Guide
How to price a cake so it pays you
How to price cakes so they pay you comes down to two steps: add up everything the cake costs you, including your hours, then set a price that leaves you a margin, the share of the price you keep. The formula is price = full cost ÷ (1 − margin). In the example below, a custom two-tier birthday cake that costs $218.20 to make, priced for a 30% margin, sells for about $312. The rest of this guide shows how to find each cost, why margin beats markup, and how to quote custom, tiered and wedding cakes per serving.
What goes into the price of a cake
Pricing a cake is two jobs. First you find the full cost of one cake. Then you choose the margin, the part of the price that stays with you as profit after every cost is paid, and divide.
Margin is written as a decimal: 30% is 0.30, so you divide by 0.70. Rounding the result up to a clean number is fine; rounding down quietly eats your margin.
To run the sum for one cake with your own numbers, use the cake pricing calculator. To cost the ingredients line gram by gram, see how to cost a recipe.
- Ingredients: every gram, including frosting, filling, sprinkles and the eggs for the wash.
- Packaging: cake box, board, dowels, ribbon, label.
- Labor: every hour you spend baking, decorating, cleaning up and delivering, at an hourly rate you would accept from an employer.
- Machines: oven and mixer time, priced from their power use.
- Overhead: a share of the monthly costs that exist whether you bake or not, such as insurance, software, a market stall or part of your kitchen bills.
- Price = total cost ÷ (1 − margin).
Read next: Cake pricing calculator, How to calculate recipe cost, step by step
Example: what a custom two-tier cake really costs
These are example numbers for a home baker in the US: a 6-inch tier on an 8-inch tier, buttercream with fondant details and a topper, for a birthday party. Your prices, hours and rates will differ, so treat them as a template for the sum, not as what you should charge.
Labor is 8 hours: about 4 to bake, fill and crumb-coat both tiers, 2.5 to decorate and stack, and 1.5 for design messages and delivery. The oven line is about 2 hours at 2.5 kW and $0.17 per kWh, plus mixer time. The overhead line is $240 of monthly fixed costs spread over the 40 cakes you expect to sell that month.
At a 30% margin, $218.20 ÷ 0.70 = $311.71. Round up to $315. Notice that labor is the biggest line: leave it out and the cake looks like it costs $58.20, which is how so many bakers end up working for free.
Once you have costed your usual sizes this way, a cake pricing chart keeps them in one price list you can send to customers.
| Cost | Detail | Amount |
|---|---|---|
| Ingredients | Sponge and buttercream for both tiers, filling | $29.60 |
| Decorations | Fondant details, topper | $12.00 |
| Packaging | Tall box, cake drum, dowels, label | $9.40 |
| Labor | 8 hours at $20 an hour | $160.00 |
| Machines | Oven and mixer | $1.20 |
| Overhead | $240 a month ÷ 40 cakes | $6.00 |
| Full cost | Sum of the lines above | $218.20 |
| Price at 30% margin | $218.20 ÷ 0.70 | $311.71 |
Read next: Cake pricing chart
Margin or markup: why the difference costs you money
Markup is a percentage added to cost. Margin is a percentage of the price. They are not the same number. If you take the $218.20 cake and add a 30% markup, you charge $283.66, and your real margin is only 23%: $65.46 of profit on a $283.66 sale.
If you want 30% of every sale to stay with you, divide by 0.70 instead of multiplying by 1.30, or add the matching markup of about 43%. The table shows what the same cake sells for at different margins and the markup that gives each one, which helps when you set a retail price and a lower wholesale price for a café.
| Target margin | Divide cost by | Same as a markup of | Price | Profit per cake |
|---|---|---|---|---|
| 20% | 0.80 | 25% | $272.75 | $54.55 |
| 30% | 0.70 | 42.9% | $311.71 | $93.51 |
| 40% | 0.60 | 66.7% | $363.67 | $145.47 |
| 50% | 0.50 | 100% | $436.40 | $218.20 |
Read next: Bakery profit margin: how to work it out and how to raise it, Profit margin calculator for bakers
Custom cake pricing: price the extra hours, not the look
Custom cake pricing uses the same formula, but the cost changes with the design. A buttercream cake with piped borders and a fondant cake with hand-modeled figures can share a sponge recipe and still differ by hours of work.
