Cake pricing is something that comes up time and time again for cake decorators and is something of an Achilles heel among us. Even experienced cake decorators still struggle with it – have I priced too high? Have I priced too low? Am I better or worse than my competitors? Will people think I am being greedy? What if people challenge me? It’s only cake, should I really be charging that much?
I have a lot of experience with cake pricing and that last one isn’t a question I ask myself very often but lately, I have had a few potential clients walk away because they didn’t like what I was charging. In fact, one of them told me it was very expensive for a cake and she had had someone else quote for the doing the same thing for half the price. Well, good luck to her I say because I don’t see how the other baker can do it and still make a living let alone turn a profit.
The fact is, as cake decorators, we undervalue ourselves and our work when we really shouldn’t. After all, we are providing a professional, often bespoke service, that takes up many hours of labour. No one questions a plumber charging £60 merely to come and look at your broken washing machine but asking a cake maker why something that took them ten hours to make costs £100 is fair game.
Work out your costs
It’s not too hard to work out your direct costs when it comes to cake pricing, especially if it is a round or square one. I have Excel spreadsheets with all the ingredients listed, the price per gram or ml or number and then have them inputted into my different recipes and for different sized cakes. In a nutshell, it means I can look at my charts and know exactly what the direct costs are for an 8” chocolate cake, for example. I also know how much buttercream I need and how much fondant as well as the cost. Once every six months I check through the prices and update them which automatically filters through all the recipes.
The difficulty is in knowing how many hours something will take. Again, for round or square cakes you soon get a good idea but if it is a shape you haven’t carved before like a house or a train, how do you know?
As you gain more experience you can give it a good guess. I know the average wedding cake probably takes around ten hours and an average celebration cake around two to three. Then all you have to do is work out what you want to charge per hour an roughly how much that specific cake will take you. Often this is a guesstimate and even with years of experience, I still get it wrong sometimes.
Also, don’t do minimum wage. You’re worth more than £7.20 an hour. If that’s all you’re charging yourself out at quite frankly you might as well go and stack shelves in a supermarket and save yourself the hassle of running your own business.
Look at your competitors
If you’re still not sure about your cake pricing, another way to get a good idea is to look at other people offering a similar service. What are they charging? Does your price sit somewhere in the middle or are you top or bottom? Where you want to appeal to – high end or budget end – will play a big part in your cake pricing and looking at your competitors can give you an indication of whether you’re on the right lines or not.
I’m not saying just wholesale copy your competitors because that would be a little cheeky but it can give you a good starting point around which to base your own costs.
But I’m only new, I shouldn’t be charging very much!
Oh purrrrlease shut up! Last time I looked you were running a business not a charity and therefore you have costs to cover. You may not have been in business for long and you may wish to charge a little lower because you don’t have as much experience but you’re still a fucking business!! Unless you love cakes soooooo much you want to make them for nothing you’re in it to make money. It just so happens you’re doing something you love at the same time.
You are offering a service so don’t be afraid to charge for that service. I have yet to meet a newly qualified plumber who offered to do a job for a tenner just to get the experience…
Profit, it’s not a dirty word
For some reason, lots of cake makers seem embarrassed about this but see my point above. If you didn’t get it then, then get it here: YOU’RE RUNNING A BUSINESS NOT A CHARITY. In order for your business to grow you have to add in profit to your cake pricing calculations, specifically gross profit.
As well as your direct costs (cake ingredients, materials) you have your indirect costs (electricity, equipment, insurance, rent, water, rates, subscriptions, professional fees, bank fees etc) Your gross profit should be enough to cover all those and still leave you with a tidy net profit that you either take from the business as a dividend or reinvest in the business. I normally set my gross profit margin at around 40-50%. That might seem high but you’re not churning out a high volume product, you are producing a bespoke, detailed and one-of-a-kind product. You can only do so many a week and if you price for really low profit you’ll be nothing more than a busy fool and out of business in no time.
Deal with the negatives
Even when you work out your cake pricing, you think you’ve got it nailed and you send the quote you will always always always get someone who comes back saying they think it’s far too expensive for a cake and they can get one much cheaper from Cake Blogs down the road.
Well I say, tell them to fucking go there then! You shouldn’t have to justify yourself. You prices are what they are and I bet Coco Chanel never had to justify why her jacket was £4,000. However, if you do feel the need, here are a few of the comments I have heard over the years and how I like to reply:
1. It’s only cake, I can get one for a tenner in Tesco’s
Hmm well those ones are factory produced with crap ingredients and on and off a production line in under two minutes. If they pull the supermarket card, tell them to go and get their cake from the supermarket, they clearly aren’t your market.
2. I’m a charity/single parent/this is really stretching my budget
Um if it’s stretching your budget that much then see number 1 above, Tesco’s do a great budget range. It is not your job to feel sorry for them, you are running a business and you have bills, labour and overheads to cover. If like me you’re also a single parent, your business is what ultimately puts food on the table and shoes on your children’s feet. I’m not an uncaring bitch, I do give regularly to charity. But if I gave in to every sob story I would’ve been out of business a long time ago. And for the record, I bet they’ve never gone and done their weekly shop at the supermarket, rocked up to the cashier and said, “Oooh can I have it for half price, I’m a single parent.” No, exactly.
3. Explain to me why it is costing so much
If you have to, break it down. If you have done your costings correctly this should be a simple matter of explaining the different areas of cost to them. One trick I have learned is to break it into cost per person. A single large amount like £450 can sound like a lot but if that cake is for 120 people that is only £3.75 per person. I daresay you’d struggle to get a slice of factory-bought cake in a well-known chain of coffee shops for that and that cake is not bespoke and not decorated how you like either.
4. I work in sales, I know a cake doesn’t cost that much, now does it?! Usually accompanied by a knowing look and a nudge or wink
Okay so you work in sales, that makes you an expert on cake now does it? I don’t think so. That’s a bit like me walking into Karen Millen and telling them I work in sales too and don’t reckon their dresses cost that much either.
5. Why am I paying so much for delivery?
Cakes are delicate. Cakes can’t go by courier because they will get smashed to bits. Believe me, we’ve tried it. So they have to go by hand, which basically means me or one of my employees delivering it. That takes time, my time, as well as petrol and wear and tear on the vehicle, plus time to set up at the venue in question. My time costs money and I could be using that time to further my business or make more cakes. You should really be grateful we’re doing that and not charging you more.
6. How much?! I’m not paying you that much, I am only going to pay you this much
Oh really? Well, then you won’t be paying me at all because I won’t be fucking doing it for you then. What you’re ordering is a bespoke creation that no one else has. You wouldn’t walk into a garage and expect a Ferrari for the price of a Fiat so why would you expect a bespoke cake for the price of a supermarket one?
Bottom line: when it comes to cake pricing make sure you know your value and stick to your guns. To nick L’Oreal’s famous phrase: “You’re worth it.” Don’t let anyone tell you otherwise.