Cake Decorating Blog

Cake Inc: Pricing Cakes Like a Pro

Starting a cake business can be scary, intimidating and most of all confusing! You have worked for years on your cake decorating skills and can now bake, fill, carve and cover cakes, you can make flowers and decorations, you feel you have a talent and you want to share your talent, while making some money. It’s a great idea, but where do you begin? What are the laws? How do you advertise?

We are here to help! Over the next few months we will be covering many business topics, from building a great menu and working with customers to working with other vendors, delivery concerns, cottage food laws and more. We want to help you succeed!

We are starting off with the question that is asked most in the cake industry: “How do I price my cakes?”

This is a tricky topic, with many factors to consider. We are going to break down eight factors that will help you price your cakes in a way that will make you and your customers happy.

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Jeweled Wedding Cake

Photo via Craftsy member RB Girl

1. Location…Location…Location…

Where you live and where you bake will be the most important factor to consider when looking at pricing. If you live in New York City, your pricing will be very different than if you live in a small town in New Mexico.

Researching your local market is the best starting point to figure out pricing. You probably know if a gallon of gas costs more or less in your area than it does in surrounding cities. It's the same with custom cakes. Call other custom cake stores and find out what they are charging. If they are successful and are charging a lot more than you were planning to charge, you need to raise your prices.

2. Do NOT undercut your competitors

I hear it all the time from cake decorators and artists, “I am just starting out, so I can’t charge as much as the big name decorators out there.” Or, I hear, “I have so much to learn, I am not good enough yet to charge that much…I am still building my portfolio.”

When you are starting a company, you are telling friends, family and clients that you believe you are good enough to open a business. You may not feel like you are good enough, but pricing your cakes low hurts yourself because you will be working your tail off, could burn yourself out, not make any money, and you can become known as the CHEAP cake lady.

Undercutting your competitors also hurts them and the cake industry in your area. Bringing prices down in your area can take business away from other companies and cause them to loose income, which can have many unwanted consequences.

Lower prices at the beginning can also make it very hard to raise prices once you have a strong customer base. They will not want to pay the higher prices and will find the next new decorator to take your place. You want to attract loyal customers that see the quality of work you do and are willing to pay for it.

3. Know your costs

This is a big one! We can throw numbers around all day, but if you don’t sit down and figure out your costs, you will under-price your cakes, guaranteed. This is where you get out your pen, paper, calculator and receipts, and calculate what you actually spent or will spend on making a cake.

Here is a list to consider as you calculate your costs

  • Overhead: rent, utilities, business cards, posters, office supplies, computer
  • Bakery equipment and supplies: mixer, oven, tables, cooling racks, pans, bowls, food coloring, luster dusts, fondant, tools, boxes, cake stands, cake boards, dowels
  • Ingredients: flour, sugar, butter, eggs, baking powder, chocolate, vanilla and other specialty ingredients
  • Delivery: gas, wear and tear on your car, your time
  • Time: You need to make sure you get compensated for your time. Set an hourly rate for yourself and charge accordingly.

The last item is a big one. When I first started my company, I was asked to make a small two-tier wedding cake, it was covered in fondant and had a purple fondant bow and fresh flowers. I charged a price that I thought was high enough, but did not take the time to calculate my costs. After delivering the cake, I went home and calculated my costs, not including the time I spent making the cake (which was about 7 hours) after everything was added in, I calculated that I had made $15 on that cake. Which came out to $2.14 per hour. I learned a huge lesson that day. Don’t make the same mistake I did. Calculate your costs before you agree to even make the cake.

Frilled Cake with Stained Glass Design

Photo via Craftsy instructor Maggie Austin

4. Do not compete with grocery store prices

When pricing a cake, never try to compete with grocery stores or wholesale stores. Those cakes were flash-frozen months ago and decorated as fast as possible with buckets of premade icing.

As we discussed before, you want to target the customers that are loyal and will come back for great tasting, quality cakes. If you want to know if your prices are too low, call and get an estimate from a grocery store. If you are close, raise your prices.

5. It’s just a cake…No it’s not!

This is something you may hear from customers, or you may have even said it yourself. When a couple gets married/ there is always a picture of the bride and groom cutting the wedding cake. When people go to a wedding, what do they talk about? The dress and the wedding cake!

A wedding cake or a birthday cake is the centerpiece of that event. Do you remember what you got for your birthday when you turned 10? Probably not, but you may remember your birthday cake.

Custom cakes are not just cakes. They are works of art that are central to the celebration. Also, from the business aspect, your cakes are not just a cake you throw in the oven and hope it comes out right. Your cakes are tried and true recipes, icing, cake boards, dowels, fondant, decorating tools, days of work preparing decorations, planning, sketching, designing, and working with the client, then you deliver the cake and make sure it is perfect before walking away.