Start from the cost of the same cake undecorated, then add the design: decorating hours at your rate, toppers, gold leaf, extra tiers or supports, and the time spent messaging the customer about the design. In the example, the fondant details and topper add $12 of materials and about 2 of the 8 hours ($40). The same two tiers with piped buttercream borders would cost about $166.20 and sell for $237.43 at a 30% margin, so the design adds about $74 to the price.
Take a deposit before you buy ingredients for a custom order. It covers what you spend if the customer cancels, and it makes the booking real for both of you. A cake contract puts the deposit, the date the balance is due and the cancellation terms in writing.
Read next: Cake contract template for custom orders
How much to charge for a cake by the slice
Many bakers quote per serving, especially for tiered and wedding cakes. Work out the price of the whole cake with the formula, then divide by the number of servings. The two-tier cake above at $315 gives 28 party servings (8 from the 6-inch tier, 20 from the 8-inch), about $11.25 a serving.
A per-serving quote only holds if the serving count is honest. Party slices are larger than wedding slices: cut as wedding slices, the same two tiers give 36 servings, and the same $315 is $8.75 a serving. Check a cake serving chart for the size and cut you use, and quote on the servings your customer will actually cut.
Read next: Cake serving chart by pan size
Keep your cake prices right when costs change
A price is only right on the day you calculate it. When butter, eggs or boxes go up, your margin shrinks on every cake you have already quoted at the old price.
Recheck your costs whenever you buy at a new price, and at least every few months. If the margin on a cake has dropped below your target, raise the price, change the recipe or the size, or decide on purpose that the cake is worth selling at a lower margin.
The guide to ingredient price increases shows how to recost, reprice and tell your customers.
Read next: Ingredient price increases in a bakery: recost, reprice, and tell customers
Price every cake from its real cost with Farinu
Farinu does this sum for you. Enter each ingredient with what you paid, build the cake from sub-recipes such as sponge and buttercream, and add packaging, your hours, oven time and your monthly overhead. Farinu shows the full cost of the cake, its margin at your price, and a suggested price from the target markup you set: a 43% markup gives about a 30% margin.
Set retail and wholesale price lists, and when an ingredient price rises, Farinu tells you which cakes now sell below your target and what to charge instead. Orders keep each customer's deposit and balance in one place. The free plan covers up to 10 recipes and 50 orders a month, and Team removes both limits.
Read next: Bakery recipe costing software, Bakery price list software, one list per place you sell
Questions
- How much should I charge for a cake?
- Add up the full cost, including ingredients, packaging, your hours, oven time and a share of overhead, then divide by one minus your margin. A cake that costs $218.20 to make sells for about $312 at a 30% margin. The right number depends on your own costs, so run the sum for each cake rather than copying someone else's price.
- How do I price a 2-tier cake?
- Cost each tier as its own recipe, then add what the tiered build needs: dowels, a thicker board, the time to stack and level, and any delivery. Divide the total by one minus your margin. For a per-serving quote, divide the price by the combined servings of both tiers from a serving chart.
- How is wedding cake pricing different?
- The formula is the same, but the cost usually includes more hours: tastings, design meetings, stacking, delivery and set-up at the venue. Count all of them. Wedding cakes are often quoted per serving, using wedding-size slices, and a deposit is taken when the date is booked.
- How do I price a smash cake?
- A smash cake is small, but it still takes a bake, a decoration and a box, so labor is most of its cost. Price it with the same formula. If you sell it with a larger party cake, you can share some of the set-up time, which lowers the cost of the pair.
- What profit margin should a cake have?
- There is no single right margin; it depends on your market, your time and how many cakes you sell. What matters is that your hourly rate is in the cost, so the margin is real profit on top of being paid for your work. Check the margin on each cake rather than one average for the whole menu.
Related pages
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