Not knowing how to charge for desserts or not knowing how to arrive at the right price can be detrimental to the success of your bakery and create negative feelings toward your business.
Pricing ain’t easy! I think questions about pricing and costs are the most frequently asked questions from beginning bakery owners.
Have you seen these questions about how to charge for desserts?
These types of questions are daily routine on cake groups and baking forums:
“How much should I charge for this cake?” **posts random cake photo**
“How much should I charge for these cookies?” **posts random cookie photo**
“How much should it be for a 2 tier, chocolate cake, with ganache?” **no photo, just guess what that might look like**
“Hey guys, a customer wants 36 cupcakes, what do you charge for yours?” **missing description or any details about flavors, fillings, or decorations**
New bakers are desperate to know what to charge for desserts. Even resorting to asking strangers online what they think would be a good price.
I remember what that feels like. It was a scary place to be, wanting to please my customer, but needing to earn money and cover costs at the same time.
Good Advice on How to Charge for Desserts Goes Unheard
Frequently, when someone does post a good answer about how to price, they are ignored or even told they are wrong because they don’t understand “the market.”
That’s like standing in the rain, being offered an umbrella and saying, “No thank you, this type of rain isn’t stopped by umbrellas.”
What? Yeah… something that crazy.
What is even more surprising is when people start giving out prices… like $35, $2.50 a serving… oh, at least $100… or the best answer ever, “I don’t even turn on my oven for less than $200!” (By best answer ever, I mean NOT the best in any recorded history… ever.)
The original question asker seems so happy with the answers, thanks everyone profusely, and probably runs off and implements the new pricing advice.
I get it, any end to the stress not knowing what to charge can be soothing. Yet, in a few weeks, they will be back to wondering why they aren’t profiting from their business.
Pricing can be difficult.
Not just because there are so many components, but because we tangle up our self-worth in the price tag attached to our dessert. I truly understand the fear of pricing desserts.
It’s embarrassing to tell you that when I first started selling desserts, I ended up earning around 50 cents per hour. Right.. even with 18 hours days, that sucks.
It felt terrible to explain to my family that the job that I just worked all weekend for won’t even buy a meal for my family.
I didn’t know any better, but I learned quickly, and you can too!
Only you can price your desserts
Ferrari doesn’t post pics of their new models on a car forum somewhere and let Kia give them pricing advice. I really don’t think so… Different target markets for sure. Indeed, they have different parts, value propositions, and sales strategies.
It’s easy to see the difference between Ferrari and Kia.
You are different too. What you are trying to achieve is different than other bakers in your area or on those forums. It matters. Even for little low margin baked goods.
- They aren’t you
- They aren’t your business.
- You HAVE to cover your costs AND make money!
A person in another state, in another city, with a completely different situation than you cannot tell you what to charge your customers based on a photo or description of a cake. Period.
I know it would be so much easier if they only could.
Don’t Take the Lazy Route
People also love to try and make pricing your desserts simple by saying, “Take your ingredients and multiply them by 2… 3… 4… or at least 5…. “
Please don’t do that.
When you are off and running and you can see a pattern in your own costs and time. Then, you might be able to get away with a shortcut or two, OCCASIONALLY, in a pinch… but not today.
If you haven’t started to price your baked goods, it’s not even time to look at what others in your same market charge… yet.
Here’s a very basic guide on how to charge for desserts
Or how to price your cakes, how to charge for your cookies, charge for your eclairs, your baklava, how to price your macarons, how to charge for your candy, how to charge for your sugar art, how to charge for your pies …
(Get it? Whatever you sell…get paid)
1) Get to know your numbers… ALL of them.
The expenses that you have to pay in order to do business and the cost of all of your ingredients and overhead has to be known. Worried you will skip something? Using this amazing FREE site called Cook Keep Book helps me keep track of all of my costs! (I am not affiliated with them at all- just a loyal and true fan of their beautiful site!)
2) How much do you need to get paid to make it all worthwhile?
If you are too scared to name a number, then look up the industry standard for your area. Do it… type in “salaries for bakers in YOUR CITY, STATE. Choose a wage, above minimum wage, and make it your starting salary. (Don’t’ make it .50 an hour like my starting wage… YIKES!)
3) What is involved in making your product?
Do you have to go to 5 different stores? Maybe you have to draw sketches for an hour. Do you go milk a goat? What time and effort go into bringing this product to market? Is this a rare product or can it be found everywhere? What is special about yours that you are considering making a business out of it?
