Of all the comments (with a question) I hear over and over and over again is. “ I feel funny about charging people for what I do. I know it takes my time but, I am learning with every cake. How much should I charge for my cakes?”
Why do you feel funny about charging people for a product that they request from you? Do you feel funny about paying to have the oil changed in your car? Do you feel funny about paying for cookies in the store when you get to the check out stand? I don’t think I have ever heard anyone get to the check out stand and tell the checker “ I would like these cookies but I really think that they are only worth 69¢ instead of the 89¢ that they are marked. When people request a product from you it has worth. How you determine the price is by the ingredient cost, the time you put into that product and the quality of that product. Then there is also one more thing that figures into how much you can charge – your reputation and the demand for your product.
When you first begin in this business you will need to keep your prices competitive with your local competition. Check out what the bakeries and other specialty cake decorators in your area are charging. NEVER, never NEVER under price the local bakeries. As you gain skills and improve the taste and textures in your cakes you can begin to raise those prices accordingly. The reason people are coming to you for a specialty cake is because they want a product that is better or technique that the bakeries are not willing to do.
People will only pay you what you ask. If you only ask for $1.00 per serving for your cakes believe me they won’t pay you more.
Begin pricing those cakes slightly higher than the local bakeries and then as the demand begins to come for your cakes because they taste and look better, you begin raising your prices.
When the demand gets to the point you are turning more work down than you are doing it is time to raise those prices again. Every six months or so raise them 10¢, 25¢ or 50¢ a serving and over a period of time you will be able to elevate them to where they need to be.
I know one cake business that is charging very low prices for sheet cakes because she says that her local people won’t pay more for the cakes.
In truth she is paying more to get those cakes done by her employees than her customers are paying for the cakes. Every cake that goes out her door – she is loosing money on because she is paying salaries to employees to accomplish the overload of work she has.
You must be compensated for your time and your employees time to stay in this as a business. You must consider the time it takes to mix up the cake, bake the cake, make the icing, make the decorations and decorate the cake. If that customer wants a custom design and you have an hour into mixing the cake, making the icing and etc. Three hours into creating her custom design and you figure your time is worth $5 to$10 per hour. Then that cake at a minimum should sell for at least $25 to $45 with the cost of the ingredients figured in.
Don’t under compensate yourself.
Now when you add more techniques to your expertise such as gumpaste flowers, fondant techniques and time consuming run sugar work then you must charge additional for the time and work in those techniques.
Sure this starts as a fun hobby but when your friends and neighbors find out what you are doing – you soon find yourself in a time consuming business.
Many of us only started in this business to be able to do cakes for our families and then found our hobby had turned into a full fledged side business.
If you aren’t smart about charging for what you do, you will find this a drain on your time and your resources. You will become discouraged with no time to spend doing other things with your family, all of your extra time is spent in the kitchen, constantly needing more equipment (that does get expensive).
No one can tell you exactly how much to charge for a cake.
Each of us must determine prices we are comfortable with that fit within our community.
Be Fair to your customers and yourself.
Be generous with your servings. Give your customers the very best tasting cake you can offer. Always do your best on every project or cake you take on.
Even if you realize you under priced a cake – still give your best and adjust that price the next time you are asked to do that same design. Keep a good picture record of your cakes so that customers will feel comfortable knowing what you can do.
Why should they pay more than bakery prices if you can’t do better quality work than the bakeries. Those pictures are very important to your being able to charge more for your work.
Quality in the cake and the decorating will be expected as your prices go up. Always striving to do better work will assure your quality stays high and your customers stay happy.