Grocery stores have cakes, you provide a lasting memory, a conversation piece and a work of art.

6. Do I price by the serving or by the cake?

Once you have run your numbers and you know the costs involved, this is usually the next question. And my answer is both. I know that may not seem very helpful, but here is why. Customers can get nervous contacting a custom cake shop. They want to be able to compare prices and feel that they have a basic idea of what they can expect as far as pricing is concerned.

Here are three things to consider when setting your prices:

Have a minimum price point.

Make it very apparent that your cakes start at a certain price point, such as, “Fondant cakes start at $7.00 per serving” or “Wedding cakes start at $500,” then add that the prices go up depending on the design.

This can save you and your customer time. They will walk away if they know the minimum price is too high. You don’t want to spend time emailing and meeting with a customer only to find out they were expecting a three-tier wedding cake for $50. (It has happened!)

Many of the big-name decorators have starting points of $1000. You may have customers that tell you your prices are just too high, but do not lower your prices! You wouldn’t go to the grocery store and tell them their prices are just too high and ask them to give you a discount, you would shop somewhere else.

You should not try to make every person that contacts you happy. Stick to your pricing and if they choose to go somewhere else, they may not be the right kind of customer for you.

Choose one cake cutting chart and stick with it.

There are many cake cutting charts, but most caterers are trained to cut to the Wilton standard. Once you have chosen which chart you will use, keep it consistent and memorize it, so you can easily quote servings per tier and minimum price points per tier. Most customers will come to you with the number of people they want to serve, be ready to give them a starting price as well as how many tiers the cake will need to be.

Cake Sculpted into Shape of a Dress

Photo via Craftsy member Ella Harvey

Pricing sculpted cakes.

Specialty cakes and carved cakes require a lot more time for designing, structuring and decorating. This is a great time to price by the design.

Be realistic about the time required and price it accordingly. Just because a customer only wants to serve 10 people does not mean it will take you less time than a cake to serve 30 people. Be honest with your customers, tell them these cakes take much longer than other cakes, and are priced based on the design not on the number of servings.

7. Pricing false cakes

False cakes can be easy to decorate and can give you extra time, allowing you to get started earlier on orders. They also add height to smaller cakes, but pricing them can be tricky.

I found that some brides wanted to order a false cake and have sheet cakes on the side to try to save money. For me, this is not why I started a business, so I priced my false cakes at half the cost I would charge for a real cake, and then priced my sheet cakes at half the price of a regular size piece of cake. So when you add them together, this option does not save the customer money.

Sometimes the customer wants to just add height to the cake. In this case I still charged half the price because of the time to decorate the cake and the cost for the fondant and other ingredients.

Some decorators choose to charge full price for false tiers, this will be your decision based on your costs and if your market will allow it.

8. Your time is worth money

I have a good friend who's an amazing photographer, and she charged prices I couldn’t believe. When I asked her about it she said, “Just because I could never afford myself doesn’t mean other people can’t afford me.”

Make sure you give yourself credit and include the hours you worked on your cakes. Your prices may seem high to you, but if your research shows that your market will sustain your prices, go for it. Remember, you are your own worst critic, so give yourself a break and be honest with yourself about your time you spend on cake decorating.

Your time is valuable, so set an hourly rate and stick with it. You have a great talent and should not be making less than minimum wage because you are building your portfolio or because you are just starting out. You would not apply for a new job and tell them that you are okay with making $2 per hour, so don’t do that to yourself.

Pricing cakes correctly can take some work, but is certainly worth the time and effort. Run your numbers and then set your prices in a range your local market will sustain and that you are comfortable with, and you will find success!

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49 Comments

Cat Colbert

Thanks for the excellent article providing guidance on how to price your cakes. I think the most valuable point made is not to short change yourself because you are starting a new business. It’s so important to consider the value of your time spent.

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Radhika

Very well written article. I am a beginner and really feel almost embarrassed to quote a price. I know I spend hours working on the cake, and that my skill level is growing, but the moment I hear, “Oh, that’s sounds too costly!”– I am riddled with self doubt.
I need to change my thinking to “The cake is the centrepiece of the party”. That’ll be my new mantra 🙂
Thank you!

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BimsFlavors

Thanks for this wonderful article! Definitely very helpful! 🙂

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Ann

It is so true! I once made some cake pops for holiday sale, I priced them at 3 for $1 even though I worked until 2am to finish them! Family and friends found that unacceptable and repriced them at $1.50 for one, to match normal Starbucks prices! And to my surprise, lots of people bought them at that price!