4) How much profit do you need, above your wages, to grow your business to the next phase?
A lot of beginning bakery owners don’t consider profit as anything other than what cash they get to put in their pocket. Yet, profit is the way you steer yourself into the future.
Profit is used to reinvest in the business and pay out dividends to the shareholders, even if you are the only one. The profit is what you can play with.
Maybe on cookies, you only earn 10% to keep your prices low, but on custom cakes, you up your profit to 50% because they can command higher prices and are specialty items.
You can even choose to take no profit on an item, but it’s always best if it is your choice and you are aware of what you are doing.
5) Now for the fun part- MATH
At this point, you can start to do some math.
$10. 00 in ingredients
$ 2. 00 box and label
$ 1.00 utilities
$ 1.50 delivery
+ $ 27.00 for 1.5 hours of time @ $18 per hour
$ 41.50 total cost
+ $ 4.15 for 10% profit
$45.65 (that’s a strange number so I would round up or down depending..)
“Depending on what?”
Well, the number 45.65 is actually what I have to get paid for this item to even exist on my menu. Otherwise, I will be buying other people dessert and that is no business model. The $4.15 is a very minimum profit that I would like to have if I am going to be selling a bunch of these items. If this were a very labor intensive type of item, I would really need more profit to have all of my resources dedicated to making this item.
(SIDE NOTE about charging for your time: IF you are new, things will take you longer. IF you are slow on purpose because you enjoy meandering through the order, that changes your “time” considerably. If you have a busy bakery, you will be making more than one thing at a time, so that time isn’t really accurate for one order. Assign a flat time rate to a job, ex. basic cake 1 hour, pie 30 minutes, a 2 tier basic cake 4 hours, etc. You can and should even charge different rates for decorating than baking.)
6) Consider your past, present, and future customers
- Who has already been buying your desserts?
- Who can you sell to right now?
- Who do you hope will be your client in the future?
The answers to these questions will tell you how to position yourself for your target market.
People who buy Ferraris don’t want a cheap car.
People who buy economy cars don’t shop for Ferraris. It’s important to know your audience.
If you are currently a cheap cake lady but you have your eyes on being a premiere wedding boutique bakery, you have to strategically get there.
Read more about how to find your target market here.
7) Now it’s time to look around you at your bakery’s competition.
- Who are your direct competitors?
- Where are all of the other places someone could go and get something similar to what you are selling? (EXCEPT big box stores, you cannot compete with their pricing tactics or production schedule, just ignore them.)
- What are your competitor’s prices? You can look at their websites, their social media pages, you can even call and ask or have a friend call (it’s really common, I promise.)
- Who is the cheapest?
- Who is the most expensive?
- How do your customers compare with theirs?
8) Adjust your price for your market
After considering #5 and #6, you can change your price to fit your market, as long as it doesn’t dip below $41.50.
You can raise your price to be a high-end product, especially if you can say that it is made with premium ingredients, in a special way, or your reputation is one for which people will gladly pay more.
You can also take the middle road and have a safe bet with a mid-range product until you earn your reputation (which can happen rapidly.)
Now you have a logical product pricing range. Let’s pretend it’s $45.00 – $80.00…. You can land anywhere in there and be reasonable for your market.
Knowledge is power.
The more you know about your business the more confident you will feel. It’s really liberating to be able to know how to charge vs. asking random strangers on the internet.
Pricing is not a marriage, you can change it later.
Prices fluctuate. Don’t get over-analysis paralysis by thinking it has to be perfect. Your main goal is to cover your costs and make a profit. You can worry about creating your bakery empire after you master how to charge for desserts.
Last bit of advice, I caution you not to try and be the cheapest. You don’t want to start a race to the bottom. It’s always better to add more value than compete for low prices.
I really love what Krazy Kool Cakes and Designs have put together on their YouTube Channel. It’s real talk about Cake Business from Super Cake GENIUS Laura E. Varela-Wong and her very talented husband, Arnie Wong.
Pricing for Profit at your Bakery is a no-nonsense article about getting the price right.
The Magic Pricing Formula is a simply stated article on pricing: Price = Ingredient Cost + Labor Cost + Allocated Overhead Cost + Profit from a guy who really knows his business numbers, Jason Kraft. Sadly, I don’t think he started the new site mentioned in this post.
Question and Comment Time!
Do you struggle with how to charge for desserts? What are the biggest challenges you have faced when trying to figure out your menu and pricing?
Please comment below or drop me a line, I’d love to hear from you.