How Much Should I Charge For A 7 Layer Caramel Cake
Cake pricing can be the nigh challenging and intimidating question to most beginners in the cake decorating world. Moreover, pricing your cake is not just about adding the costs of ingredients and a markup. And, in this post, I share my pricing strategy for your homemade cakes.
Ane of the scariest questions is: How much would you charge for this cake? And, if I don't quote the right toll I may lose the order. And, if I overcharge, the customer will become somewhere else. Conversely, if I quote a depression price, then I will not make any coin.
I've calculated the price of the same cake a zillion times to make sure I got it right. Also, I try and so difficult to reduce my costs so that I could charge less for my cakes. And, as a consequence, get more orders.
In fact, sometimes, I look at the cost and say, I wouldn't pay that much for a cake. And so, how tin can I charge that from customers?
Table of Content
- Does that sound like you? I use to be that person above!!
- How much should you charge for your cakes?
- Pricing a block video
- At that place are four main components to pricing your cakes
- How do I decide labor - my wages?
- Price vs. value
- The main factors that determine the value of your cake
- Let's explore these factors
- Is your business model profitable?
- A few points to note when pricing cakes based on market value
- The Price Tag vs the Proper noun Tag
- Frequently asked questions
- You may also like
- Bring together the conversation
Does that sound similar you lot? I use to be that person above!!
(yup hiding face up in palms hither)
These are some of the most common questions I get asked from beginners. And, it really resonates with me because I've had the exact aforementioned questions in my head all along.
- How should I price my cakes? And, how to price cakes or cupcakes?
- As well, can y'all share your price-listing with me? Please transport me your cake pricing chart.
- And, what is the right price for a beginner?
- How much should I accuse for this type of block? And, what is the toll of cake for this design?
- In add-on, exercise y'all have a cake pricing guide?
And, as much as I'd similar to say, this is what I charge and y'all can accuse the same; that's not possible. So, I thought I'd write a footling post on cake pricing (well, I planned to write a picayune bit ... it'southward long.. so grab a loving cup of coffee).
How much should you charge for your cakes?
I'll share with you lot what I do and how I get about pricing my cakes.
Now, having done two degrees and an MBA - yous may find that my method sounds very geeky. And yet, trust me the books are not wrong and it's how y'all apply that knowledge to practical issues that brand a huge difference.
And so, hang in at that place - I will try my best to brand it equally unproblematic as I tin can for you all to understand. In fact, I will give you lot more than than one choice on how to price your cakes. So grab a cuppa and let's make it a appointment with cake pricing.
Pricing a cake video
Video on Facebook hither
Video on YouTube
There are four main components to pricing your cakes
i. Direct costs
- Cost of ingredients and supplies. Every ingredient no matter how little has to be included in your pricing.
- Price of accessories - such as block boards, boxes, and dowels.
Yous do non need to practice this for every cake recipe. Pick some that are representatives of your most common cakes. Since we tend to use the same ingredients in almost all of our cakes. For example, flour, butter, eggs, milk, buttercream, and fondant toll you - 20 dollars to make an 8-inch cake. Also, keep these costs for your reference.
Other direct costs include delivery (taxi or fuel costs), set-up costs (boards, poles, boxes).
2. Indirect costs
- Utilities - such as gas, oven, mixers
- Advertising - business cards etc.
These would include what yous pay for electricity, gas, water, telephone, etc. It also includes any tools or accessories that yous purchase in order to brand and decorate your cakes. Any cost that is associated with your business only non a direct ingredient in each cake, is considered an indirect cost. It'south simpler to calculate these types of expenses on a monthly basis, rather than on a cake by cake basis.
For case, yous can utilize a rough approximate that 25% of your utility costs are related to your business. So calculate that total for a detail month and divide it by the number of cakes you lot've made that month. This will provide you an estimated indirect price per cake.
For example in an boilerplate month, your indirect price is nearly ten dollars per cake. Furthermore, marketing expenses, such as advertising, edifice and maintaining a website for your business concern, even your business organisation cards are function of your business expenses.
