Calculate overhead costs

No matter how much you loving baking and decorating cakes at home, there’s no denying it takes up valuable time. Then there are ingredients and equipment to think about and, unfortunately, these don’t come for free.

If you are in the market to sell your homemade cakes, it’s important to consider the value of your produce. It’s far too easy to underprice your work and charge less than what your goods are really worth.

How do you know if you’re valuing your home baked cakes as they deserve?

Here are a few things you should consider when deciding how much to sell you cakes for.

How much are the ingredients?

Often you may not realize just how much the ingredients needed for each cake actually cost because everything is already on the shelf of your pantry.

Unfortunately, that doesn’t mean you don’t have to pay for it.

This is why you need to consider the price of the ingredients used for each cake, so that you can cover the expenses in the price tag. If you forget about the ingredients when deciding how much to sell them for, or don’t calculate them accurately, there’s a good chance you’ll underprice them.

What is your time worth?

Of all the resources we have in this world, time is one of the most precious. This makes the time you spend baking at home very valuable. Even if you enjoy every moment, your time still deserves to be recognized and your customers should contribute towards it.

How much that time is worth is up to you. Most people who run home baking businesses love to bake, but that doesn’t mean you should undervalue your work and time. Simply decide how much your time is worth and include that into the price of your homemade cakes.

What are the overhead costs?

When you bake a cake there are a lot of different utilities and equipment that you need. These might include things like:

  • Kitchen space

  • Oven

  • Electricity

  • Mixer

  • Utensils

Even though you need these things for every single cake you bake, they are easy to forget because they come in a bill that is mixed with all your other household expenses.

However, it’s important to consider them when pricing your baked goods, or you will end up with a price that doesn’t reflect the true costs to make each cake.

Do you deliver?

Many home baking businesses offer the extra service of delivery to their customers. This provides real value to those who buy your cakes and you should consider how much that convenience means to the customer.

In addition, delivery requires your time, a vehicle and fuel costs. If you deliver your homemade cakes, it makes sense to add a small delivery to help cover these costs and ensure your services are fairly priced.

What is it worth?

The value of the finished product isn’t always exactly equal to the expenses of making it. This is because you need to consider the market competition and how much it is worth in the real world for your customers.

  • How much does it cost to buy a cake from a local bakery?
  • Are your cakes the same quality?
  • Do they deliver?

These questions can you help you to understand what it’s like to buy a cake from the customer’s eyes. If your cakes seem like they are much better value with lower prices, you may be underpricing your cakes.

It’s important to honor your work by pricing them according to their worth. If you offer better quality homemade cakes, don’t feel ashamed to reflect that in your prices.

Does the price match?

Once you have considered all of these things – the ingredients, your time, overhead costs, delivery and market value – you will have a much better idea of the value of your cakes. From there, it is easy to decide on prices because you know how much they cost to make and how much profit you need to make per cake.

When you make any changes to prices, you’ll most likely discover that customers are prepared to pay a fair price for quality home baked cakes.

It is up to you to put the right price tag on it.

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Yolanda S.
Yolanda S.