Here’s a reminder if you needed it: you’re not a megacorporation with razor-thin margins and worldwide distribution. You’re likely a cottage baker, using your home as a stand-in commercial kitchen. Maybe you’ve grown to the point where you need to use a commercial kitchen! Either way, you care about quality, time, and customization to give your customers exactly the cake they’ve been dreaming of. That makes your cakes, and their pricing, unique.
Your Recipe for Pricing
There’s a litany of important considerations for pricing your cakes. These can include: time, craftsmanship, ingredients, delivery method, and margin.
First, your time is valuable! If you went to your local bakery to get a job, they’d pay you anywhere from $12-17 based on your experience. You should not expect to be paid less working on your own. In fact, your time is even more valuable, you’re doing the job of an entire bakery by yourself!
Let’s say you want to make $15 an hour running your cake business. If it takes you three hours to make a cake, the math is simple: your cake’s starting price should cost at least $45 (for reference, I can go to Walmart to get a basic cake for $20-30, so we’re already doing better than that!). That doesn’t even include your ingredient cost.
From there, it’s up to you to decide how much to change the price. Are you using premium ingredients? Do you have a particular knack for decorating? Are you shipping or delivering? Is there anyone else in your area doing the same thing for cheaper? Do you want to serve a luxury audience? Price accordingly!
To help you benchmark your pricing, we analyzed hundreds of cake products throughout the Castiron ecosystem, breaking it down by cake type and region.
Cake Pricing Tiers
The average selling price across all cake types was $55.50. Note, these are the selling prices, not the listed price, or final price with taxes, fees, and tips.
The first graph shows that it’s important to be conscious of where you are selling to. The west and northeast have the lowest average prices. As you price your products, it’s helpful to not only look at your costs and ideal customer, but also at how your competitors (other independent cake bakers in your area, not the grocery store) are pricing. The regions are further broken down by state below.
When you break down each cake type and the regions they are sold in, even more variability shows up.
Unsurprisingly, custom cakes had the highest average prices. Cake pops and cups are smaller, so they are expected to be a little smaller/cheaper.
It’s important to mention that this doesn’t necessarily mean the prices listed here are the absolute source of truth for pricing your cakes. Thanks to our ‘Mark as Paid’ feature, there are plenty of products sold off-platform.
Ready, Set, Raise Your Prices!
There you have it. Your starting point for pricing your next cakes! Remember: your pricing can impact how seriously your customers take your business, so price like a professional!
At the end of the day, pricing can help you avoid burnout and take on only the orders that you really want to do. Pricing is a way to weed out customers who might not be worth your time. Curious about what your pricing communicates to customers about your products? Laura Luk of Butterfly Bakes ATL shared her pricing philosophy with us here.