙂
hi Cindy , thank you for very good blog ; I start cake business from home couple month ago but still its hard to price my cake and i know i undercharge i am new in business i want to make some customers i don’t want to charge too much , my family and friends love my cakes and they think i am not charge enough and i know i take time to make cakes and they looks perfect and taste good too. please give me a advice what should i do ,i really want to expand my cake business.
hey Afsheen, use the formula in the above blog post to calculate your costs and labor 🙂
Hello Sharon,
Could you please teach me how to add up my recipe costs +labor & etc. to arrive the price of my cakes.
hey Marjorie… use the guidelines in the above article. also you can buy software such as Cake Boss that calculates it for you:)
I’ve recently started playing with sculpted cakes. I’ve made a few, but I don’t really know how to gauge the time it takes and I assume since I’m a beginner with them I should become more proficient. Maybe.
Any advice for figuring in the time when I’m still starting out?
That is SO hard to guess! Everyone works at a different pace. I would do a few practice cakes to get a gauge of the time it takes you. 🙂
Just want to say thank you for taking the time to write this, love baking, i rise my hand about undercharging wich i am willing to improve. Very glad i found your helpful article and formula.