Pricing cakes for profit! I understand what it is like not to have a profitable pricing method in place for you cake business.  For 5 years of running my cake business that was me. I got it right for some of my products but got it majorly wrong for the majority of the cakes I was selling.  I was getting fed up, disheartened and beginning to hate cakes!

I was sick and tired of creating cakes for 50p an hour, however the thought of all the numbers and calculations left me in a cold sweat!  I felt like I was in a catch 22 situation.

But if I wanted to be profitable and have a successful cake business then the numbers game was just something I would have to master.

Cake business help: Pricing your cakes for profit.

Pricing Cakes: The 7 Step Cake Pricing Formula

It took me a while, a lot of trial and error but I created the 7 Step Cake Pricing Formula and wow it completely transformed my business. For the first time in my cake business life, I was creating a profit, making a wage and beginning to succeed at the business game. 

This wasn’t just a one time only thing  that I created and then forgot about.  I use it in my cake business for every single cake that my bakery creates and I teach it in detail to my mentoring students.

Now I want to share it with you to help you and your cake business.

Helping you creating a profitable business from selling cakes.

So what is the formula, well first let’s take a look at the categories that the formula is made up of:

  • Mindset
  • Labour
  • Ingredient Costs
  • Sundry Costs
  • Utility Costs
  • Profit
  • Total Cake Price

Ok, now time to pop it into a formula:

How to price your cakes - 7 step formula

The 7 Step Make Money With Cakes Pricing Formula:

Mindset + (Labour + Ingredients Costs + Sundry Costs + Utility Costs) x Profit = Total Cake Price

Step 1: Mindset

Let’s start with your mindset. How you think about pricing, how you think about money, how you value your time and more.  Now you may think it sounds a bit ‘woo woo’ and to be honest it can be. But I am strong believer of mindset, the law of attraction (yes, for those of you in the know I totally love The Secret!) and how it can be totally transformational.  Mindset is a HUGE, HUGE, HUGE topic and if it is new to you, start slowly. I recommend looking on YouTube for free content and then going from there.

Step 2: Labour

Labour is often a part that cake makers forget about when pricing cakes. That sounds ridiculous but when you enjoy the cake making process it doesn’t feel like work. Which is fantastic. But not sustainable if you are not charging for it.  Especially if you are thinking about making your cake business your only income.  So how to charge. Jot down an hourly rate that you would love to charge. Then add 20%. How does this make you feel? Excited? Nervous?

Now that you have your hourly rate, start recording EVERYTHING  that you should be charging for.  Pop it onto a spreadsheet or clearly write it on a piece of paper. Make a note of mixing time, the baking, the cooling, the decorating to the shopping, cleaning, delivering, admin and more for every single cake you create. This is so important as you need to see what really goes into each cake you create.

Step 3: Ingredients Costs

This step most cake makers do include which is lovely. It can be fairly time consuming to implement, especially if you have lots of different recipes. But once this part is done you will just need to keep a check on any price fluctuations and change accordingly.   

Step 4: Sundry Costs

The sundry costs are all the items you use that aren’t ingredients so cake boards, boxes, ribbons, dowels, etc. I recommend shopping around for the best prices that you can find. This is simple to pricing the Ingredients Costs.

Step 5: Utility Costs

Utility costs are vital costs and something that you need to pay in order to create each of cakes. This is why I pop it into the pricing cakes formula.  It can be a little harder to calculate but go find your utility bills (gas, water, electric), tot up the total yearly cost then work out the daily or hourly costs.

Day Costs =  Yearly total divided by 365 days

Hourly Costs = Yearly total divided by 8760 hours in a year  

Pricing Cakes: How to grow your cake business with cake business help

Step 6:  Profit

My favourite part and one that a lot of cake makers miss out. The simple truth is, if you want to grow your cake business then you need profit. Profit is the money you can put back into your business and is not to be confused with your wages/drawings.  

Follow steps 1 -5 and your business will gave you a wage and cover costs. Add this step and your business will flourish.  

Profit will allow you to invest in that cake shop you have always wanted, buy new tools, hire a bookkeeper, use paid for marketing to market your business, improve your kitchen, etc.  The profit margin you wish to add is up to you. However, I recommend aiming for somewhere between 30%-70%. But you can start small, one step at a time. After all a 1% profit margin is but better than no profit margin!

Step 7: The Total Price

Now it is the fun part of pricing cakes, time to calculate steps 2 to 6.

