Learn How To Price Your Cakes

If you want to learn how to price your cakes you need to know what your competitors are doing, and what your real costs are. It’s vital to your success to price your cakes right.

Learn how to price your cakes

What if your competition was selling their products so cheaply that they aren’t even making a profit? How will you compete with that? You can’t! Instead of fighting a losing battle to be the cheapest cake decorator around, find out what your competitors aren’t doing well. Don’t compete for the least profitable items, focus on your most profitable products. Own the market for those products!

Here’s my real life example:

In my area, most of the decorators specialize in children’s cakes. Not one of them feature wedding cakes or adults birthday cakes on their web pages. I deliberately chose to market wedding cakes and expensive adult birthday cakes. I didn’t want to compete with them for the same group of buyers. I also wanted to focus on selling the most expensive cakes, where I could make the most profit and the least amount of competition. As a side note; later on those brides came to me for other cakes. Having loved their wedding cake, they then went on to call me for baby shower cakes and first birthday cakes, etc.


What does your market want, and how much will they pay for it?

You have to appeal to potential customers by selling the products they want, at the price they are willing to pay. If you don’t have the right products at the right prices, customers aren’t going to buy from you. You won’t be able to sustain your business. I know many other websites will tell you “if you market your work well the buyers will come,” but my twenty-five years of caking experience has taught me that simply isn’t true!

One day when I dropped off my tax information at my accountant’s office, she pulled me over and told me about her experience at the local cupcake shop. She began laughing as she told me she had attempted to buy a birthday cake for her granddaughter, but the cupcake shop wanted well over $100.00 for a tiny cake!

My accountant could easily afford a $100.00 cake, that wasn’t the issue. The cake she wanted was ONLY for four people, and she specified that she didn’t need or want extra cake or a custom design. She only wanted a simple little cake. She asked me, “is the cupcake lady crazy or what? Who’s going to pay $25.00 per piece of cake?” “Does she think she can build a successful business in this town with THAT kind of pricing?” She told me all her country club friends have similar stories about the crazy cupcake lady.

Your bakery/food business (whether it’s home based or a store front) is not any different than other stores. If people enter your store physically or virtually and you blow their mind with your pricing, ignore them or confuse them; they may never return. First impressions matter. Be prepared and professional before you open your business door and sell what they want for a price they can afford.

(Currently, the cupcake shop now sells whole cakes for $10.00 each on their FB page. First, she priced her product too high; now she can’t give them away.)


How do you price your baked goods

How Do You Find Out Your Competitors Prices?

Go shopping! Buy some items from them. Ask for their price list and menu. Shop like everyone else. (Don’t convince yourself you can’t afford to do this. Sometimes you have to spend money to make money.) If you are uncomfortable calling them, email them. Create a second email address using a different name to hide your identity. Find out what they are doing well and what they aren’t doing well. Seriously, do you think that Apple doesn’t study what Microsoft is doing and selling? Business is business, and you need to take a professional attitude and stance to succeed also.

Ideally, enlist the help of a close friend or relative; it’s helpful to have an independent opinion and not just rely on your interpretation. Ask your friend to pick up your orders and have them pay with cash. Your competitors won’t have any idea that you’re eating their food.  You need to know more than just their prices; you need to taste their products too.

After you’ve made a small purchase, later on you can contact them asking for prices on higher end items. Tell them someone in the family is getting married and is looking for a wedding cake. Don’t get into specific details or waste this bakers time; all you need are some basic pricing guidelines from them. A day later, email the baker a brief thank-you note telling them you passed on the information.


Find out your costs, so you can establish your prices.

Did figure out your costs? Here’s my tutorial teaching you how to cost out your recipes: http://www.fearlessbakers.com/how-to-cost-out-your-recipes/  (To your cost calculations you still need to add items like overhead, labor, advertising, accountant fees, etc.)


Detailed Graph of Competitors Pricing

I gathered a larger sample of prices than many of you need to do. I did purchase products from many of these businesses, but not all. Most of them list their menus and prices on their websites, which is very helpful.

What you want to learn is the PRICE AVERAGE column, that’s where your prices should be.

To charge more than everyone else you’ll need to create more value or desire for your product. That is another topic we need to explore in-depth, in the future.


 Learn how to price your cakes from the world around you.

You need to learn what your competitors are doing. Learn what your local market wants to buy and how much they are willing to pay by examining what everyone else is selling.

  • Create a pricing chart to compare everyone’s prices (as shown in my chart above.)
  • How was their presentation?
  • Were they prepared with their pricing?
  • Do they have prices posted?
  • Did they give you a receipt or an invoice?
  • How was their packaging?
  • Did they take a deposit?
  • Were they professional or disorganized?
  • What did you like about them?
  • What didn’t you like about them?

Learn what they are doing well and what they aren’t doing well. Be better than your competition! Sometimes being better only requires a better recipe, a cleaner design or a simple pot of flowers at your front door.

In the future, when a client is pricing and comparing your work to your competitors; you can speak with knowledge, and highlight why your food and service is the best in the area.

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