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Pattie

Love the line “Just because I could never afford myself doesn’t mean other people can’t afford me”! That’s the key, isn’t it?

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Liz

Thanks for a super informative article that covers the tricky ‘pricing’ question!!

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De

Thank you for your candid guidelines. I don’t make the actual cakes, I make gum paste and other air-dried non-toxic clay items to use on cakes, especially life-like flowers. I use the information and instructions from gum paste for all my projects, it translates so well. The guidelines are the same also. Charge what it’s worth not what you yourself can afford to pay. And be realistic, you can’t live on $2.50 an hour.

Thanks, I appreciate the information. It does translate!

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Claudia

Thank you for all the recommendations. Very helpful. The best article ever!

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Helenna Mannila

Great article, setting out pricing in cold facts. I made the mistake of pricing too low when I started, and all it does is build up frustration because you know the business cannot continue/function like that. I now have a pricing structure in place which I review a couple of times a year to make sure the prices are up-to-date. There are a lot of cake decorators where I live, so competition is strong. Invariably there are under-cutters, but that is their choice, and one which may not see them still in business in a year or two’s time…

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Stephanie

You touch on so many important points! I think I’ll print this out and hang it in my shop office so I can always remind myself!

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chris

A very refreshing article , that has made me sit up and think , It is a very hard habit to break when you have quoted your cake so low because you dont think you are proffesional enough to charge what your cakes are worth and it is one that i have fallen in to …. But i am tired of standing till i hurt and dropping with tirdeness after a full days work at times , setting the alarm at ###### o clock to wake up and finish a cake on time for a cake that stands you a measly 10 pound . So thank you for this helpful guide , i am worth more than 2pound an hour and so are my cakes… they are not just cakes they are works of art .

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Su Lyn Chung Navarro

Excelent!!! I need this tips. In Panamá is dificult, because the people want beautifull cake and don’t want pay for it. I am begining and you read my mind. Thanks a lot.

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Cakes by Sweet Indulgence

Point # 8 really hits home with me. As someone who has made cakes for more than 35 years, I have come to realize how much my time is worth.

It doesn’t matter how much you love doing it, you need to be compensated for all your work that goes into it.

My prices are fairly high but certainly within reason, considering the high cost of all the quality ingredients we use in our cakes.

If people do not want to pay the price, I’m good with that. If they do, they will probably buy another big box store cake or grocery cake or even from bakeries that use cheap ingredients.

Yes, there is that big of a difference when you use quality ingredients, your taste buds can tell the difference.

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rachel

I am trying to start a cake decorating business. I really enjoy doing it. Would you be willing to send me some recipes you use. It sounds like you have been in the business a long time and I would love to gain some wisdom 🙂

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Mary

Hi there would be to much to ask. For some recipe’s from you I only do 3 leches cake wich s 3 milk cakes .. But with you experience I bet you have some good recipes for client hope you can share some with me I ll appreciate it.thank you

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Grace

Great great great. Thanks a lot for this advice

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Diana Pretorius

Helpful indeed…”Good cake isn’t cheap and cheap cake isn’t good!”

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Diana Pretorius

Helpful indeed…”Good cake isn’t cheap and cheap cake isn’t good!”

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Lourdes Viera

Just LOVE all the information you provide in this session. Thank you very very much! I’m going to pass it to my baker friends

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Rob

Hola Erika y carmen!!!

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brenda

Don’t fall into a trap of giving a cake as a present. As people think it’s a cheap present and don’t realise the time or cost of materials. My advise would be if asked to make a cake by a friend is.tell them how much and if you want to make as a present at least they then appreciate the cost. You can then decide if you want to give as a present or discount it to what you want to give as a present.

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kranthi

very nice article and with beautiful cakes. i will bookmark your article for further cake designs online cake delivery in Hyderabad. Thanks for a great informative article.

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bookthecake

Excellent!!! very nice article and with beautiful cakes…..!It look absolutely delicious …..:!!!!!!The blog design was to good .Now a days people get attract with this type of cake …..!!! And thanks for sharing ……. :)i will bookmark your article for further cake designsCakes to hyderabad

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DeeDee

Thanks for the information, my cake business is Home style very little decorating. I have under priced the same way and people want my pound cakes, I Also mail cakes. I am defiantly going to change my way of thinking…..

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Mary Jo

Great article and love your tips. I have been the go to “cheap cake lady” for years and don’t make many anymore because I’m burned out. Wish I would have read this a long time ago.

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Lucy

So helpful, I almost gave up.. after calculating the time you spend and what you are getting… thank u so much.

