This past week I have been so busy with cake orders. I had to do a massive 3 tier cake and some birthday cakes.
The 3 tier cake was a bit of a challenge for me. I don’t really like doing tiered cakes, so that is why I do not do wedding cakes. The cake required an array of flowers and I did enjoy making them.
There is nothing like having some quirt time after the kids have gone to bed, watching TV
And making sugar roses and peonies.
I was alright till it came to stacking the cakes. I was not sure how many dowels I needed or whether the dowels I used were enough. Anyway managed to stack the cakes, but the next day, I noticed the top tier was leaning over. Complete nightmare. I managed to shock it, and then it came time to deliver the cake to the venue. It was like if I was carrying a new born baby. My heart did not stop beating till the cake was safely at on the cake stand in the event.
Well the cake held up and the celebrant loved the cake. I kept thinking why was I so worried.
But that is the life of a baker. It is our craft and we feel a personal connection for every cake we make.
Here is a pic of the cake and I was paid N100,000 for the cake. So I bought a new mixer with the proceeds. Not bad at all!
So how much do you think you would have charged for this Cake.
If you said anything less than N50,000, then you need to read this Pricing formula desperately.
Here is how you should price your Cakes.
It is a simple formula;
(Labour + Ingredients Costs + Sundry Costs + Utility Costs) x Profit = Total Cake Price
Step 1: Labour/ designer fee
Step 1 is labour, often the undercharged part of the cake pricing formula. When you know you are being paid something good then you making a cake becomes more enjoyable. But if you aren’t getting any good money,then it can be like a chore.
You do not want to work for nothing
To help you gain a control on the labour aspect, make a note of what you honestly want your hourly rate to be. Then increase it by 20%. This will be your hourly rate. Next start to monitor how long each type of cake takes to create. Record everything, from the initial enquiry, to the mixing, baking, cooling, cleaning, decorating, shopping, delivery, stacking, etc.
Step 2: Cost of Ingredients
I know this can be quite time consuming part. It is important to know the
price of each cake so make sure you calculate every batch. And remember to cost out every single recipe and recipe variation you work with.
Step 3: Sundry Costs or Extra Costs
Similar to step 3 this is fairly simple to cost, and again. Sundry costs, are things like cake boards, boxes, ribbons, dowels, etc.
Step 4: Utility Costs
I know calculating Utility costs are a little trickier to calculate as you have to look into your utility bills or think of an estimate or figure to cover your utility.
If you get bills and want to be very accurate. Find your gas, water and electric bill then
calculate the total yearly costs.
You can then calculate your daily or hourly costs.
Daily Costs = Yearly total divided by 365 days
Hourly Costs = Yearly total divided by 8760 hours in
This is how you can calculate the utility costs per day or per hour (whichever you prefer).
Step 5: Profit
If you want to grow your business this is the most important part.
So so far if you follow the process until this step you will be paying yourself a salary, covering your costs and not losing money. If you add this part this is where you will see your business grow. The profit will allow your business to grow without you sacrificing how much you will make.
The profit is money that you can invest back into your business. So that you can afford that shop you want, buy new cake equipment, create a website, buy flyers, generally market your business, and outsource your bookkeeping, admin, etc.
Do not overlook this step. How much profit you add to your cake pricing formula is your choice. But aim for at least somewhere between 30% – 60%.
Step 6: The Total Price
The final step is calculating all the steps.
(Labour/designer fee+ Cost of Ingredients + Sundry Costs + Utility
Costs) x Profit = Total Cake Price
Bose of Bose Cakes and Bakes has an order for a 10 inch fondant vanilla birthday cake with small piping and a few fondant roses on an iced cake board in a box.
Let get calculating:
Labour/your designer fee – N1,000 x 5 hours = N5000
Ingredients Costs = N2000
Sundry Costs = N600
Utility Costs = N450
Profit x 30%
The Formula (N5000+ N2000+ N600+ N450) x 30% = N10,465
Therefore the total price of Bose’s cake to the customer is N10,465
So this is the pricing formula you can use to price your cakes and you can tweak it how ever you want. So no more undercharging for your cakes, you are a professional and should be paid as such.
Rotimicakelady is your personal cake fairy. She is a cake business consultant and Coach.
She runs the Cake Business Owners Club where she helps bakers through Online courses have super profitable and successful cake businesses.
She has a passion for helping women who have a passion for baking, transition from hobby cake makers to successful and profitable cake business owners.
She also help cake business owners who have struggling in their cake business with strategies to enable them get more customers, so you make more money. Rotimicakelady is passionate about Cakes, business and making money.