Pricing Your Cakes
Without a doubt, this is the most common question within the cake decorating industry and one it would be fair to say we have all struggled with at one point.
As the owner of a home-based cake decorating business (Rimma’s Wedding Cakes), I was surprised to find an email from a lady (KIM) who was wanting to start her own business asking for advice on how she should set up her business and how to price her cakes.
Firstly, I would like to commend her for seeking us out for advice and I was more than happy to help, it takes a lot of courage to ask for help especially from what could be called your competition.
The following is my responses to Kim’s questions, they may not be correct in your eyes, but it is how we have built our business from a hobby to a full-time professional cake decorating business in 3 short years.
Kim lives in a suburb about 20 minutes from the city centre, which in my opinion is a prime location, (Considering our business is 50 minutes from the city) being close to the city means being close to a lot of venues, less travel for delivery and setup, this will help with keeping the cost down for her clients.
But this also means a lot of competition from business owners within the city itself, but I advised Kim not to be put off by this but rather encouraged as she would be sure to have couples inquiring about her service, simply due to her location.
I did suggest that she contact other businesses and ask what they are charging, some will help others won’t but it will give you a better idea of where to start.
You Must Know Your Costs…
By this I mean, you simply must, I will say it again you must know your cost to run your business, you are not running a charity, you are running a business, It does not matter if this is a home-based business or a commercial business, if you do not know your costs you are behind the 8 ball right from the start.
This is even more crucial when just starting, you need to account for everything, this will then give you a good guide as to what you need to charge as an hourly rate for your service.
One of the great things about starting a cake decorating business is that you really don’t need a lot of money to start, but you still need to know what it is going to cost you to run your business, you need to take into account;
Rent, Power, Insurances, Business Cards, Advertising, Delivery, Ingredients and lastly your time.
If this all adds up to $1000 per month then you need to make $250 a week just to break even, but you have not paid yourself yet, see how important it is to know your running costs, it is a MUST.
Should I Charge for Delivery…
Simply answer is YES, this sometimes does depend on distance, if it is close by we will deliver for free, but we do have a set limit and anything over that limit is charged at a fair rate.
Here is a great example of why you should charge a delivery fee and a lesson we learnt the hard way.
When we were just starting out and decided to make this a full-time business, we offered FREE delivery, this worked out fine as we only had deliveries into the city and around our local area.
Until one of our clients who ordered a wedding cake ($750), and then stated we do free delivery, to which we answered Yes as promised, 225 kilometres later we set up her wedding cake.
It costs to run your car, Fuel, Tyres, Maintenance and your time, so yes charge for delivery or be prepared to pay the price, because one day you surely will.
How Much Per Hour…
This is a big one, my advice to Kim was as I stated before, try to find out what other businesses around her are charging and match it.
Do not under any circumstance sell yourself short, if you are running a charity, by all means, do it for free, but you are running a business and you should expect your clients to pay for professional work.
If your clients want a 3 tier wedding cake with all the bells and whistles but want it for $50, send them to the supermarket, I know this is blunt, but believe me, you are doing yourself a huge favour, and In doing so establishing your business as professional.
The second you start to undercut all around you, 2 things are going to happen,
1) Your client is going to tell other couples just how cheap your cakes are, true you will be busier than anyone around you, but you are not going to make a cent, in fact, it will cost you your business.
2) That will be the label of your business from that point on, Kim’s Cakes – Cheap as Chips, if that happens good luck in trying to put your prices up.
You need to cover your costs and pay yourself, that is just very simple business, so it goes without saying you need to charge accordingly, do not sell yourself short, it is not good for your business or yourself.
What About Dummy Cakes…
We charge the same rate, you need to look at it this way, it may not be a real cake, which you would have taken into account while doing your quote, but simply because it is not real does not mean it is going to take less time to decorate.
A great example of this is one of our clients who wanted a 3 tier wedding cake, the bottom and middle tier were fake but the top tier was for cutting.
We needed plenty of sugar flowers, a large amount of stencil work, piping etc, just because the two tiers were fake did not matter, they still needed to be covered, still takes the same amount of time.
What Kim needed to understand is that she still needed to charge for her time, your cakes are a work of art, they don’t just get slapped together, they take time, they simply must be perfect, fake or not.
I said to Kim, in summary, you are a professional cake decorator, you are running a business and providing a service, a service that not everyone can do, if everyone could do it we would all be turning out 3 tier wedding cakes for $20 a pop.
Treat every client like they are going to be your last, we have a rule at our consultations, we use the two things on the side of our head 80% of the time (Ears) and the hole above our chin 20% of the time.
We treat our clients with the respect they deserve, they have not come to us to hear how we want their cake to look, sure we will guide them, but ask yourself this who’s wedding is it…
I would love to know your thoughts on this post, it is a hot topic and one that will continue for a long time to come. You can also view other posts by following this link.
Please feel free to leave a comment below if you have any questions, maybe a suggestion for another article, it would be great to hear from you.
Maybe you would like to speak to us as Kim has done or need some advice, please do not hesitate to contact us, I would love to help.