How do you set a price for cakes?!
Answers: I am starting up a small cake business. I would like to know how other people have gone about setting prices for their cakes. I plan on doing plain regular sheet and round cakes decorated to specifications. Also I will be doing specialty cakes like gutairs and what not. I also know how to do fondant and will be learning how to use gumpaste for flowers etc. Eventually I'd like to tackle wedding cakes as well. Any insight would be helpful. Thank you!
I run a small business from my home selling cakes...
I first set an hourly rate for myself based on how expirienced i am compared to others....
then I charge them for the amount of each ingredient i used for the cake, fillings and frostings....
any extras, cake boards, dowels, etc
If you are delivering that cake you need to charge per mile or offer a flat rate like $10 for 5-15 miles(just an example, not actual)
I have a couple pricing matrixes that I will forward to you so that you can see how some people price out the cost of cakes...I can send you my own pricing matrix also, its a little confusing when you first look at it, but i made it for my own personal needs and likes...
i'd price the competition out
as a mystery shopper not their competition ... go in or call around for pricing for xyz cakes and pies
then you price yourself at or below their price.
gum paste and specialty cakes are all the rage and not every bakery does this.
i wouldn't price them uber high off the bat- draw in clients and then raise prices a lil at a time after you are established
best of luck to you
Find a website for a bakery that you know of in your home town and request their information for pricing and see if you want to go by that. You also have to take into account how much the ingredients will cost and how much time it takes to prepare something.
As with most products, you set the price according to what peple will pay.
That will give you your selling price.
If you can make them for less and give yourself a suitable profit, you have a business.
If you cannot make it for less then you have no business
Start with the end user price and work backwards. This can be judged by survey and competitors.
Does your USP ( unique selling point ) allow you to charge more ( maybe you are organic, vegetarian - they might carry a premium )
The cruedest pricing models for retail are "double the in cost and add VAT / TAX"
For small-scale-manufacturing ( which is your case ) you would probably look to triple the in cost and then add in the labour costs.
For custom designed cakes you are more into the services industry so material costs are likely to be a small part of the total out price - you are back to what the customer is willing to pay.
i suggest you ask SUCCESSFUL competition to quote for some cakes - get your family to submit the rfq's. Choose companies you aspire to be like.
u put a prce tag on it
Check to see what your competition is charging,. Also sit down and calculate how much it costs to make a cake( price of ingredients, packaging, gas used to bake the cake, every little thing used in making and presenting that cake). To that add what you think would make a good profit,( 20%) and if that is near what your competitors are charging then that is a good place to start