I completely love my job. I am blessed with the ability to make edible art and teach others how to do the same. In almost every class I have, I will inevitably have one or two people who plan on starting their own baking and cake decorating business. Shows like “Cake Boss” and “Cupcake Wars” have sparked the interest of so many wide-eyed bakers that it’s almost unbelievable.
I am constantly asked “how do I price out my cakes?” It is one of the most talked about subjects among home-bakers. It is an incredibly difficult question to answer also. There is no black and white answer to give. There are many elements that will affect the price of a home-baked good. Here I will do my best to explain some of those to you. It is my hope that this will clear some things up for those of you that sell your items. The following info below is straight and to the point. I’m not beating around the bush. I want you to know the honest truth about this topic.
And if you are a customer, someone who has an interest in purchasing a custom designed cake, then this might answer some tough questions for you as well.
Location, Location, Location
Your geographic location will make all the difference on the general price of your cakes. Some areas of the country charge $1.50 a serving while others charge $9 a serving. It all depends on where you live and the cost of living there. The first act you must take when preparing to price your cakes is RESEARCH THE LOCAL MARKET. It is essential that you find out what other bakers, both home and store front, are charging. You must develop a solid understanding of the market.
**It is important to remember that store front bakeries will typically be higher than home bakers because they have overhead. They need to charge enough to cover the cost of ingredients, payroll, utilities and equipment plus their time, maybe even a delivery fee here and there. Get the idea?
This part is the worst, at least I think so. As cake decorators we are artists. We create edible works of art, so this numbers and data recording part completely bores me to tears but it is very necessary.
The next time you are at the grocery store, take a pen and paper with you or your smart phone and WRITE DOWN THE COST OF INGREDIENTS. GO HOME AND RECORD IT. I have an excel spreadsheet that breaks down the cost of ingredients and I have them for different stores. Now, remember, many retailers will slightly adjust their prices every week even if the item isn’t on sale. Many things can drive this but just keep that in mind. Periodically check the prices to make sure your recordings are up to date.
What Is Your Time Worth?
This, to me at least, is the hardest part. Custom designed cakes are created by artists. It’s not “just cake”. Walmart sells just cake, I create edible art. This is difficult for some to grasp. And trust me, you’ll have customers tell you that it’s “just cake”. Well it’s not just cake when you want me to construct a large piece of art that requires a custom designed base with an affixed piece of hardware and tons of gumpaste details all hand-made and painted. When a cake requires knowledge of engineering, it is not “just cake”. When a customer wants hand-made details, fondant figures, gumpaste flowers, hand-made decorations…. then it is not just cake. It crosses over into something totally different.
So as an artist, what is your time worth? I HAVE NO IDEA, DON’T ASK ME. 🙂 That is something you must decide. Again, look at your competition to get an idea of what they charge.
- You are your own worse critic. In many cases people, especially those starting out, feel that they charge too much for their cakes because of their experience level. It’s natural to be unsure. But it’s highly unlikely you are charging too much. In most cases people don’t charge enough!
- When doing your research on other bakeries in your area, do not be afraid to ask what they charge per serving. When setting your prices, you will want to set them close to the other like-minded bakers, meaning apples to apples here. Have similar prices to other home bakers.
- **Do not undercut other bakers by making your prices lower!** I see this a lot with new bakers just starting out. They want to get experience and build a name for themselves so they sell their work for much much lower than anyone else. That is grossly inappropriate, unprofessional and unfair. First, you will build a name for yourself as the cheap cake lady. You will quickly learn that people will take advantage of you and will walk all over you just to get what they want. And they will benefit greatly from an amazing home-made creation while you will be busting your rump for nothing. This is your business and in business you need profit. It’s ok to make money on your cakes.
- Back to the whole Walmart thing, you can’t sell a Walmart quality cake because your creations are better than that. Those grocery store bakeries are mad sometime up to 6 months or more in advance, frozen and then decorated with icing from a bucket! G-R-O-S-S! And I’ve heard horror stories about those icing buckets. One baker from a large grocery chain said that she worked in that bakery for roughly 10 years and in that 10 years they consistently used icing that was past its expiration date. O-M-G. Blah! A cake from you is fresh (at least it better be), the icing is from scratch and the ingredients are much better.
- Do not worry about losing the sale. I know, I fret over it also. I have lost sales because of price before. It WILL happen. But again, there is a completely different quality in a home-baked good compared to a grocery store cake. If you lose the sale then Oh-Well. It wasn’t meant to be. You want to make quality products for the right amount of compensation.
Just remember to never sell yourself short. You will be frustrated from lack of sales, trust me it will happen. But you deserve to be paid for all of your hard work. You don’t want to give your customer sticker shock but you do want to make a profit. People are used to Walmart and Cosco so when they come to you they very well may be shocked. But you can offer them something so much more special than any grocery store chain. And if they want “just cake” then maybe a grocery store cake is best for them.