How
much should I charge for my cakes?
This is one of the most frequently asked questions by cake decorators when they
begin to sell their cakes. As artists, it is hard to know what value to place
on our work. We don't want to sell ourselves and our talents short, but neither
do we want to shock our customers with high prices, leave them feeling like they
paid too much, or even worse - have a customer argue with us about the price of our
cake. In this article I will address some of the common questions about the
pricing issue.
Am I charging too much for my cakes?
It's doubtful. The most common problem with pricing is underpricing.
I don't feel right charging very much - I'm just starting out.
It is natural, when you are starting your cake business, to feel unsure
of your skills, and hesitant about charging very much for your cakes. The
first thing to remember is that we are our own worst critics - your cakes are probably
much more skilled than you think they are! When you value them and price them appropriately,
your customers will too.
Should I charge by the cake or by the serving?
Charging per serving is the standard in the cake industry.
Just like bread is sold by the loaf and milk is sold by the gallon - cake is sold
by the serving. Find a serving chart you like, and stick with it. Two
popular serving charts are
Wilton's and Earlene's.
Earlene's chart has slightly larger serving sizes than Wilton's, so you will want
to adjust your price-per-serving appropriately if you choose this chart. Most
caterers are trained to cut wedding cakes to Wilton's standards. If you have
a customer base that enjoys a more generously sized piece of cake, Earlene's
chart is a great choice.
I should charge more per serving for wedding cakes than for party cakes, right?
Well, here at CakeBoss we believe that a cake is a cake, no matter what
the occasion, and that there should be no price difference. Brides are already
told in bridal magazines and web sites that vendors are ready to rip them off at
the mere mention of the word "wedding". (Watch
a funny YouTube video). Charging a higher price for a wedding cake
just reinforces this misconception. However - there could be an argument made
for charging more for wedding cakes - wedding cakes require a tasting and consultation
which party cakes usually do not. They require more time for delivery and
setup, and of course, more stress. IF you decide to charge
more per serving for wedding cakes, be sure you understand why you are doing it
so you will be able to explain when your bride asks you why her "wedding" cake costs
more than a "party" cake would.
How do I know what people will pay for a cake in my community?
Call other custom bakeries in your area and ask them how much they charge
per slice for wedding, party and sheet cakes. Set your prices close to theirs,
or maybe slightly lower if you are still building your skill level.
Do NOT undercut them - this is a disservice to them, and to other decorators in
your community.
Wal-Mart sells their cakes for $15! I can't match that price, much less
beat it!
Never, ever compare your prices to Wal-Mart, Sam's Club, Costco, or a grocery
store. People can't get the same cake at Wal-Mart that they
get from you. That cake at Wal-Mart was made months ago, flash-frozen, and
shipped to the store, where an employee working as quickly as he/she could frosted
it with icing from a bucket, and maybe added some airbrushing or buttercream roses.
That employee probably had 50 other cakes to complete in the same shift. The
difference between your cake and Wal-Mart's cake can be likened to the difference
between custom garments and off-the-rack clothes. Say you went to a seamstress,
consulted with her about the perfect fabric and cut for your body type, discussed
your coloring, took measurements, went back for several fittings, and in the end
had an exquisite dress, hand-made with excruciating attention to detail, perfect
for your body and your coloring. When the seamstress required payment, you
would not tell her that a Wal-Mart dress costs $14.99, so that's all you should pay.
The two products are not comparable.
People around here are used to Wal-Mart prices, they won't pay much more than
that.
You'd be surprised. It won't take long for your customers to realize
that you are providing the kind of cake that Wal-Mart simply can't. Will Wal-Mart
match a baby shower cake to an invitation? Will they accept fabric swatches of
bridesmaids' wedding dresses to ensure a perfectly color coordinated wedding cake? Will
they respond to multiple emails from a mother who's worried about making her daughter's
bridal shower perfect in every way? No!
Someone complained about the price and said I charge too much!
