I was massively undercharging for my cakes here's what I learned

[OIizzz]

Hey everyone! I've been baking custom cakes from home for about three years now as a side hustle (my background is actually in tech), and pricing was the thing that stressed me out the most. I'd spend 6+ hours on a cake, factor in ingredients, and very little profit in the end.

Then I actually sat down and broke it down: my ingredients, my time (including baking, decorating, cleanup, back-and-forth with the customer), packaging, even the electricity. Turns out I was massively under charging

The biggest things I learned:

1. Most of us don't count our time properly. If you're spending 30 min on a consultation, that's labor.
2. Ingredient costs are sneaky. That vanilla extract and good butter add up fast.
3. "But my friend charges $30" isn't a pricing strategy. Your friend is probably losing money too.

Since my day job is in tech, I ended up building a little calculator to help me figure this stuff out because I got tired of doing it on spreadsheets. It's called www.butterwell.io. It's free and still in beta, so if anyone wants to try it I'd genuinely love feedback from other home bakers.

But even without a tool, please go add up what your last cake actually cost you. I think a lot of us would be shocked. What's your approach to pricing? Do you have a formula or do you just wing it? Would love to hear how others handle this.

 

[retired baker]

Hey everyone! I've been baking custom cakes from home for about three years now as a side hustle (my background is actually in tech), and pricing was the thing that stressed me out the most. I'd spend 6+ hours on a cake, factor in ingredients, and very little profit in the end.

Then I actually sat down and broke it down: my ingredients, my time (including baking, decorating, cleanup, back-and-forth with the customer), packaging, even the electricity. Turns out I was massively under charging

The biggest things I learned:

1. Most of us don't count our time properly. If you're spending 30 min on a consultation, that's labor.
2. Ingredient costs are sneaky. That vanilla extract and good butter add up fast.
3. "But my friend charges $30" isn't a pricing strategy. Your friend is probably losing money too.

Since my day job is in tech, I ended up building a little calculator to help me figure this stuff out because I got tired of doing it on spreadsheets. It's called www.butterwell.io. It's free and still in beta, so if anyone wants to try it I'd genuinely love feedback from other home bakers.

But even without a tool, please go add up what your last cake actually cost you. I think a lot of us would be shocked. What's your approach to pricing? Do you have a formula or do you just wing it? Would love to hear how others handle this.

hi olizzz,
consider,
1, "consultations" are for $1000 cakes, with non refundable $200 tasting fee credited toward order.
taking a cake order is not a sit down nibble on their ear consultation. Don't let it turn into that unless its a unique custom cake in which case all bets are off and pricing starts at $125+.
This is why we have popular cake profiles with photos they can choose from... to speed up the order process.

2. I know ingredient costs, I know packaging costs.
The pricing app you made is very good for occasional bakers.

3. maybe, maybe not. I would stay open minded ,
I saw a 8 inch cake at the store yesterday that was $17, looked not very good but I'm going to buy one and see what theyre doing, I'd guess cake mix and frosting. the food cost is $3, plastic dome packaging $1.50.
They can wholesale that to the retail store for $12 and turn a profit because they make 50 cakes at a whack and freeze them.

 

[OIizzz]

hey retired baker,

thank you so much for the feedback. That's a really good point about consultations, I can see how the app might be framing every order like it's a custom project when most aren't. I like the idea of preset cake profiles with photos to speed things up. Curious how you handle it in practice though, do you have a set menu customers pick from, and then only go into full custom mode above a certain price point? And when you do take custom orders, how do you keep the back-and-forth from eating into your time? I'm trying to figure out the right way to model that in the app — like whether there should be a "quick order" flow vs. a "custom order" flow with different cost assumptions baked in.

 

[retired baker]

" how do you keep the back-and-forth from eating into your time ? "

steering, making suggestions, give them "your" choices.
Multi flavored cake is more labor, choc, vanilla and pistaccio layers is 3 cakes, not one.
So steer away from that but offer them the price comparison.

