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

4 comments:

  1. AAAAAA-Men! People do not realize how much goes into cake making/decorating. This is the very reason I recently decided to get out of the business after 3 years. I do have a passion for cakes, but people always telling me I need to charge less when the cake takes me 2+ days. Gimme a break! They want the the world when it comes to their cake for very little monies and now has finally driven me away from it! I refuse to be make 40K a year working 80+ hours a week when some of my clients are bitching about how expensive their cakes are when they're CFO's od Banks, successful Realtor's and other successful business owners. It truly makes no sense why they can't "get it," but I'm really tired of trying to get them to see it.

    It's time to get out of the cake business.... For me at least!

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  2. Wow Melissa,
    An excellent post. Quite informative in many ways. You are so right. I hate it when people say "But its just cake, I bet I could make it myself, if only I had the time...". It takes all my strength not to say "Ya then why don't you". Can you believe, I did my undergrad and grad in computers and then took all those classes and courses for cakes and decorations, just to earn a 40k salary, when i could have been earning 60-80k easily working only 40 hrs per week. But I love my work, and am happy with what I do even though I don't earn much.
    After reading your post I hope people will stop selling their products for less....Otherwise people like us will have to stop cake decorating altogether.

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  3. When starting any business, small or big, it's important that the price of your wares should be based on the cost of expenses. If you want to turn your hobby into a business, make sure you have everything planned well.

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  4. We think business plans are very vital tool before starting any business, it is a guideline to success and plays important role to get funds from investors.

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Sweet Words!