Pricing (yes again)

In my last post I was trying to understand why so many home-based, celebration cake businesses are closing down.  One of the reasons I’ve seen quoted time and time again is that customers want cheap cake and home bakers can’t earn a living providing it.

I confess, like a lot of other bakers, when I started out, I didn’t charge enough for my cakes.  I think this stemmed from a lack of confidence in my ability, lack of experience and not thinking much about being in business.  The problem with doing this is that customers always expect you to be cheap but there comes a point when you realise you cannot continue to put in the long hours without making any money.

As I mentioned in an earlier post, there are other benefits of working from home and I and others in the same position, do appreciate those, however, the simple fact is,  we are running businesses.  Any business selling a product or service needs to charge its customers enough to cover its running costs, pay staff, invest back into the business and make a profit.  If all these costs aren’t covered the business will not be successful or survive. I am the only staff member, being a sole trader, but I still need to pay myself a wage for the hours I work.  Making cakes from home needs to be worth it financially or I’d also have to close down the business and find a job outside the home to earn enough to pay the bills.

When I started my business over 10 years ago, there wasn’t the information available on running a baking business from home that there is now.  I have learnt so much in the last few years, many things I wished I’d known before I started (I’ve added links below to some I found invaluable).  As business owners we have to educate ourselves so we can all charge what we are worth.  We have to remember that not everyone can bake, design and decorate beautiful cakes, that’s why our customers buy from us and we shouldn’t sell ourselves short.  It is not ‘just cake’!

Something else to remember, everyone has a choice when they buy products.  Sometimes cheaper, mass-produced, off-the-shelf items are all they need, other times they require something special, something unique, hand-crafted, made with love, care and attention to detail.  If they choose the latter they must expect to pay a higher price.  This applies to cake too.

If you are thinking of starting a celebration cake business from home here are a few points to consider

  • charge for your time right from the start.  How much you charge per hour is your choice but remember, unskilled workers get at least the minimum wage.  As a skilled artist why should you earn less?
  • time yourself when working on every cake, at least until you get a good idea how long certain aspects of cake decorating take you.  I use an app called Timesheet for this. Make a note of how long it takes to line tins, prepare and mix ingredients, level, split and fill the cakes.  How long does it take to crumbcoat the cake, colour the icing, cover the cake, cover the board? How long do different types of decoration take?
  • another essential part of running a business is admin.  Don’t forget to work out how long it takes to design a cake, work out a quote, deal with correspondence and phone calls.  How much time do you spend shopping for ingredients and equipment?  What are your stationery and printing costs? How much do you pay for insurance.  All these costs and others have to be taken into account and paid for by the cakes you sell.
  • don’t forget, when pricing your cakes, to include everything you use in the production.  Its not just flour, butter, eggs, sugar and icing, there are boards, boxes, dowels, colours, cleaning products, equipment to buy or replace etc.  Keep receipts for everything used or you’ll soon find yourself out of pocket instead of in profit.

Here are the links to some of the best business advice I’ve found, a lot of it is free some isn’t but I’ve not regretted paying for any of it.

http://thebizofbaking.com/

https://cakecoachonline.com/

http://www.quaintcakes.co.uk/

http://www.bluedoorbakery.co.uk/

 

Good luck

 

 

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