Your Cake is HOW MUCH!? Home Baker's Guide
I want to start today’s blog post on a bit of a joke.
Bacon a cake for 100 for 50 bucks.
Whew. Lot’s to digest in that. First, it was a horrible joke. I am not funny. I have the sense of humor similar to that of a wet moldy sock. It kinda stinks. A lot. And it really is never comfortable when I do land a punchline. Not only that, but that price!!!! EEK!
Pricing cakes is TOUGH. Everyone is used to big box store prices. Getting a quarter sheet cake from the grocery store is as simple as $13.99 and a 20 minute walk around the store to give them time to scrawl out “Happy Birthday Joni!” So when a client calls, that is what they want, a $13.99 price tag. And you want that sell and feel horribly guilty saying anything other than that.
HOLD UP. Stop. If you don’t read anything past this sentence, read these next few words and retain it until the end of time: Cadillac Escalades do not sell at Ford Explorer prices. In fact, to get an Escalade, you are looking at an average of $75K that ranks WORSE (6.2 on a scale of 1-10) than a car that averages $35K (7 on a scale of 1-10.) But it ranks SEVENTH in popularity compared to the Explorer ranking 21st.
I want to make it crystal clear, a bespoke (fancy word for custom) luxury cake will NOT cost the same as what you find in the local super market. It should not.
First, in the grocery store, those cakes were made in a manufacturing facility. By a machine with a person occasionally adding ingredients or stopping the machine to scrape the sides. They are making hundreds or thousands an hour for pennies on the hour. They get wholesale prices that are absolutely unobtainable for any small business owner. This manufacturing company sells cases of 5 sheet cakes (bare in mind that can be up to 20 quarter sheet cakes when cut) for $83.55. Do the math real quick. $16.71 for a full sheet, $8.36 for a half sheet, $4.18 for a quarter sheet. Your grocery store buys it at that price. They also buy Bettercreme at a ridiculously low low price of less than $40 per tub. That tub will ice about 20 quarter sheets. Do the math again. Let’s do it for just a quarter sheet though. $6.18 for materials for a quarter sheet cake.
Let’s throw in the employee who is paid $10 an hour but is required to spend no more than 15 minutes decorating that cake. Total cost for the store to make that quarter sheet cake? $8.68.
Eight dollars and sixty-eight cents. I can’t even buy the butter I need to make a two dozen cupcakes at that price.
And the grocery store has THOUSANDS of other items they can sell to help make up the overhead for a department that doesn’t bring in more than impulse shoppers.
Why did I just tell you all of that? Why did I just do a SECOND blog post about math? Well, first, I wanted you to understand you can NEVER meet or match a grocery store’s prices. It just is not possible. Second, I really like math. I mean, I REALLY like it. I know, I know. It is accrual world.
Okay, so now that you hopefully understand you cannot sell a quarter sheet for $13.99, how much CAN you sell it for? Or better yet, how much SHOULD you sell it for? How much should your client expect for this cake? We will go basic. Basic is easy. Basic keeps it uniform. We will assume it is a quickly iced quarter sheet with a few buttercream roses and “Happy Birthday Joni!” piped across the top.
First, you are your own purchaser. You do not have a company employee who does this on your behalf. You are also your own secretary. You have to communicate with the client, no one can do it for you. You are also your own baker. And dishwasher. And decorator. You are your own driver. You are your own records department, PR rep, marketing director, quality assurance department, legal compliance team, photographer, and bookkeeper. Your overhead did not go down because it is just you…it went up. How much is your time worth? If you own your own business, you had been tell me at least $15 an hour. A better number is $25 an hour. An even better figure would be $35 an hour. You are wearing an awful lot of hats and that is taking up an awful lot of time away from you and your family.
Second, even if you get wholesaler discounts, you are NOT getting the same discounts as your local grocery store. Not even remotely possible. They sell hundreds of millions a year. You sell what, a couple thousand max? And if you are me, just a couple hundred, if that? Your supply costs are not that much cheaper, and in many cases remain the same, as that of your clients. Assume it is going to cost you roughly $17 for butter, flour, sugar, powdered sugar, packaging, eggs, and milk. It likely is higher if you are a scratch baker. But this is a safe assumption for now.
Third, did you even factor in your wear and tear on your stove? Your mixer? Your dishwasher? These things are meant for home use and last an average of 15-20 years. Home use is not 200 cakes a year. Assume you lose roughly half the life span when you are doing this from home. How much does new appliances cost? $1000 for a new oven? Alright, so let’s factor in you are going to have to replace it sooner than anticipated, factor in roughly $2 an order for equipment replacement.
Fourth, are you licensed? Insured? Hold any certificated (such as food safety) that need to be kept up? Factor in that as your operating costs. For me, I factor in roughly $6 per order for this.
Fifth, how long is it going to take you, from shopping to delivery to including clean up, to make this quarter sheet cake? Let’s assume a total of 2 and an half hours. I am going to assume a wage of $20, just because it is a nice even number.
Sixth, TAXES! Even if you don’t have to collect taxes, you have to pay them. Especially employment taxes. Factor that in (this varies by how much you bring in).
Let’s add it all up.
LABOR 2.5 hrs x $20 = $50
EQUIPMENT DEPRECIATION $2
TAXES (estimated) $5
TOTAL SALE PRICE $80
There you go. This is just a rough estimate and a really quick run down. But it gives you an idea. (By the way, my quarter sheets start at $130, IF I am even willing to accept them to begin with.)
You know the number one mistake home baker make when they figure up their prices? Labor costs. That is why you see folks selling cakes for $30. That is why you see it for $20. They are LITERALLY giving cake (and time) away. I fully understand that you don’t want to rip someone off and you want to be fair in your pricing. However, on the flip side, why would you want to be ripped off for your time and talent?
Not all that exciting a post, I will admit. But an important and informative one, I hope. Next week, I’ll look into maybe giving maybe a bit of a more fun theme. Like dog butts and hydrangeas or something.
Before I close, I want to tell you one more joke.
Peace, Love, and Cake, Jen
P.S. For additional pricing resources, check out this pricing calculator, I LOVE it as a starting tool guide until you are better able to quote an item.