3. Labor
- The time you spend on the cake - you must include the time you spend to design the block, shop for the ingredients, bake the block, decorate and set up the cake.
- Y'all have to put a dollar value as a wage for your labor.
Yes, often people forget to include the time information technology takes them to pattern the perfect cake, the time that gets spend back and forth emailing customers for the guild and pattern. The time y'all spend to go buy those ingredients, as well as the time you lot spend blistering the block.
four. Commitment
- This includes non just the cost of the taxi or gas to drive the block but also the time you spend to gear up up the cake.
Just for an case, let's price a block (rough approximate)
| Toll | 24 servings | |
| Direct Cost cake, frosting, cake board, delivery | xx | |
| Indirect Cost Gas, oven, | x | |
| Labor ( $ five ten 6 hours) | 30 | |
| Delivery | 5 | |
| Total price | 65 | ii.7 per slice |
| Profit - % or a marking-up | ?? |
Why should you mark-up or add a percentage to your cake?
Many cake decorators don't do this!! Expect at the table above. It'south got cost, labor, commitment only there is no profit. The labor is your wage it is not a profit. Yous worked hard on that cake and you deserved to be paid. The profit comes when you add together that last line - % or a mark-up. When you lot make that turn a profit you have a successful business organization. Does that make sense?
So, what is better a % or a marking-up?
It's a personal preference. Some people say I want to make xxx% profit of every block I sell and then in that location are those that say I want to make $50 on every 24 servings.
How do I decide labor - my wages?
If someone employed you what would they need to pay you lot, so you lot would have their job? Would y'all take that job if they paid yous forty dollars an 60 minutes or would y'all say -no I need at least 50 to make it worth my time.
The minimum wage in State of israel is 25 then when I started block decorating I did actually charge but 25 per hour. Now I take moved upward to fifty because I think that'due south modest.
Information technology's definitely non what an artist should be paid but I'thou still OK which what I pay myself. So, you see; it'south upwardly to yous!! And what you think is fair to y'all!
Cost vs. value
Price your cakes based on their value, not their cost
The most of import point I want to make is this. Pricing for decorated cakes is not about cost +. Rather, they need to exist priced based on the value they provide to your customers. It's a luxury production. Therefore, information technology should be priced on value not cost. It'south like the difference betwixt the price of a dinner in a height French restaurant, and your local fast food joint. You don't know what is the cost of ingredients that become into your 5-course French dinner. Bluntly, you don't care. You pay for the experience, the emotional value y'all get from it, and of class the great taste and presentation.
The aforementioned goes for custom-designed busy cakes
Having said that, if you decide to make this your business concern, yous need to make certain that y'all have a practiced business organization model. In other words, you tin make the profits that you would like to have from this business. Otherwise, it can exist an expensive hobby, or worst, a losing business.
Therefore, information technology's very important to have a very expert agreement of your costs. These include more than just the direct costs of ingredients that become into your cakes. I volition hash out that in detail below.
Commencement of all, let'due south starting time with determining the value of your cakes.
The master factors that determine the value of your cake
- Where are yous located and how much are your customers willing to pay?
For example, the toll of a cake in New York is not the same as in Texas? (and New York and Texas are both in the US) - What clientele are you serving? (eye-grade kids' birthday cakes? loftier-class wedding ceremony cakes?)
- or What is your expertise? What unique value exercise you offering?
- What is your reputation and demand for your product?
Let'south explore these factors
one & two - Where are you located and how much are your customers are willing to pay? What clientele are you lot serving?
I'chiliad going to use myself as an example then information technology's not so geeky.. (wink wink).
When I first relocated from the United states of america (in 2005), I regularly made cupcakes, block assurance, and cake pops. And yet, it wasn't very pop here in Israel and to some, it was something new and fascinating.
I grew up with a decorated cake for every birthday, weddings and holidays. But, in Israel custom decorated cake was a luxury item and very rare to find. It was not a must-accept item for a birthday party. A birthday cake was non even in the budget! I was surprised that some weddings I attended did non have a wedding block and no 1 seemed to miss it.