Add together Step 2: Labour, Step: 3 Ingredients Costs, Step: 4 Sundry Costs and Step 5: Utility Costs. Then multiply it by your Step 6: Profit and this will leave you with Step 7: The Total Cake Price.

For example:

  • Step 1: Mindset – believe that you can charge more than £100 for cakes.
  • Step 2: Labour – £15 x 5 hours = £75.00
  • Step 3: Ingredients Costs = £37.00
  • Step 4: Sundry Costs = £6.00
  • Step 5: Utility Costs = £4.00
  • Step 6: Profit x 30%
  • Calculations: (£75 + £37 + £6 + £4) x 30%
  • Step 7: The Total Cake Price = £158.60.

Your Turn

Now it is your turn to take what you have just read and apply it your cake business, start pricing your cakes for success today.  If you prefer to watch this method in a video then check out my free Cake Pricing Masterclass. If you have a question, then join our friendly Private Make Money With Cakes Facebook Group and ask away.

Good luck and if you need extra help and support please do get in touch to see how I could help you with personal cake business help through one-to-one mentoring. 

Pia Cato

10 Comments on Pricing Your Cakes For Profit: 7 Step Make Money With Cakes Formula

  1. Would love some help and advice.

    Im trying to get funding so i can open my own vegan/gluten free bakery but getting funding seems to be impossible.

    Busniess plan, personal forecast and sales forecast havr been done which took me a month to do.

    Still no joys in managing to get funds.

    I’m passionately about baking vegan and gluten free products and i spent years perfecting my recpies so they taste as good or even better than non vegan produts out there.

    Any help i would very much appreciate it. Xx

    • Hello, congratulations on creating your business plan and forecasts (already super impressed with that). Where are you trying to get funding? Are you based in England? If you are in England there are a number of funding bodies out there. If you are under 30 the Prince’s Trust maybe able to help I got funding (a loan) from Fredericks Foundation I suggest contacting your local council as well as they maybe able to help or find a local business advice centre. In Gloucestershire we have a business centre called the Growth Hub and they are able to put businesses in touch with advisers and help with grants, advice, etc. I hope this helps 😀 x

  2. Hell there Pia,

    I am so happy I found your page as its the best one so far on how to work out a price for cakes that I do from home from time to time now. I absolutely love baking and have recently decided to do them in my spare time when someone places an order.

    I have noticed each cake I make my cake making and decorating skills get better.

    So, again thank you so much for your price guide on this page.


  3. Hi there Pia i m glad to have come across your page. one that is clear about pricing and makes it simple. i m baking from home, and really think its time that i start charging profit for my cakes. How do i present this to my customers?

    • Hi Sasha, so happy this post has helped you. Presenting new pricing to customers can always seem a little tricky as first. If they are a new customer charge the new price straight off. If they are a previous customer, there are a number of ways you can do this, either explain that you are putting your prices up and that for this order they can have the old price but any orders placed after this will have to be charged at the new price. Alternatively, explain that your prices have gone and this is the new price from now on. But it is totally your call. One thing I would say is go over step 1: Mindset before you talk to your customers so that you are completely in the zone. Good luck! Pia x

  4. Hi Pia…i tried your pricing tecnique..just want to ask how you come of the price of your cake in your example pls? Because its different when i compute it…please.Because im trying to do it to price my cake which i have terrible of pricing it. And i like they way you do it…please help me. Thanks

    • Hi Josephine, hope all is well, what do you do when you compute it? This is the formula
      Step 1: Mindset – believe that you can charge more than £100 for cakes.
      Step 2: Labour – £15 x 5 hours = £75.00
      Step 3: Ingredients Costs (this is just a made up number for the purpose of this example) = £37.00
      Step 4: Sundry Costs (this is just a made up number for the purpose of this example) = £6.00
      Step 5: Utility Costs (this is just a made up number for the purpose of this example) = £4.00
      Step 6: Profit x 30%
      Calculations: £75 + £37 + £6 + £4 = £122 – multiply this number with 30%
      Step 7: This calculation will give you Total Cake Price to charge your customer = £158.60.

      Hope this helps,

      Pia x

    • I do factor in the difficulty level of the cake, if it was more complicated and more time consuming, then I would extra time in the labour part of the formula. If it is a cake you have never created before, always over estimate. If you do create it quicker than estimated you could always give the customer the difference or keep it as profit. x

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