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Lesly Suanu

Am so grateful for this pricing lesson. I have really learnt alot. Pls I want to know more about flavors in cake. I mean how to combined flavors, and which kind of flavors gives better results. Thank you. Leslsy

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Cass

I know Wilton’s sells a package of concentrated flavors called Treatology and I think they have a guide on how to mix and match to get new flavors.

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Brenda

Wonderful article. I have under priced my cakes for years and I KNOW THEY ARE GREAT… But no longer. If you want it you will have to pay accordingly. Thanks, a friend told me to up my prices…the cakes are too cheap… I am not paying myself for all the long hours and beautiful workmanship.
I hear you Ms B. Sorry it took so long to understand. Great article, thanks a million.

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Chrisette

Thank you for the amazing tips. Very helpful and so true. My daughter has been trying to make me understand that giving away cakes for free just brings down the quality of my work and no appreciation for the time spent. Good eye opener.

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Akinlade Taiwo

It’s like a reminder of what we do everyday about pricing of cake which most of us are guilty of thanks so much for reminding us

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Elizabeth

Excellent! I love Craftsy, love to have so many classes with me and be able to learn so much. Please keep sharing this type of info, I feel that pricing is very difficult and also marketing the right way. Keep the tips and advices coming. Thanks.

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Ayinde Opeyemi

Thanks for the pricing tips. It has really encouraged me not to see my prices as bn ridiculous and how to really estimate my cost……Thanks a bunch

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Elizabeth

I like your output craftsy

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Virginia Wagner

How perfect timing for me to think thoroughly that this information you posted online it’s very helpful. I’m thinking of opening my own business of ” Wilton way in cake decorating “.
I have to research everything and study for the good in business, etc…so on. I’ve finished the course 4in Wilton way..” Advanced Gum Paste Flowers”. I’m so trilled with your information. .
Thank you so much! ! !

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Afsheen khan

Thank you so much ,i am thinking to open my own business , your prices tips very helpful i did makes cakes and i charge less even i worked for two whole days , but thanks to your blog , i love your cakes and carfty.

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Destiny

I want to say thanks for this info/advice as a baker & event planner I did start my prices off very low just to meet the customers pricing standards. Ontop of that I fiqured since im just starting out im not that good to compete with years in competors. But after reading this you gave me full hope that im just like the others. Like you said u cant go in your lical grocery store or bakery asking for a discount or to change there pricing so why should i.great thinking. Thanks alot

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Funmi E

I really really needed to read this

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Lou

I think this article is excellent. Give yourself credit for your beautiful creations….even if you don’t think they are very good. Have you seen some of the cake decorating videos? I have seen a lot of sloppy work being done by so called professionals and wonder how they can get by with it. I know the quality of my work and I know the amount of money I spent on my training to be a cake designer. If you want my cakes, you will pay me for my skills. If I am too expensive, you will find someone else to make your cakes. I am worth every penny and so are you. If you were a lawyer, you would charge a lawyer’s fee, right? Same principal applies to cake designers.

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Nnedi

Very useful, educational and informative article.

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Yesenia

Hi everyone, it has been hard for me to start a small business. I am good at what I do. I just think the problem is I live in a small town where there is no bakery. And your local bakery is either Walmart or HEB plus bakers who bake from home. The nearest big city is like 30mins away. How do I compete with that. And how do I go about pricing.

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Ykeena Covin

Thank you for your information! It has been very helpful!

Ykeena Miller Covin
Cakes by Keena Desoto, TX

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muruganantha

Iam open in cake shop you cake cooking procedure teaching me

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BemsBest

Its so helpful..great information..thanks you so much its help me more about pricing cakes..and your design oh how i love it..

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Helen

Thank you so much for this guide. I underpriced myself for a cake earlier this year and I blamed myself eventually. It took up to 2 weeks to finish the cake- a 5 tiered multicoloured cake with numerous flowers as well as a huge loaf pan cake for her traditional wedding and I had to transport it to a different state. On the morning of the wedding, I was burning with fever. I recently switched to making cakes with butter and not margarine and believe me, the going has been tough but I am sticking with it. I make “organic” cakes using the best ingredients- I can’t afford to put less than the best out there and to underprice myself. I worth a lot for my time and patience. Thanks for the great tips!

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Mutindi

So useful. I’ve often found it hard to charge what I know I should charge.

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Stella Gigmai

Thank you for the wonderful article.It is very helpful.I am starting up cake shop soon and Iam working on my business ideas.
And Im finding it difficult already on how much i will charge customers.

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Nguenue Nfortayong

Thanks for the boost given to the cake decorator. customers can be very tricky indeed. most know what they want and do value it

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