Virtually birthdays that my son attends accept no fancy birthday cakes. Rather, what they often had was a simple cake that grandma made in a blistering foil, poured some chocolate sauce over information technology and sprinkled some sprinkles around.
So in 2005, there was very little awareness or demand for custom decorated cakes in Israel.
Much has changed since and then. However, the market place here is still lagging behind the rest of the world. And yet, this is where I chose to start my business. So as y'all can understand, the level of sensation, and as a upshot, the demand for, and value of decorative cakes has a directly effect on how much I can charge for my cakes. Hence, I had to find and focus on those client segments where there is a demand for decorated cakes. For example, the ex-pat community, and people who immigrated to Israel from the US or the U.k..
You need to practice the same in your location. Find out what are the trends. What types of cakes are more popular. What are people willing to pay for those cakes? In some places, sheet cakes are very popular, while in other places no one cares much virtually them.
Busy cakes accept a long time to make. There are some customers who view them equally a waste of money. And however, there are those who value the work and attempt put into it and are set up to pay for that.
3. What is your expertise? Or what unique value do yous offer?
It is of import that you exist honest with yourself when answering this question.
Too, almost anyone who starts a concern wants to make money. Still, your success is largely dependent on your expertise and the value yous offer customers.
Most block decorators will tell you they provide a unique value. Some examples include: doing something new, personal consultation, design expertise, modeling expertise, etc. But is that enough to create a differentiated value?
Showtime of all, you need to ask yourself what makes your product amend than others? Practise you lot broil the cake from scratch? Are you offering gratuitous delivery? Are you a unique artist? Do y'all accept creative and unique designs? Are y'all offer whatever extra frills? How are your skills compared to your competitors?
Supermarkets cakes vs. homemade cakes
Ane of my mom's friends used to take the price-list of a local bakery, mark it upward past xxx% and use it as her price listing. As a child, I was amazed at how like shooting fish in a barrel pricing was, but afterward doing my MBA - ah not and so impressed.
Never ever compare your product to a supermarket product, not fifty-fifty if you are at a bones level of cake decorating. This is not a proficient price guideline. Why? Because supermarkets have a very different business concern model than ours.
- Supermarkets' concern model is based on low-profit margins, backed by a cost-driven, highly efficient operation.
- A baker sells about 300 to 600 cakes a week.
- They purchase ingredients in bulk and at a fraction of the toll that we buy them from the supermarket!! So the aforementioned flour that you pay ii dollars for probably price a few cents for them.
- In addition, they piece of work on a large scale, which puts quantity earlier quality. We deal in quality and custom orders. In that location is no comparison - right?
As a habitation baker, you effort to use acme quality ingredients as compared to generic supermarket brands, and you customize each and every cake. While supermarket cakes are flash-frozen; y'all offer freshness, consultation, designing and much more.
Competitors
There has got to be another domicile baker not far from you lot. Cheque out her cakes, run across the value she provides – compare those to your skills and values.
What would get a customer to choose your cakes over hers? Y'all definitely do not want people coming to you lot just because your prices are depression? Do you? In that location is no accolade in being that 'inexpensive cake lady'
Unique expertise and value
Identify your unique skills and expertise. Try to use them to create value for your customers.
While cake decorating was a new venture for me, baking, on the other hand, is my expertise. I take been blistering for more than 20 years and take pride in the fact that I make the best tasting cakes from scratch.
Since in my present market baking a cake from scratch is considered unique and valuable, I use it as my competitive advantage.
4. What are your reputation and the demand for your production?
To get block orders y'all first need to create awareness and generate demand for your product.
- Do people know you?
- Have you built a proficient reputation?
- Does your production have a market place presence?
- If you have a good reputation, your cakes volition be in loftier demand and you will be able to accuse a college cost.
Personal example - Most of my business comes from give-and-take of mouth. I do not advertise. As such every client that comes to me, comes through someone I know or has tasted my cakes at some event.
Considering I work in a price-sensitive market this is the best style for me to build my business and reputation.
One time people hear about you and your skills from a reliable source their attitude to pricing changes. I have seen that with my customers. There is real tangible value to a expert reputation.
