Cake Pricing Guide – How To Price A Cake


Updated: February 17, 2024

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Yay! It’s that time again—weekly Friday blog posts! Currently chilling at the airport, waiting for our flight to San Diego. Fingers crossed I can get this written before we take off!

Firstly, can I just express how much I adore that all of you are enjoying my blog posts? I’ve been flooded with direct messages from both bakers and non-bakers, sharing how my Instagram tips have been incredibly helpful! If you happened to miss that post, you can catch up right HERE.

Last week, I ran a poll on my Instagram stories, asking about your preferences between pricing cakes and managing a full-time job alongside a side hustle. The results were pretty evenly split, but there was a slight edge—15% more—towards those interested in learning about pricing cakes! It dawned on me that many of my followers who aren’t bakers still wanted insights into this topic. So, this post will dive into the HOW of pricing your cakes (or any service, for that matter), ultimately answering the question of WHAT you should price your cakes at!

Keep in mind, these insights stem from my personal journey of running a home bakery across three different cities: Provo, Utah, Los Angeles, California, and Boston, MA.

KNOW YOUR MARKET

I receive numerous DMs from people asking about pricing their cakes. My immediate response is to check out their profile and see where they’re located. It’s tricky to advise on pricing based on what I charge in Boston because every market is different! When I started baking in Provo, Utah, I knew my cakes wouldn’t fetch high prices due to the low cost of living.

Fun fact: Steven and I snagged a 2-bedroom apartment for just $700 when we got married (insanely cheap compared to where we are now!). Looking back, I think I charged around $25-35 for a 6″ cake. I scoped out other home bakers and bakeries and undercut them by about $5-10 because I was just starting out. The key takeaway here is to understand your market and do your research—it pays off in the long run when it comes to pricing.

KNOW YOUR WORTH

Absolutely, it’s crucial for bakers and all creative entrepreneurs—photographers, wedding planners, florists, and the like—to understand this principle. Even though I was a baking newbie in Utah, I was still able to create beautiful cakes right from the start! They might not have been as intricate as the ones I make now, but take, for instance, the Momofuku Milk Bar Birthday cake. I quickly mastered that cake in Utah. I vividly remember posting a photo of it on Instagram, and to my amazement, Milk Bar commented, “You’re hired.” It was the best comment ever!

They price their cakes online at $50 for a 6″ three-layer cake, plus a hefty shipping fee. So, I felt that charging $45 was a fair price considering the amount of work that goes into a Milk Bar cake. It might have been on the higher end of cake prices in Utah, but for those who wanted a Milk Bar cake without the extra cost of shipping or a trip to NYC, it was worth it. Nobody even flinched when I told them my price. That’s when I realized the importance of being confident in your work and pricing it accordingly.

YOUR TIME IS SO VALUABLE

In Los Angeles, I really wish I had increased my prices because, let me tell you, the amount of time that goes into baking a custom cake is no joke! You have to go back and forth with the client via email to nail down the perfect design they want, then it’s onto making the batter, baking the cake layers, patiently waiting for them to cool, whipping up the frosting, prepping and creating the decorations, purchasing any additional toppings like florals or cake toppers, packaging it all up, and finally, delivering it! Just the process of crafting one custom cake could easily eat up 3 to 6 hours, depending on how intricate the design is.

I never really calculate my rates on an hourly basis, but I do ask myself some important questions when I’m pricing my cakes: Is making this cake worth the time I could spend with my husband? Is it worth sacrificing a weekend exploring the city or doing something I truly enjoy just to make someone else a cake? Of course, I bake because I love it, but it’s essential to always consider yourself and your time first before accommodating others.

PRICE CAKES FOR FRIENDS AND FAMILY ACCORDINGLY

I picked up a valuable lesson at a Tuesdays Together event: always approach pricing your cakes to friends and family with confidence. Personally, I’m more than happy to whip up free cakes for my immediate family and their kids—it’s my little gift to them, and I adore seeing their reactions to the cakes I create. However, when it comes to friends, it can get a bit trickier. Of course, you want to maintain goodwill, but at the end of the day, you’re running a business and deserve fair compensation.

