Creating cakes for others is fun and can be profitable for a home-based business. Finding a price point isn't hard if all the factors that went into the cake are calculated. Once all the ingredients and labor costs are finished, a firm number can be figured for a profit. Here is a classic method for how to price homemade cakes.
Cost out any and all ingredients that will go into the cake. This includes what went into the cake batter, the buttercream recipe, the amount of fondant that will be used, etc. List all the ingredients and calculate the cost of each. For example, to calculate the cost of 5 eggs in the batter, divide the cost of a dozen eggs by 12, then multiply that number by 5.
Calculate the time you spend preparing, baking and decorating the cake.
List any extras that will go into the cake: decorations, garnish and disposables. Add any gum paste flowers that will be purchased or made and any rolled fondant bows that will be created. This list will also include any purchased candles for the cake, purchased cake toppers or flowers that you will provide. Be sure to include the costs of any cake separator plates, cake columns or cake bases that will not be returned to you. If these items are supposed to be returned to you later, charge a deposit so you are able to replace merchandise that is not actually returned.
Identify difficult, time-consuming decorations. These include gilded letters that require hand-applied gold or silver dust or a scene done completely in airbrush. Calculate a fee for doing those.
Add in any delivery charges you will incur. These will include gasoline costs, toll fees, courier or delivery set-up fees, and any other expenses related to delivery of the cake.
Calculate all the costs and total them. This figure is the base price to cover your expenses. Add to that the amount of profit you want to receive for the cake. If there is sales tax to collect, add this to the total amount.
- Sarah Vantassel/Demand Media