For someone who cooks for a living, it is a challenge to calculate how much to charge for the food I prepare. Rule of thumb in the industry is to keep the food cost below 30%. I normally try to figure out how long a dish will take to shop and cook for, then come up with a price and try to spend no more than a third of what I will be paid. Sometimes it works, sometimes it doesn't; potential clients often don't realize how much time it takes to prepare the food. I shop, prep, cook, package, clean, and most of the time deliver. There is also the hidden costs of the gas, electricity, and water bills, which are impossible to estimate. Often I make one of something, so I can't save on volume, and obviously my ingredients are more often than not purchased at a retail price. Take this cake for example:
I made it for a fund raiser event for which I donated 6 desserts. The person who bid on the item asked me to make a birthday cake. Since I don't know the woman I am baking for very well , and since she doesn't like chocolate, I decided to make this crowd pleaser, easy to make and fast to decorate cake. I have a rough idea of how long it took me to make; about 15 minutes to make, 15 to assemble, and 15 to decorate; totaling 45 minutes, not including shopping and delivery.
This is what I spent:
Sponge Cake $2.5o
Simple syrup $0.10
Pastry cream $1.50
Heavy cream $2.65
Strawberries $1.50
Marzipan $2.00
Chocolate $o.38
Sliced almonds $2.00
Grand total: $12.63
If I applied the 33% rule, I would charge $42, for a gross margin of $29.37. The cake serves 8 to 12 people, which means $3.50 to $5.25 per slice. What do you think? Is $42 a fair price?
1 comment:
O this is so hard. I remember the same problems when I worked as a professional artist. There are so many costs involved people don't realise that.
I think there will be people that would be shocked to pay 42. Those are the ones that want a unique, homemade, especially made for them, with first class ingredients, fresh and delivered at their doorstep cake and just want to pay the price of a standard frozen one from wallmart (or whatever store). This is very hard to comprehend for the majority of people. You're not just a homebaker making a cake, you're a professional!
It's very tempting (been there, done that) to lower prices and sell more or without the comments), but you have to keep in mind that it's supposed to pay the bills too. I have no idea of the cake prices in the US, so I don't know what to compair it with. OF course it's a lot of money, but it's a lot of work too.... and you have something unique to present at your birthday of whatever feast.
Just use the formula that you use to calculate this and don't give it away! Good luck
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