How to price your cakes for profit and sustainability

Introduction: Cake pricing is a topic which has undoubtedly till this day been the making and breaking point of every skilled self employed person including home bakers.

“How much should i charge for my cakes?”, “I don’t think anyone would pay this for just a cake!”, “I’ve found someone cheaper!”. “It’s only flour, butter, eggs and sugar!”…… i could go on and on, but that would only be adding more insult to injury.

When starting a small home baking business, most bakers only tend to make a profit only about 5 years into the business. Of course there is the issue of re-investing the profits into equipment/tools because the cake world is evolving and you have too keep up with the trend. My advice in the area of buying cake tools, would be to first get the essentials only. These are: Cake mixer, Turn table, Scrapers (metal/ Acrylic), Baking tins, Spatulas & Palette knives, Oven and Fridge.

The last two, you probably already have, but you need to ensure they’re good quality as they’ll determine how delicious your cakes are (taste and texture), and how beautiful/ugly your cakes look (cracked buttercream & condensation issues). Once you get these 7 equipment right, all you need do is to work on your cake aesthetics.

Your design style determines if you’ll keep buying tools or not, reason why you will need to determine your cake decorating style from the very beginning. Do you want to be the baker who bakes any and every design brought to you by your customers? If you do, then prepare to buy tools all the time.

1. Pricing:

So how then can you price your cakes in order to make a profit and get real value for your skill and time? Before i spill the beans, there’s one important question i always ask myself when charging for my cakes: "can I pay X amount for this cake?"

Your customers need to see that they’re getting real value for their money, and this can only be achieved by selling them cakes which not only taste amazing, but also are uniquely stunning, and not just an over-repeated design on the market. Furthermore, when you keep copying other designs, you can’t really charge your worth as the original idea/style, isn’t yours.

Before we delve into the math of correctly pricing your cakes, be sure that you are providing value for your customer’s money, by incorporating your own ideas into the design.

So you’d ask: what if i am just starting and my skill level isn’t that good? Should i only charge for ingredients then? the answer is NO! We all start from somewhere regardless of what skill level we are now. This is how to correctly price your cakes:

– Cost of Ingredients: Cost of all your ingredients including, cake dowels, cake topper, cake board, cake box, & non slip mat, sprinkles etc.

Example: 1kg (1000g) of flour costs = £x, but you only used 600g of flour for the cake. Therefore the cost of 600g flour will be : (600g x £1) / (1000g x £X) = £0.60                         Do this for all other ingredients.

– Utility Costs: This is easier if you have a smart meter as you can easily time yourself when baking or decorating a cake to know how much gas and electricity you’ve used on your smart meter. If you don’t have a smart meter, keep reading i’ll show you how.

Example:

• Your monthly electricity bill divided by 30 days = cost of electricity per day.

• Cost of electricity per day divided by 24 = cost of electricity per hour

• Number of working hours in the kitchen = Cost of electricity per cake. Remember, this is not just the number of hours your oven is turned on, because whilst in the kitchen your mixer is also using electricity, the lights are switched on, the fridge is also turned on, the phone you are using for reels is also being charged… etc ) these are all base costs which need to be covered.

  • So if electric / gas costs £0.50/hr, for 6 hours, you would have used £3 worth of electricity. If you spend 18 hours on a cake from baking to decorating, the total cost of electricity / gas for that cake would be £9.

  • If you make 3 cakes within 18 hours, multiply the total electricity/gas cost by 3.
    

– Overhead Costs: These are costs which can be very easily missed like; the cost of fuel for grocery shopping your ingredients, the number of hours spent shopping, online shipping costs and VAT,  the time you take to sketch the cake or research ideas etc…

– Cost per hour: This would depend on your skill level and experience, but if you are just starting out, we strongly advise you charge your city/country’s minimum wage per hour. You can then increase as your hourly rate as skill level goes up. 

Some bakers charge up to £15 – £20 an hour, and even though they only spend 4 hours on the cake, remember it has taken them about 3-5 years to learn how to finish that cake in 4 hours professionally. Hence whilst charging for their time, they’re also charging for their expertise/years of experience.

All these costs put together would make up the final cost of the cake.

2. Practice, Practice, Practice: Like any skill, cake decorating requires practice. Don't be discouraged if your first attempts don't turn out as expected. Keep practicing, experimenting, and learning from your mistakes. With time and dedication, you'll be able to create stunning cake decorations that will leave everyone in awe, and subsequently charge more for them. Conclusion: Making stunning cakes is a combination of creativity, technique, and practice, but what will keep you in business is profitability. At the end of the day, we all have bills to pay. As a person, when you feel that you are getting adequately rewarded for your work, you become more motivated to deliver the best results.

By following these tips, you'll be well on your way to profiting from your baking and cake decorating business, whilst creating visually appealing masterpieces.

Remember to charge your worth, be patient and ready to make mistakes along the way, but above all, learn from them and let your creativity shine through.