I did not have any formal way of pricing cakes, so I added up my ingredients using a rudimentary spreadsheet and then multiplied that number by 3, which came to $330.11.
It was 10″-8″-6″ square cakes, which serves 100. It was covered in fondant and included 7 handmade gumpaste flowers. That would be $3.30/serving. Crazy!
In this case, the customer told me that they were saving the top tier of the cake for their first anniversary, so they would be serving 82 servings. So, for some reason, I only charged them for 82 servings. Rookie mistake! I had already decided that I wanted to charge $4.25/serving, so at 82 servings, that would be $348.50.
So where did I get the $4.25/serving? I made it up! It just sounded good to me at the time. Honestly, I don’t remember. I’m sure I did some online research about fondant pricing, and I probably called some local bakeries to get an idea of their pricing for comparison. I had no idea how long it would take me to make the flowers or the fondant borders, so I did not factor that into my pricing at all.
Now for the kicker! Neither of the numbers are the amount that I charged this customer. Are you ready for this?
I charged them only $250.00!
That’s right. $2.50 per serving for an all fondant cake with handmade flowers.
So I put the cake information into Cake Pricer to see how it compared to my original pricing (before I lost my mind and lowered the price for the customer).
As you can see, at the time I was charging $15 per hour and had a 20% profit included. That still came up short based on what I said I wanted to make per serving for the all-fondant cake. With the flowers, the minimum total should have been $449.50.
So, here is the breakdown of what I actually charged the customer.
So, to get to this price I had to lower the Profit Percentage to 0% and lowered the hourly rate from $15.00/hour to $11.75/hour.
$11.75 per hour wasn’t horrible, but with 0% profit, no business will stay open for long.
Had I charged the full $4.25/hour the breakdown would look like this:
pricing cakes for profit
We now have a healthy profit margin of 30%, which equates to $134.71 and an hourly rate of $16.23/hour. Much better! The spreadsheet rounds totals up to the nearest dollar, so our minimum ends up being $450.00.
What makes up the cake subtotal?
The Cake Subtotal listed in the image above is shown in the following screen shots.
Cake Tiers Details
The Cake Tiers Detail section includes pricing for:
- All cake batter, sugar syrup, filling, icing, and fondant covering needed,
- All cake boards, dummy cakes, dowels, or other types of support systems
The following sections show additional costs.
All costs for the main board that supports the cake are listed here.
- The main board itself,
- Any covering that might go on the board, such as, Scrapbook or Wrapping Paper, Contact Paper, or fondant.
- Ribbon for the edge of the board.
Time & Overhead
All Time & Overhead charges are listed here.
- Time charges include baking & preparing recipes, decorating, and clean-up.
- Overhead is calculated based on your customization of the Preferences sheet, as well as, wear & tear on the tools you use to make the cake.
This section includes everything else.
- Any additional recipes or purchased items, such as, Royal Icing, Rice Cereal Treats, Fondant, Gumpaste, or Modeling Chocolate in addition to what is used to cover the cake,
- Other Recipes, such as extra ganache for drip cakes, macarons or cookies used in decorating,
- Boxes for transporting the cake,
- Additional items, such as, disposable gloves, paper towels, exacto knives, or anything else that goes into making the cake,
- Hand-modeled or purchased figures, toppers, or flowers.
So there you have it. Everything is accounted for and you end up with a decent hourly rate, as well as, a respectable profit. By pricing cakes for profit, you will keep the doors open without burning yourself out.
One thing to remember is that not every customer is going to say “Yes” to your pricing. But if you stick to your guns and price appropriately, you will eventually get the clientele that you want. In fact, in my last year of business I had more revenue than any of my other years and I worked less. I was even closed for most of the main wedding season to take care of a family member that needed me. I was able to do that because I priced my cakes effectively and only accepted orders that made me money.
I hope this helps you understand a little more about everything that needs to be accounted for when pricing your custom cakes.
I’ll be back next week with another example.