This month we will be talking about pricing, the bane of many cake entrepreneurs lives.  Over 3 blog posts I aim to help you improve your pricing strategy, by offering you top pricing tips and advice.  Let’s start with the three biggest pricing mistakes cake entrepreneurs make when starting out on their business journey and how you can avoid them. 

The Biggest Pricing Mistakes


1. Benchmarking other cake designers

The mistake: You have started your business but you’re not sure what to charge. You have a google and see how your competitors are pricing their cakes. You then mirror your prices on what seems like a similar cake business. BUT STOP RIGHT THERE (sorry to shout but it is important). Every single cake maker who runs a business has a different set of priorities, reasons, overheads, ingredients costs, goals and so on. Therefore, if you benchmark their prices you are taking on their beliefs and reasons.  By all means look at your competition but leave it at that, don’t mirror their pricing.   From now on you are banned from benchmarking!

How to avoid it: So how do you price your cakes. Well, you need to get to know your business inside out and that means identifying every single cost that is associated with running your business.  From there you have the foundations for pricing your cakes for your unique business.



2. Working below the minimum wage

The mistake:  You forget to charge for your time. This is such a common mistake, and I often hear of cake makers realising they have been working for 50p or less per hour when start looking properly into their costings.  I know when I first started I didn’t charge for my time correctly and had an hourly rate of around £2.00 per hour. You don’t want to end up like that!

How to avoid it: I strongly recommend adding in your hourly rate to each cake your create so that you can pay yourself a wage.  The hourly rate you charge for yourself is completely down to how much you want to earn a year.  Your rate could be anything from £8 per hour, to £35 per hour, to even more. It is completely up to you, just remember to put it in.



2. Not adding a pure profit percentage

The mistake: The third biggest mistake is not adding a pure profit percentage. It is great that you have worked out all your costs, including your hourly rate.  But if you fail to add a pure profit percentage your business will simply not move forward.  You won’t have the funds to reinvest and purchase lots of wonderful cakey items or the funds to pay for marketing activities to help spread the word about your business. Unless, of course, you take it out of your wage but that is your wage not your business’s profit.

How to avoid it:  I learnt this the hard way, in fact I learnt all three of these mistakes the hard way.  Once I started adding a pure profit to my business that is when the magic started to happen. I suggest starting small and increasing the pure profit percentage, every 6 – 12 months. You may want to start with adding a 5% pure profit margin, and then increase to 7%, then to 15% and so forth.



To sum it all up: Once all your costs have been worked out, and you are happy with your hourly rate, then your pure profit percentage is the only number really you need to increase on a regular basis to make sure your business continues to grow.  Your should aim to have a minimum pure profit percentage of 15 to 20 percent.Though to be a super star business your will need to be closer to 40-50 percent.

See you for the next post on pricing!

Pia x

Pia Cato

7 Comments on The Biggest Pricing Mistakes Cake Entrepreneurs Make

  1. Hi Pia. I am in the process of turning my hobby into a business. I am already part of the Facebook group and have found all your post/webinars so helpful. Thank you so much.

    • Thank you so much Kelly and so glad you are finding it useful. Running a cake business is such a rewarding business, good luck with everything and do introduce yourself in the Facebook group 😀 x

  2. Hi Pia
    All the mistakes that you said are true and I did it, OMG, but today I started to put the prices in the correct way thank you so much, you can be my fantastic monitor, just I want to grown with my business and I hope to do it and I need to build my website as well because I moved from blogger to wordpress.
    Love your help

Leave a Reply

Your email address will not be published. Required fields are marked *