Then that person is probably not meant to be your customer. Do they complain
about the price at the hairdresser? At the nail salon? Probably not.
If they will complain to you about the price, imagine what else they will
complain about. If you let them talk you down in price, you are setting a very
bad business precedent.
If I charge too much, I might lose the sale!
And? Do you need to take a sale where you end up making below minimum wage
or even losing money?
I never know what to charge friends and family.
Yeah, that's a tough one. There are a lot of factors at play here. Things
to consider: do you have time to do the cake? Do you WANT to do the
cake? How close are you to the person requesting the cake? Do you owe
them a favor? Is he/she always requesting favors and free stuff from you?
We can't tell you how much to charge friends and family, but here are some options
to consider:
1. Have a standing arrangement - if you offer to do the cake, it is free.
If they request the cake, they pay for it (either full price, discounted some percentage,
or ingredients only).
2. Different standing arrangement - if the person requesting the cake lets you have
free reign of the design, the cake is free (or charged ingredients-only).
If the person is going to get picky about design and act like a customer, then he/she
can pay like a customer. This is a great way to practice new techniques you've
been dying to try, and
get some new cakes in your portfolio.
3. Offer all friends and family a standard discount off your regular
prices (15%, 25%, 50% - whatever you
are comfortable with).
4. Friends and family pay full price like everyone else.
Whatever you decide, don't feel obligated to make a cake for every family function,
or every family/friend who wants one. There are only so many hours in the
day! It's ok to say you're too busy, especially if it's a last-minute request.
I have read that a good way to price cakes is to charge for the cost of ingredients
times 2 (or 3).
We firmly believe that the "ingredients times 2 or 3" method of pricing
is random, arbitrary, and not rooted in any kind of business theory. In our experience, this method results in grossly underpricing your product. The cost of the cake lies not in the ingredients, but in the labor
invested.
To price your cakes, there are four elements
to be aware of:
The first element: Ingredients and supplies
To know how much to charge, you
must understand how much you are spending.
It takes a time investment to calculate your ingredient costs, but it is vital to
understanding what a cake costs you to make. Don't forget the cost of the boards, boxes,
foil, and dowels.
The second element: Time
When you start thinking about it, the time you spend on a cake is so much more than
just the time spent decorating. There is time spent consulting with the customer,
planning a custom design, shopping, baking, cooling, making fillings, frostings,
fondant, and sometimes custom work like fondant or gumpaste toppers or figurines.
You deserve to be compensated a fair hourly rate for the time you spend on a cake.
Don't forget cleanup time! We've all seen what our kitchens look like after
a big cake!
The third element: Overhead
When you bake a cake, you use your oven, your utilities, your pans, your mixer, your dishwasher, and soap. These things all required an initial investment
by you, and a nominal fee for their use should be added to the cost of the cake.
The fourth element: Delivery
Your customer lives two hours away and wants the cake delivered? Then
you must certainly be compensated for your time, your gas, wear and tear on your
vehicle, and any tolls that are incurred on the trip. The current federal
reimbursement rate for mileage is $0.50 per mile, so this is a good place to start.
Remember to charge for the entire round-trip!
CakeBoss can help you itemize your ingredient costs so that you
know exactly what all your recipes cost YOU out-of-pocket. Then, using the
pricing calculator, you can easily figure a total cost for a cake, including time,
overhead, and delivery. You would be surprised how these things can add up!
One CakeBoss user recently told us she had been planning on charging
$30 for a cake, but when she used CakeBoss to add up her costs,
she realized she needed to charge $56!
CakeBoss also tracks profit for each cake, contains a photo record
of all your orders, lets you print customized invoices and reports, has a calendar
feature to assure that you never forget an order again, and much, much
more! Your satisfaction is
absolutely guaranteed with our 30-Day Money Back Offer! If
CakeBoss does not completely change the way you run your home cake business, we
will refund the full purchase price within 30 days, no questions asked.
©
2007-2008 CakeBoss and Masters Software, Inc.
Links welcome.
Do not copy without permission.
|
|