When I take an order the initial question is "how many people", that tells me the size.
What type of cake, traditional american layer , dobos torte, black forest, hazelnut success, molded mousse etc.
Have you seen the cake pictures on our website.?
Steer their choices.

google a local cakery , notice how its almost all preset choices,

Lady M Cake Boutique · Home of the Famous Mille Crêpes

Lady M Cake Boutique · Home of the Famous Mille Crêpes

www.ladym.com

 

[retired baker]

i bought this 8 INCH boston cream cake, $10.50
it weighs 2 lb. powdered spongecake mix, cold process bavarian kreme filling, choc goo top.
It came frozen from south Boston, 450 miles away.
Some simple choc decoration would turn this into $40.

 

[retired baker]

Competition at the low end is fierce .
Often the difference is decoration and presentation/packaging.
Big choc curls with powdered sugar or choc dip strawbs on top .

Packed in a white or gold window cake box with red ribbon and gold sticker from amazon.
Put the cake on a gold cake circle.
Same identical cake, different image.
75 cent box, 40 cent gold circle, 10 cent oval sticker, 10 cents red ribbon.
$1 extra packing cost, allows double the retail price.

https://www.amazon.com/DOYIDE-Inch-10x10x5-Container-Valentines/dp/B0CTCKRKXM/ref=sr_1_1_sspa?crid=2JPN7809V1LLF&dib=eyJ2IjoiMSJ9.I99w9VyKYl51CUE12E08WvOf7276qvOjsBEISsJfzXCGL1zbEoswWdDI7zsMgwz0cd4mWXUA1Fcalmkjs30rMIr8k36BQ-9sS_NUzTUEcZKwkhlphPubVS9si6bCd9OZrfVx7xwB2v9jIRexCEVQVXZxMRQzJRwKiXzZiNtMx-qkvJuY0j-m-1ymbK5jm6xCYuqyaPLLzHrafqxI-8H_hRj45-5L1GxGvJQ189vhjFk.-0abMFjtzgGPd0uXmdkXp0RzxntO25S84063-HmA_V4&dib_tag=se&keywords=gold%2Bcake%2Bbox&qid=1774570486&sprefix=gold%2Bcake%2Bbox%2Caps%2C182&sr=8-1-spons&sp_csd=d2lkZ2V0TmFtZT1zcF9hdGY&th=1

https://www.amazon.com/Boards-Circle-Cardboard-Grease-Disposable/dp/B0BGHFCYJ6/ref=sxin_15_pa_sp_search_thematic_sspa?content-id=amzn1.sym.17106a56-58e7-409a-96ee-b2be7987a708%3Aamzn1.sym.17106a56-58e7-409a-96ee-b2be7987a708&crid=2JKOFIYB2OQ4&cv_ct_cx=gold%2Bcake%2Bcircle&keywords=gold%2Bcake%2Bcircle&pd_rd_i=B0BGHFCYJ6&pd_rd_r=a75661cc-3e76-4696-804b-51fcb805891d&pd_rd_w=cMHph&pd_rd_wg=oNVYr&pf_rd_p=17106a56-58e7-409a-96ee-b2be7987a708&pf_rd_r=9KKRK7YGKMR9Z93SSGQ2&qid=1774570667&sbo=RZvfv%2F%2FHxDF%2BO5021pAnSA%3D%3D&sprefix=gold%2Bcake%2Bcircle%2Caps%2C189&sr=1-2-543a432c-671c-4a3a-a15e-c8d9b2229043-spons&aref=e1R8CmMStN&sp_csd=d2lkZ2V0TmFtZT1zcF9zZWFyY2hfdGhlbWF0aWM&th=1

 

[Bakingtime3]

I think it also depends on if you are doing this as a hobby on the side to try to make a few extra dollars or something you are doing full-time. Clearly you already have an oven in your kitchen, but if just starting out, the cost to buy the oven would be a consideration in your total overhead. If you rented a building, the cost of heat/AC light, water, rent/lease, etc. would also have to be included in the overhead costs of your business. If you have other employees, then those costs would also have to be included in your overhead calculations. Other costs like delivering the finished products would also be part of the overall overhead. If you travel someplace to meet with potential customers that is also time you have to consider.

Probably you can look around online for some standard allocation of overhead costs which would eventually get spread out as your business expands. Then you don't have to try to figure this own on your own and anyone else starting up a new business has already determined those things.

All of that is obviously in addition to the cost of the ingredients for specific recipes.