The simple but frustrating answer is that no one can tell you how much you should charge. Setting a price structure is one of the most difficult parts of any business. As with real estate, the price of cakes varies widely by location and is largely determined by your local market. Finding the right price point requires research of your competitors’ prices and a solid understanding of your own costs.
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.
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. When YOU value your cakes and price them appropriately, your customers will too.
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We firmly believe that the “ingredients times 2 or 3” method of pricing is arbitrary and not rooted in any kind of business theory. In our experience, this method results ingrossly underpricingyour product.
What do you think is the most expensive ingredient in your cake? Is it the butter? Maybe the sugar, or buttermilk, or eggs? It’s important to know what your costs are, and factor them into the price of your cake; take a look at some of our recipes where we’ve provided an ingredient cost breakdown! But, the most expensive ingredient in your cake is your time. And the cost of your time has nothing to do with how much you paid for ingredients. This is why it’s so hard to price cakes, and why Software is essential to your beginning cake business.
Is the standard in the cake industry. Just like bread is sold by the loaf and milk is sold by the gallon – the cake is sold by the serving. Find a serving chart you like, and stick with it. Two popular serving charts areWilton’sandEarlene’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.
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Well, here at 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”. 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. You could also make your wedding cake a more premium product; torted with 4 layers of cake and 3 layers of filling, while your party cakes are simply 2 layers of cake and 1 layer of filling. Wedding cakes also require more time for delivery and setup, and of course, more stress.IFyou 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.
I know, I know. You’re here reading this page because you were searching for an answer, and here I am telling you that there is no answer. Here’s the lowdown: in the United States, you could charge anywhere from $2.00 per serving (please don’t go lower!) to $10.00 per serving (or even MORE sometimes!). Where you fall in that huge spread depends on your skill, your costs, your local market, and your ability to sell your cake. When you use Software to price your cakes, you’ll have a much better idea of what you need to be charging to be paid fairly for your skill, time, and expertise.
Call other custom bakeries in your area and ask them how much they charge per slice for wedding, party and sheet cakes.
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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.
But I called the local cake shop, and their prices are way too high. I can do it so much cheaper than that!
The local cake store is charging what they need to charge in order to pay rent, utilities, make payroll, and keep a roof over the head of the owner. If you significantly undercut their prices, you are not only lowering the value of cake in your community, but you could affect their business enough that they have to lay off employees, or even close. Even though you don’t have the overhead of a cake shop, you owe it to the cake decorating community to maintain the value of your goods. There is no honor or pride in being the “cheap cake lady”. Also, you run the risk of antagonizing them if you undercut their prices significantly. You never know – professional networking is a powerful thing. You may want to build a relationship with that cake shop. Professional relationships can enhance your business reputation and increase your bottom line through referrals! Don’t think: “Their prices are way too high.” Think: “Wow! Look what a custom cake is worth!”
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Here’s a real-world example: What if your home were paid off, so when it came time to sell, you put it on the market for much less than your neighbors’ homes just because you didn’t “need” the full market value? Not only would that not make any sense, but you would lower the value of everyone’s homes on your street and make your neighbors angry.
Never, ever compare your prices to Wal-Mart, Sam’s Club, Costco, or a grocery store. Peoplecan’tget 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 frost 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.
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. Does 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? How about responding to multiple emails from a mother who’s worried about making her daughter’s bridal shower perfect in every way? No, of course not.
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If you’re in the business of selling cakes, then sadly you need to get used to people complaining about the price. Some people will complain about the price even if you charge half as much as you should. Complainers are probably not meant to be your customer. Do they complain about the price at the hairdresser? At the grocery store? 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.
“Just cake” can be found in the cooler at Wal-Mart for $15. If you are going to sell your cakes, it’s important to eliminate the phrase “it’s just cake” from your vocabulary. Custom cakes and cookies are edible works of art that require skill and artistry and can take days to complete. Duff Goldman, the “Ace of Cakes”, has a$300 minimum for a 10-15 serving custom tiered cake.
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
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