All the above factors are important factors in determining what is the value of your cakes in the eye of your customers. How much are they willing to pay for them? What toll will your specific market place bear?
Is your business concern model assisting?
Equally I mentioned above, unless you're doing this as a hobby, the purpose of your cake business organization is to generate a profit. The more the better.
Therefore, information technology'due south crucial that yous empathize both sides of the business. How to create demand for your product, reach your customers, toll your cakes correctly, and deliver them. And at the aforementioned time, what are the real costs of making your cakes, and running your concern. Of form, your goal is that your income from selling your cakes will be higher than what information technology costs you to make and deliver them to your customers
Hence, understanding what are your total costs, and calculating them correctly is critical to your long-term success.
A few points to note when pricing cakes based on market value
My personal experience
When I began my business I priced my cakes lower than the market value, not because I wanted to get more business. No!
Dissimilar most professionals that become to courses and learn past practice, my practice was on the task.
While I was very confident in my baking skills, I yet had to testify my decorating skills non only to my customers but for myself as well.
So I made a lot of cakes by simply charging for the cost and was very happy about it. I let friends pay me the cost of the cake then I could acquire and it was a win-win situation for us all. I considered it equally if these customers are funding my education.
Merely as my level of skill and expertise grew so did my prices.
We all take to start somewhere. And sometimes we have to make compromises along the fashion to reach our goals. What's important is what works for you lot. Which customers are you're aiming to serve, and what are they willing to pay the value yous provide.
The Price Tag vs the Name Tag
To me, information technology doesn't matter if the cake has a price tag on it or is for FREE. In one case it leaves my hands it's a work of art fabricated past Veena Azmanov.
People who see the cake don't inquire how much you paid for it. They inquire who made the cake. So I take pride in what I do and the value I offer.
Here'due south another post that speaks on pricing cakes. I think you'll find information technology a good read too. - I bet most of y'all are underpricing your cakes
Frequently asked questions
How much should I accuse for my cake?
Just for the purpose of simple maths:
1. Start, estimate how many hours is this cake going to take - 5 hours
2. Then, calculate the price of ingredients - $20
3. Next, decide the labor cost - $20 x 5 = 100
4. Add utilities price - $5
5. Sundry toll (small cost) - $v
6. Then, calculate the total price: xx + 100 + 5 + five = $130
7. In addition, how much profit you want to make - 30% = 130 x xxx%
eight. So, finally, the full cake price = $ 169
What if the customer is not willing to pay the price?
First, not all buyers are your customers. And, you are never going to be able to please anybody. In fact, at that place will be those who cannot beget your cakes and that's ok.
Why am I not getting whatsoever cake orders?
Oftentimes, the problem with not getting cake orders is not the price only the marketing effort. You lot have to attract the right customers.
For example, luxury Swiss watches are sold at sectional shops, not on Amazon.com.
My cakes have longer to decorate compared to other cake decorators?
When yous are new to cake decorating it is normal to take longer to decorate the cakes. In fact, speed comes with fourth dimension and practise.
This is where you need to make up one's mind how much to pay yourself.
Read - Timeline for decorating a block.
How many cake orders tin can I have in a calendar week?
It depends on how much time and how much work-load you tin handle. Hence, there is no "correct" number of block you lot need to do to be called a cake decorator. Please read - how many block orders can I take.
We discussed a few more than cake pricing questions over on the cake decorating web log
Cake Pricing - Block Decorating Tutorials
Cake pricing is oftentimes the most stressful determination a cake decorator has to make. The fear of losing customers by over-pricing or losing money past under-pricing is frequently a dilemma. But it doesn't have to be. Here are a few tips on the subject field of how much should I accuse for my cakes?
And, I'd love to know what yous think, not just well-nigh this mail simply almost block pricing. Also, about your concerns regarding cake pricing. So, please share your thoughts, questions, and comments with me, and the other readers. And, I might update this post and include some of your comments, and address specific questions. And so, just write a comment below and I'll be happy to address those questions.
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Source: https://veenaazmanov.com/cake-pricing-price-cakes/
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