Thursday, September 10, 2009

Pricing

Hi guys! I know it has been a very long time since I posted, but I need to put this out there!

If you are trying to make a business of your cakes, you must cover all of your costs (labour included) as well as a profit for your business. If your business does not make a profit (and no, your labour costs are NOT the profits!) then it is not a business; it's a hobby.

If you are not trying to make a business of your cakes, then don't pretend to and then charge ridiculously low prices. Charge what you want, but be clear it is a hobby and you are doing it for the love of the hobby. Stop making it impossible for those of us who are trying to feed our families to actually make a living!

Want a list of things to consider in your pricing? OK... here it is. This is NOT a complete list, and NOBODY can tell you how much to allow in any given category... your costs will not be the same as mine because you live in a different location, use different ingredients, shop at different suppliers, choose different advertising options... etc. Also keep in mind that even if you are not spending all of these things now, you probably will eventually! Save that money so you can afford to do it when it is time!

MmmKay?


So...
  • ingredients (don't forget your cake pan release, the plastic wrap you use to cover your cakes, the parchment you line your pans with, as well as any waste that could happen if you buy a dozen eggs and only use 6, food colours, etc)
  • labour (including shopping time, clean up time, baking time, decorating time, etc. You may choose to allow a different rate for these activities, but they still need to be covered)
  • licences and inspections (you ARE licenced... right? if not, you should be, and this can be a substantial cost)
  • insurance
  • boards, dowels, drums, boxes, labels etc
  • rent & renovations (even if you are working from home right now, eventually you will want to move into a biz location... are you going to double your prices when you do?)
  • hydro, water, heating & A/C
  • equipment (fridge, stove, mixers, scales, airbrush, counters, rolling mats, etc...)
  • tools (impression mats, cutting tools, spatulas, bowls, measuring spoons, stencils, molds, cutters, whatever you have!)
  • cleaning supplies, light bulbs, etc
  • training & books (you don't think you are DONE learning do you? Don't forget about the business training as well as the cake training!)
  • association & club memberships
  • printed materials (biz cards, flyers, signage, contracts, etc)
  • advertising & marketing (newspaper, magazine, samples to other vendors, etc.)
  • bridal shows (entry fee, signage, insurance, samples, dummies for your displays, toppers for your displays, cake stands, your time, table linens, table rental, hydro costs, etc... there are a LOT of hidden costs when doing shows!)
  • cake delivery (time to get there AND BACK, vehicle costs, potentially a 2nd person's time, gas)
  • computer and web site, graphic design (for the love of all things sweet, do NOT use a "free" site if you are running a business. They look anything BUT professional. You can have your own site for less than $100 a year if you do it right, and then you also have your own me@mywebsite.com email address rather than @ hotmail or yahoo or whatever.
  • photography equipment (yes, you can use whatever camera you already have, and yes, you can do without any other equipment, but you are trying to sell your cakes. Does it not make sense to show them in the best way possible? You don't have to have a professional studio, but some lights and a backdrop will make a HUGE difference in your photos!)
  • postage and delivery costs of your supplies
  • book-keeper/accountant
  • office supplies (you don't sign your contracts in blood do you? because... EWW!) :lol:
  • charitable and community donations and sponsorships
  • etc
  • etc
  • etc