How should I price my cakes?
By Julie Gibson ��� Somerset, England
It is very
common for
new cake
businesses
to vastly
under-price
their product
This is one of the common questions amongst
cake makers looking to start out in business
and it is crucial to get it right if you want your
business to thrive and to bring you any sort of
income. It is very common for new cake businesses to vastly under-price their product and
find themselves at the end of their first tax year
slowly realising they have worked their socks off
for no money at all. However, with some forethought and a simple spreadsheet it is easy to
avoid putting yourself in this position.
The most important thing to get right when setting your prices is your mind-set. So many of us
bakers start from a position of making cakes as
a hobby for our friends and family and therefore
see our creations as something we give away and
measure only in smiles and not cold hard hours
worked and money laid out. If you want to stay in
business you need to leave this mind set behind
and acknowledge that your skills and time are
valuable, are something you have spent years
perfecting, something which deserves respect.
Now you���ve given yourself the pep talk it���s time
to look at some numbers!
92 www.EdibleArtistsNetwork.com
Firstly set yourself up a spreadsheet and start
listing out all of the things you use on a regular
basis ��� ingredients, boards, boxes, sugarpaste,
colours, greaseproof paper, ribbon, gas/electricity units, cleaning products ��� everything you can
think of that is ���consumed��� in the making of your
cakes. Once you have your list spend some time
sourcing the best prices and note down those
prices alongside the item. This will act as your
master list for the price of your materials which
you can now use to price up different cake recipes in different sizes. This will seem like a lot
of work to start with but if you work out prices
for your most common cake sizes & recipes and
note them down it will make quoting a whole lot
easier in the long run.
Once you have these variable costs down you can
start thinking about the fixed costs of your business which need to be spread across your cake
orders for the year. These will include things
like business and public liability insurance, web
site hosting, marketing costs, cost of the use of
your home, cost of any licences you might need
in your country of operation. Again, note all of
