How much should I charge for my cakes?

Question

Hi,

I love baking and people around got to taste some of my cakes and now they would like me to sell them cakes.

The problem is, I have no idea how much to charge for my cakes..

I love the baking act but have no financial sense...

plus, I don't feel comfortable taking money from my friends but i still cant bake for free all the time..

How would you suggest I should price my baked goods?

Thanks!

Answer 1

If you don't feel comfortable taking too much money from them, try to figure out how much you spend on the supplies for each cake.  If flour, eggs, baking powder, etc costs say $15, and with those supplies you can make 5 cakes, then each cake costs you $3 to make.  You can charge a couple of extra dollars for your time, and if your friends are creating a demend for the cakes, then they're obviously willing to pay.  Think about it like this...they would pay for a cake at the store, and it will probably cost more and not taste as good as a homemade cake.  

Answer 2

Well, as a business analyst, I am working with automation projects of many food manufacturers.

Of course some of them have history of starting a small unit and they grew bigger - because people like "the taste" of the items they were selling.

So, get organized, looks like you have buyers. And you can make it bigger.

1) Check the local food market, check the prices of cakes they sell

2) Check the price of ingredients and energy usage of your product

    And make an excel sheet with actual prices + 20%.    

3) Check if you can participate in local food events and attract some buyers.

4) Check supermarkets and bakeries, and their cakes with ingredients.

After analyzing all this - and making your Production Cost calculations in MS Excel - you would get an idea of how much quantity can make your cake sell in competitive price than those in the market.

Of course, you can sell lesser than them, if you do your homework better.

And to your question of you want to bake for your friends, charge them something like -

Ingredients cost + Cooking expenses + Packing + Stroage.

And add 10% to this - just in case if you waste some ingredients while its raw, or while baking the cakes.

Example: a 500gms chocolate cake would cost from $8 to $20 depending on the volume - you make it.

To make it little cheaper, a good idea is collect orders first and then buy the raw material. (In technical terms - made to order) :-)

Remember, you can make it bigger, because people love tasty food.

Drop me a line if you need more help.

HTH

SM

Answer 3

1. You need a business license. 2. You need to be inspected by the health dept. 3. Consider the labor time and what it's worth and all the ingredients.

$. Can you make multiple batches at one time. etc etc.

take some business courses.

I bet you get sick of baking pretty fast