Quite often people are a little surprised about how much a cake can really cost, and I see countless posts online completely missing the point about WHY they cost how much they do. How to price a cake correctly isn’t as complicated as you may think!
There are many bakers I admire, not just because their work is amazing, but also because they know how to price a cake realistically. It’s hard to know your worth in this industry, but once you find it – stick to it! Don’t be afraid and remember only you can provide the service that you do, nobody else.
I’ve written about how to price a cake a couple of times before, and I’ll probably write about it again in the future. Purely because I really believe it’s important to get it right. It’s not only an insult to yourself to undercharge (as tempting as it may be in order to get the client) but it’s also an insult to the industry and makes things even more difficult with regards to realistic expectations. I often have people asking me for advice on this, whether on my cake page or when I’m teaching cake decorating.
“How do I work out what I should charge for cakes? What should my prices be? How do you charge? What price would you charge for this cake?”
So, if you often wonder this too, then you’re in the right place.
This post is mostly relevant for home bakers but can also apply to anyone that bakes cakes, whether it’s your full-time job or even just a hobby. One of my biggest bugbears is when I see someone saying “Oh I’m not a professional, I only charge this much” – YOU ARE A PROFESSIONAL! You’re not giving away cakes, you are selling them. Somebody has to pay for all those tools you have, someone needs to be responsible for the gas/electric for your oven. This is why it is really important to work out a sensible, realistic and fair pricing structure. Don’t sell yourself short, your time is valuable – you are worth it.
Plus, who wants to be known as the cheap cake lady.. I certainly don’t – do you?
I charged £800 for this wedding cake which consisted of 4 tiers to feed 120 people, each tier a completely different flavour.
I estimated it would take 22 hours of work (I went over, but this happens), the costs to create worked out at £148.00 and utilities at £15.00.
How did I arrive at £800? See below.
I have a formula for working out the prices of my cakes, and I’m about to share that. I don’t often share this kind of information as it’s private to me, but as I’ll soon be releasing a complete ‘How to set up and run your own Cake Business’ guide which will include lots of information on pricing and how to quote, I guess this is kind of a little teaser for that.
So, first things first. You need to decide on your hourly rate of what you want to earn (your salary) and you need to decide on a % figure of what profit you want to make. Profit is needed as somebody has to pay for all your supplies and overheads – this doesn’t come out of your hourly rate.
My hourly rate is between £20-£30 (minimum wage is currently £7.50) but I’m going to use £20 for this example and my profit is set at 30% (I’d recommend not going below 15%). Everyone’s hourly rate and profit will be different and your hourly rate should increase the more experience you have, and your profit should increase depending on how often you work and the type of expenses you will create.
I create cakes part time, I rarely attend wedding fairs or have market stands, but I do have costs for my equipment and website so I tend to stick between a 30-50% profit range. Also, and I know some people disagree on this, but I think location makes a big difference in the UK. Berkshire, where I live is considered quite affluent, but being from Yorkshire I’m aware some areas are far less so. This means you really need to know your area and there’s absolutely no harm in doing some research into what others around you charge – just be upfront about it.
With me so far?
Next, and this will come from experience, you need to work out how long you think the cake will take you and also work out how much the cost will be to create.
TIP: Costs to create must include everything: ingredients, decorations, boards, boxes, ribbons – the lot. Don’t leave anything out. I keep a tally of how long a cake takes me on my order schedule. That way I can refer back when I’m looking to price a similar order.
You also need to remember to add on utilities. This is the difficult part but so long as you include enough for gas/electric and water you’ll be on track. For single cakes, I stick to £5, for tiered cakes around £10-15. In this instance, I’m going with £15.
Voila! There you have it. Have a practice and I bet you’ll find it quite surprising. Next time you receive an enquiry take the time to price correctly and don’t just have a guess.
If a customer comes back to you and says this is too expensive don’t just drop the price immediately because they say so, have a little think first. Could you do this for cheaper? Do you actually want to do it for cheaper? Is this the customer the type of customer you really want? Are you worth it?
No doubt they’ll come back and say something like “but I can get it cheaper elsewhere”. If they do – let them! Why are they even telling you this in the first place? You know why right? It’s because they want YOU to make the cake – not the cheaper person. They’ve seen your work, they prefer it, then guess what… they should be willing to pay for it too.
You may also hear “But it’s just a cake” My answer… “No, it’s not!” A bespoke custom cake is usually a work of art. The centrepiece at any event, a birthday, a wedding or a christening. It’s a major part of the day and will usually feature in all the photos too. It’s never just a cake.
“You need to value your work so that your customers will value your work!”
Phew…I feel a whole lot better for getting that one off my chest.
Any questions at all please do feel free to comment below, I always respond. Or email me if you prefer.
Oh, I nearly forgot. In case you spotted I didn’t add making the two fabulous Star Wars toppers to my timing schedule that’s because the super talented Lucy from Lucy’s cake toppers made them, you can see more of her work here. Hi Lucy…. *waves*