Google companies or sole traders in your area making cakes. In order to answer those questions you have to know a lot about your competition - so research them. It's a unique selling point - find yours - what do you do better than your competition? or different from your competition? Know Your Marketplace Someone else will get that business and they do not need to compete with my friend on price to do it. She gets a lot of inquiries for novelty cakes or sculpted cakes but they just aren't her thing and she has no interest in making them. I know a great baker/decorator who does very elegant high-end cakes and beautiful cupcakes. That is certainly an option, but remember that cost is not the only thing that separates one company from another. If you are in an area with a lower than average income and lots of competitors then you may feel like you want to lower your prices to compete. If you are in an area with very few competitors then potential customers don't have as many companies to choose from and that keeps prices from being driven down. And you can charge more because the average cost of your competition will be higher. If you are in a big bustling wealthy city like central London your rates (gas/electricity/rent etc) will be higher so you need to charge more to cover them, even as a home baker. What you also have to consider with your final price is your marketplace. The price of the ingredients isn't set by you and whether or not you think that flour is " just" ground up wheat so it shouldn't cost "so much". Does that sound too much now? Does £120 or £140 still sound so unreasonable? The cost of a cake isn't determined by how you or the client feel, it's cold hard facts. So you have worked for 5 hours and you've made £15. And for that, you have made no money yet. If you made a cake that took you 5 hours, and you are going to pay yourself £10 per hour and the materials, ingredients and equipment comes to £50 (just to keep it simple) then your cost price is £100. If this is all sounding too expensive then let's look at an example. The most common is between 20-40% and high end "in demand" people can charge 100% and higher. That % is flexible and is really up to you, but I've worked alongside creative industries my whole working life and the minimum I've seen in viable businesses is 15%. You also have no cash to invest in your business's future, like setting up a website, doing marketing, buying new tools and equipment or improving your skills with classes or books and so on. Meaning if you charged that amount of money, you would break even and would have worked for no income. Once you have that total, that is your cost rate. So work out an hourly rate you are happy with (NOT MINIMUM WAGE) and add that time in. If you spend 5 hours making a cake and decorating it (and you will likely spend much more than that) then that is time you aren't out with your friends or at another job earning a living. Think of it as your equipment 'wear and tear'. You may need to replace it at some point so you have to cover that cost. Yes, all of it.įor a cake that needs a particular mold or modeling tool, you wouldn't charge for the whole tool as you will use it again or already have it - so charge a small % of what that tool cost to buy. So, from a business point of view when you are considering what to quote for your work what you need to do is this: Add up your costsįor making a cake this is your ingredients plus resources (like electricity/gas) and materials as well as a % of the cost of your business existence, such as rent and marketing. It requires your heart and soul but it NEEDS your head to survive. Not cake, not creativity, not worrying your work isn't good enough, not fretting that because you work from home that means you should be cheap. So I thought I'd take some time to talk about just that. But I do own my own non-baking business and the issue of what to charge for my services and expertise is not alien to me. In any industry, it is any given professionals role to help the customer understand the value of what they are buying. Or the skills you have taken the time, effort and cost to develop. You can't blame someone who is not in your industry for not understanding the effort required to achieve something. There are, of course, plenty of bakers bemoaning clients asking for high-end cakes at supermarket prices, but I don't blame customers looking for a bargain. Never 'Is this too cheap?' or 'I turned down a customer because they didn't understand the value of my work' I belong to a whole host of baking forums and questions I see come up over and over are 'How do I price my cake?' and 'Do you think the cost is too much for this?' or 'My client says this is too expensive'.
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