How to price a cake so that it pays
Underpriced cakes are the most common reason a home bakery loses money. This cake pricing calculator adds up what a cake really costs — ingredients, packaging, decorations, the energy the oven uses, your own hours at a fair rate, a share of overhead and any delivery — and then adds the profit margin you choose to give the price to charge.
It shows the price for the whole cake, per slice and per kilogram, since customers in some countries buy by the kilo and in others by the slice. It also shows the price at other margins side by side, so you can see what a lower or higher margin does. All of it runs in your browser.
How to use the Cake Pricing Calculator (Home Bakers)
- Choose your currency symbol and enter the cost of ingredients, packaging and decorations.
- Add the oven power, baking time and energy price, then your working hours and hourly rate, including baking, decorating and cleaning.
- Set overhead (10 to 15 per cent is common for tools, rent share and fees), delivery and your profit margin.
- Enter the cake’s weight and number of slices, optionally round the price up, and read the price per cake, per slice and per kg.
Cake Pricing Calculator (Home Bakers) features
Your time counts
Hours multiplied by an hourly rate go into the cost, not into the profit.
Per slice and per kg
Both prices at once, for the way your customers buy.
Margin and markup
Profit as a share of the price, with the equivalent markup on cost shown.
Rounding and tax
Round the price up to the next 5 or 10, and add tax or GST on top.
The formula
Base cost = ingredients + packaging + decorations + energy + labour. Overhead is a percentage of that, and delivery is added after. The selling price is the cost divided by (1 − margin). For example, a cost of 78.50 and a 30 per cent margin gives 78.50 ÷ 0.70 = 112.14, a profit of 33.64, which is 42.9 per cent more than cost. The margin is a share of the price, while a markup is a share of the cost, so a 30 per cent margin is a 43 per cent markup. The markup calculator explains the difference and its product mode prices batches and wholesale, and the profit margin calculator converts between the two.
The energy line is oven power in kilowatts multiplied by the hours baked and the price of a kilowatt-hour. A home oven rated at 2 to 3 kW is on for part of the time only, so it is an upper estimate; a gas oven can be costed the same way using the price of gas per kWh.
What to include
- All ingredients used, including the frosting. Use the buttercream calculator and fondant calculator to avoid guessing.
- Your time at a real rate. If you do not pay yourself, you are working for free. Include shopping, baking, decorating, packing and messages.
- Packaging and extras such as the board, box, ribbon, candles and cake topper.
- Overhead: a share of the costs that do not belong to any one cake, such as equipment, insurance, fees and software.
- Waste and mistakes, which can go into overhead if you keep it a little higher.
Per kilogram or per slice?
In India and much of Asia cakes are usually sold per kilogram, in the US and UK by size or by the slice. This tool gives both from the same price. Per-slice pricing also helps compare your cake with a shop-bought slice. For plate-level costing of a menu, use the food cost calculator.
Cake Pricing Calculator (Home Bakers) FAQ
How do I price a cake?
Add up ingredients, packaging, decorations, energy, your time at an hourly rate, overhead and delivery to get the cost, then divide by 1 minus your margin. A 30 per cent margin means the price is the cost divided by 0.70.
How much should I charge per hour as a home baker?
Use at least your local minimum wage, and more for skilled decorating. It is your own input, set it to a figure you would be happy to be paid.
What is the difference between margin and markup?
Margin is profit as a share of the selling price, and markup is profit as a share of the cost. A 30 per cent margin equals a 42.9 per cent markup.
How do I work out the price per kg?
Divide the cake price by its weight in kilograms. The calculator does this and also shows the price per slice.
Should I include the cost of electricity?
Yes, it is small but real. Multiply the oven’s power in kilowatts by the hours it runs and by your price per kilowatt-hour.
Is this tax advice?
No. It is arithmetic. Tax, registration and food-safety rules for selling from home vary, so check the rules where you live.