Hello Lovely & welcome back, I hope you are finding my content helpful on your journey & are being encouraged with my Instagram posts. Today I’m going to touch on a revelation I had just this past week & I hope it helps you get your act together!
I’ve signed up to a bakery business course in a baking community called the PinkCrumbb & I also have been watching a lot of TheCakeMama’s posts on Instagram & their videos. There is a world of knowledge & learnings out there! I’ve known for a while now that I haven’t been charging the correct pricing but never knew the extent of the variance.
When I started my business in 2016, I put all my ingredients & costing on an excel spreadsheet & I worked out how much each cake size & flavour would cost me, to that I added R100 for my labour & Bob’s your uncle. In the years thereafter where I felt the pinch with ingredient/ fuel increases – I added a R50 here
& there but I had never gotten back to updating or revisiting the per ingredient costing until last week – a whole 7 years later!
In the beginning, I liked the idea of being a “cheaper” or “reasonable charge” baker but I see now after going through the learning content that it was at a detriment to myself & the baking industry. I was told earlier this year by a fellow baker that I was too cheap & I was offended because it sounded derogatory however when she asked questions like how do you cost for cleaning, detergents, cling wrap, cellophane etc? At that point I realized that I didn’t, I considered those things as household items so why did I have to charge for it?
I didn’t really pay too much attention after that because I was really busy working a full time job & doing the bakery business on the side but when I started investing & making time for the learning – the message was the same. I think Janelle actually referred to it as “robbing your house”. It was a real eye opener for me & so I took the time to do the exercise. The stats are absolutely ridiculous!
Yes, I have been making money but not the kind of money I thought I was & it was because I didn’t have the facts. I didn’t have the costing & I never considered that working on a cake for 6 hours or two days cannot equate to R100 of labour. If I was paying an employee that – I would’ve been JAILED!
So, if you are in SA, this table will benefit you. I saw Janelle posted on her stories earlier this year a similar comparison in the US pricing so check her out if you need a better idea.
I am not a financial adviser but the tips really made sense to me. Stop robbing your house & price your products correctly!
Calculation for Cake Pricing
- Get all the ingredients pricing & load it on an excel spreadsheet under a tab called “Shopping List”, there are apps that you can load this into, but they attract a cost.
- Start with your smallest cake or most popular cake size to do the conversions & pricing eg. Stork to bake costs R60 for a 1kg, if your recipe calls for 250g – your cost would be R15 for the cake.
- Make sure to detail all your additional costs under headings so you don’t forget anything that falls under the category. Ie. Packaging – board, box, cellophane, tape, cake care label, allergens label etc
- Once you have all those costs together, decide on a labour cost – what you need to get paid per hour. This is a difficult one because most times we underquote ourselves & other times we overquote because we believe we are worth so much more. My advice here is to be honest & relative.
- I don’t charge oven time & never charge for electricity which here in SA is a massive disservice to my business since the price of electricity has gone up at like twice a year every year at extraordinary rates!
- For my calculation – I have used an average of 3 hours of time & this includes the designing, quoting, admin, shopping, prepping, baking, multiple deco steps, packaging & delivery time as a base which is not realistic if you think of how many hours these things take but I think its relative.
- The greatest eye opener for me & that is coming across from both business owners is PROFIT. Up until now, our calculation hasn’t included anything for a profit to the business & this is where most of us fail. Janelle says if you are not adding a profit because the cost is already too much in your view – you are literally running a non-profit organization NOT a business!
- So remember to add a profit! All bakers are different & have different overheads etc but to ensure reinvestment into your business & growth – it’s a step you cannot leave out.
Not everyone will be able to afford your cakes & this may result in a loss of clientele however this is far better than trading at a loss or breaking even unless you’re invested in doing this as a hobby.
Hope you found this helpful, please comment if you agree or if you have any questions, I’ll be happy to answer.
Until next time – be kind & bake people happy!
Wow Lauren… this is an eye opener. There are so many things to consider when costing a cake that we just ignore.
For example, water, detergents, electricity, tape and the list goes on. Labour … my word … never considered that. Thank you 🙏🏽
I especially like the idea of not devaluing yourself by dropping prices because someone thinks you too expensive.
Thank you 💕
Thank you for taking the time to read my post, we underestimate how many of us out there are making the same mistakes. Glad this helps 🙂