How to Price Your First Cake

One of the most commonly challenging parts of running your own cake business or home bakery is learning how to price your cakes…properly.

I know you see it as often as I do. Your favorite cake influencers and friends yelling ‘know your worth!’, ‘raise your prices!’ and you’re probably like, ‘YEAH!’.

Then you realize you don’t actually know what that means. 😅

What is your worth? By how much should you raise your prices? What if you lose customers? You’re already pushing the price where it is, there’s no way you can go higher. How much is too much?

I asked myself these questions often and would get this sinking feeling in my stomach and just felt like this was impossible. I would never be able to have a profitable cake business.

You might be feeling this way, but let me encourage you. I am still here years later selling cakes and running a profitable cake business. IT IS POSSIBLE!

So let’s get into it because you’re here to learn how. How do you price your first cake so you can have a profitable cake business?

How Much Does It Cost You to Make?

If no one has told you this, let me be the first. You cannot successfully price your cakes if you do not know how much it costs you to make it. You just can’t.

I know it’s not the most fun process to have to go through your receipts and calculate out how much each and every ingredient and material you use costs per recipe, but it is vital. Check out my article on 3 money Apps Every Baker Needs where I share an app that will make this process much easier for you!

Knowing how much it costs you to make a product helps you to understand which products are profitable and which are money suckers.

It also helps you determine whether or not you need to try out different brands of ingredients to make the numbers work. Maybe your targeted audience cannot support the higher cost of using high quality imported ingredients from France served in gold packaging. So you switch to sourcing your products from a local supplier instead which will bring down your recipe costs and increase your potential profit.

But most importantly, costing your products gives you the BASE price at which you can sell your products without LOSING MONEY. You won’t gain any either, but at least you won’t be paying customers for your products.

By the way, I have a gift for you! Use code STATIONBAKERY to receive 15% off of Fillet, the app I use to successfully price my cakes for a profit.

How Much Should You Pay Yourself?

Gasp! You should pay yourself? What a crazy thought.

This is one of the hardest parts of pricing your products because there are so many layers to it. Mostly emotional ones.

How do you get comfortable with the idea of actually having people pay you for your work? It breaks your heart to ‘take’ money from your friends and family. They’re your friends and family! You would do anything for them…including drive your business to bankruptcy.

How do you convince strangers (and yourself) that your work is worth $XXX? It is ‘just cake’ after all.

However, even if you and your customer thinks it’s ‘just cake’, there are people who literally watch tv all day…and get paid for it. Twist bottle caps, and get paid. Look at websites, and get paid. So why should you, baker, not get paid?

Look at it like this. How long would you work at a job that paid you $5 an hour and then required you to pay for everything needed to fulfill that job from that $5? Or better yet, they don’t pay you all…

You wouldn’t even apply to such a job!

So why, when you are in the position to choose your pay would you choose to have no pay? You’re not being a great boss to yourself.

You need to pay yourself.

You can choose an hourly rate or a flat rate per cake. Either way, you need to pay yourself accordingly no less than minimum wage, although I would argue to not pay yourself anything less than a LIVABLE WAGE.

Adjust your rates as you improve your skills and grow in demand. It’s called a raise.

How Much Should You Pay Your Business?

What do you mean pay my business? Aren’t I the business?

Yes, and no. (This is my favorite answer to everything lol)

Yes, theoretically you and your business are the same thing. However, when it comes to the money, YOUR money and the BUSINESS’ money are two different things.

Please do not go buy a hot tub using your business account money. Do not use your business money for your personal purchases. You’ll be in really hot water if you do. Keep business and personal separate.

So what is business money and how much should you pay to it?

Business money, for me, encompasses everything needed to run my home bakery business. The business money covers business expenses, taxes, growth and expansion, and other things like that.

Quick side note. Look into getting a business bank account and card. This will help you keep your personal finances from being mixed up with your business finances.

This is the money you will use to buy your ingredients, your mixers, pay for classes to improve your skills, marketing, websites, buffers etc. It is hard to calculate out the cost of all of these things to place a singular number to pay your business per order. So instead, I work in percentages.

Price Your Cake and Send the Quote

Once you have calculated your numbers, add it all up and this will give you your price for your first cake. Remember that you are in control of your business and you get to set the price for your services. You can adjust as needed to fit your needs and your markets needs to ensure a profitable and growing business.

You can now be confident in your numbers understanding why you charge what you charge and knowing that it makes sense.

If you found this helpful and want to go deeper into pricing your products successfully and running a profitable home bakery sign up for the email list where I will be sharing more.

Then check out the next article on 3 Money Apps Every Home Baker Needs.