How much should I Charge for my Cakes?
When you begin to sell cakes, this is one of the most frequently asked questions by Cake Decorators.
Like any business, setting a price structure is one of the most difficult part and the frustrating answer is that no one can tell you how much to charge. With some research on competitor's pricing and knowing own costs, you can determine the right price-point. Just like in real-estate, price of cake widely varies by location and determined by your local market.
As an artist, you do not want to sell yourself or your talent short and it is so difficult to place the right value on your work. Neither do you want to shock your customer with high prices and least, make them feel paying too much or worst, have an argument about the price.
Here are 9 things to keep in mind about pricing
1. Location, location, location:
Pretty obviously - a baker in center of Mumbai or Delhi can charge more the one in outskirts of Khandala or Neemrana.
2. Know your costs:
You would charge too little, if you have not figured out all your expenses. Consider the following:
a) Overheads: rent, marketing, utilities, etc.
b) Bakery equipment & supplies: table, oven, mixer, cooling rack, boxes, tools, stands, etc.
c) Ingredients: mixes, flour, sugar, butter, chocolate, vanilla, etc.
d) Delivery: petrol & maintenance of your car, time
e) Your time: calculate an hourly rate for your work.
3. Set a standard price per serving
You many times know the number of people that your customer needs to serve. So, based on size of cake and number of tiers, you need to be ready to give them a starting price.
4. Charge more for designs...
Be realistic about the hours it takes for designing, structuring and decorating. Just be upfront about the fact that a customer wanting to serve an elaborate 4-tier cake to 10 people can be more expensive than a large cake that serves 30 people.
5. ... but less for false cake
False cakes are easier to decorate, adds height to small ones, and takes up less of your time. Remember that you still need to spend money on decorative flourishes and fondant.
6. Don't compete with grocery stores
To find out if your prices are too low, scout on the prices of supermarket and you should avoid basing your price in the same ballpark. Understand that those cakes are generally frozen days (if not months) ago and decorated with bucket full of premade icing.
7. Avoid selling for cheap
A cake is always the 'Hero' element of a birthday party. What do people talk about after the birthday party? That's right... the gifts and the cake
8. Do not undercut other Professional Bakers
Being a newbie, you may be tempted to sell your stuff at a discount. Don't. Here's why...
a) Hurting the Industry: Undercutting lowers the overall prices and kills the business, which is bad for everyone.
b) Customer expectations: Your goal should be to attract clientele that is willing to pay for quality. It is also difficult to raise prices after you have steady customers.
c) Burnout. Without enough money, the chances are that you would burn out much earlier than what your competition can sustain.
9. Have a minimum price point
You would not want to spend hours discussing designs, only to later find out that customer wanted a three-tier wedding cake for ₹ 2,000/-. Make it very apparent to customers, that your prices start at a certain rate... and then adds on, depending on design.
Frequently Asked Questions:
Now, that you have read above rules of pricing, let's help other bakers answer below questions.
Q1. Am I charging too much for my cakes?
Q2. I should charge more per serving for wedding cakes than for party cakes, right?
Q3. I don’t feel right charging very much – I’m just starting out.
Q4. Is it a good way to price cakes by charging for the cost of ingredients times 2 (or 3)?
Q5. Should I charge by the cake or by the serving?
Q6. How do I know how much people will pay for a cake, in my locality?
Q7. I never know what to charge friends and family.
Q8. If I charge too much, I might lose the sale!
Q9. I can’t charge that much, it’s just cake!
Q10. Someone complained about the price and said I charge too much!