There are certain friends who’ve lent me a helping hand along the way, and for them, I’m more than willing to express my gratitude with a complimentary cake. Some friends I’ll offer a discount to, and surprisingly, they still insist on paying full price! Regardless of the situation, if you don’t feel obligated to them in any way, your friends and family should be your biggest supporters in growing your business. So, why wouldn’t they want to pay full price?

INCREASE YOUR PRICES (WHEN THE TIME IS RIGHT)

Los Angeles and Boston do indeed share a similarity—their jaw-dropping cost of living! In the beginning, I found myself pricing my cakes in Boston as if I were still in LA. However, as I made adjustments to the ingredients I used and honed my skills, I realized that I could command higher prices. When people inquired about the cost of my custom cakes, I confidently provided them with my rates, and to my surprise, only a handful expressed concerns about their budget. The vast majority—around 90%—didn’t bat an eye at my prices!

As my popularity grew in the Boston/Cambridge area, it became evident that I needed to further increase my prices. The workload was becoming overwhelming for the compensation I was giving myself. It’s essential to remember that those who truly desire your cake or service will pay the price you set. After all, indulging in a custom cake or service is a luxury! They’re opting out of the standard grocery store fare for a one-of-a-kind creation tailored precisely to their tastes.

How do I determine the cost of ingredients?

Calculate the cost of each ingredient used in the recipe, including flour, sugar, eggs, butter, flavorings, and any decorations or toppings.

Should I charge for my time spent decorating the cake?

Yes, absolutely. Your time and skill are valuable, so factor in the hours spent baking, decorating, communicating with clients, and any other related tasks.

How do I handle pricing for custom designs?

Custom designs should be priced based on complexity. Consider the intricacy of the design, the time it will take to execute, and any special techniques or materials required.

What if a client requests specialty ingredients or decorations?

Specialty ingredients and decorations should be factored into the overall cost of the cake. Make sure to communicate any additional charges upfront.

Should I offer discounts for bulk orders or repeat customers?

It’s up to you, but offering discounts for bulk orders or repeat customers can incentivize loyalty and encourage larger orders.

How do I determine my profit margin?

Calculate your total costs (including ingredients, labor, overhead, etc.) and then add a markup to ensure you’re making a profit. Your profit margin will depend on your business goals and market demand.

What if a client thinks my prices are too high?

Be transparent about your pricing and the value you provide. If a client thinks your prices are too high, consider offering options for smaller or simpler cakes, or explaining the quality and expertise that goes into your creations.

How often should I review and adjust my pricing?

It’s a good idea to review your pricing regularly, especially as your business grows and expenses change. Adjust your prices as needed to ensure you’re covering your costs and making a fair profit.

Conclusion

Pricing your cakes effectively is crucial for the success of your business. By carefully considering factors such as ingredient costs, labor, market trends, and your own skill level, you can set prices that reflect the value of your creations while ensuring a sustainable income. Transparency with clients about your pricing structure and the quality of your products is key to building trust and maintaining positive relationships. Remember to regularly review and adjust your pricing as needed to stay competitive and profitable in the ever-changing market. With these strategies in place, you’ll be well-equipped to thrive as a cake entrepreneur.


Jeff Campbell

Jeff Campbell

I'm Jeff Campbell, a seasoned leader with an extensive background at Whole Foods Market spanning over two decades. Throughout my career, I had the privilege of working in nine different stores across four states, not to mention my contributions to numerous other stores in various capacities. Recognized as a Global All-Star and a recipient of the prestigious Gold Pen Award, I also had the honor of winning the highly coveted Top-10 Store title three times on a company-wide level. Additionally, I achieved the distinction of Best New Store across the entire company.

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