Re: pricing & costing

by jue on Fri Oct 23, 2009 12:52 pm

Oh dear, I thought I was the only one scratching my head over this... its great then, we can all share & solve this with lots of input from all.

by whaslinda on Fri Oct 23, 2009 2:20 pm

To me, most of the customer want a very nice & delicious dessert at a very low price. Next time must ask them to try make it themself

. Then they'll know it not that easy

by PohSim on Fri Oct 23, 2009 3:07 pm

hehehe...Whaslinda, I totally agree wid u! Not many ppl appreciate top quality especially nowadays.

by jaywong on Fri Oct 23, 2009 4:52 pm

You ladies really have wild imaginations.... Najat should make this the next quiz..... see who gives the best answer....

In business term, there is supply and demand. Other factors included -- Place, Promotion and Product. For example, if you live in Damansara or Bangsar, you can price your product at a higher price if compared to pricing a similar item in Taiping. There is no guide to how much you can sell you product as long as ppl is willing to pay (demand) and you are willing to give (supply).

For Food business, you have to make sure your raw product cost is not more than 40% of your selling price excluding labor and other fix charges (utility etc). Again, for those fancy cakes which need longer time to produce, you have to add you labor cost back.

Show you 2 examples here:

A) You need to produce 40 cup cakes and you total raw ingredient and packaging cost added up to be $36.00. You will divide $36/.4 to get your minimum selling price of $2.25 a piece.

B) If need to produce a fancy wedding cake and you need a minimum of 6 working hours to complete the cake and your total ingredients cost $95. You first have to determine how much your worth (For example $6000.00 a month; you will divide $6000 by 26 days and get your hourly wages at 28.85/hour). Add you total hour wages to ingredient cost to get your minimum selling price, in this case $95+(6X28.85)=$268.00.

Keep in mind the 4Ps of marketing (Price, Promotion, Place and Product) are inter-related to each other. For example, if you are in a high rental area, your operation cost is higher than those produce from home. Good luck ladies, hope everyone makes lots of money so that can come and buy more from me

by applemint_jackie on Fri Oct 23, 2009 5:27 pm

omg! headache..

by Gerry on Fri Oct 23, 2009 5:36 pm

Headache? I have a severe MIGRAINE!!

by jaywong on Fri Oct 23, 2009 5:52 pm

ha ha, take a cold shower and go shopping.... see you tomorrow Gerry, I am sure you will be happy with your goodies....

by aeriuschang on Fri Oct 23, 2009 5:54 pm

This is what i have learned fr my cake dec tutor.

Cake Costs = 3 basic charges

1. Overheads - split into two (count into a proportion)

- Fixed costs: eg Car insurance, Telephone Rental, Advertising etc.
- Variable costs: eg. fuel, petrol, lighting, computer consumables, postage etc.

2. Cake Costs - 2 distinct areas of cost in every cake

- Cake base cost: basic ingredients eg. flour, sugar, spices, currants, etc.
- Cake Decoration Costs: Dowels, pillars, cake drums etc.

3. Labour - time spent on the order eg. times taken for baking, covering cakes, making decorations eg. sugarflowers, novelty figure modelling etc.

hey, make sure u list up every little..tiny.. thingy..

1+2+3 = RM XYZ

Now, u can charge double of RM XYZ (or even triple or ++)
1.5 to 2.5 is what my tutor recommended.

Alternatively, u can formulating a pricing structure enables u to price different cakes with diff costs.

Pricing Structures = 3 methods are the most common.

a) Set designs at set prices ( this one is commonly found in high st bakers.

b) Variable designs at set prices (this one let customer the flexibility to select range of decorative work)

c) Individually designed and priced (this is like a tailor-made service)

actually, i ve a ref book(Starting a Cake Decorating Business from Home, by Kathy Moore, p36-47) which i think it is quite useful in details in cake costs, pricing structure & profits info, especially for those fresh face.. like me..

Sekian, xiexie..

by applemint_jackie on Fri Oct 23, 2009 5:59 pm

why this thing is so so difficult?

me mabuk already

by applemint_jackie on Fri Oct 23, 2009 6:28 pm

No doubt these are not easy...Thank you so much, Jay & eriuschang for the input.

by lsoo_chin on Sun Nov 15, 2009 4:19 am

jaywong wrote:You ladies really have wild imaginations.... Najat should make this the next quiz..... see who gives the best answer....

In business term, there is supply and demand. Other factors included -- Place, Promotion and Product. For example, if you live in Damansara or Bangsar, you can price your product at a higher price if compared to pricing a similar item in Taiping. There is no guide to how much you can sell you product as long as ppl is willing to pay (demand) and you are willing to give (supply).

For Food business, you have to make sure your raw product cost is not more than 40% of your selling price excluding labor and other fix charges (utility etc). Again, for those fancy cakes which need longer time to produce, you have to add you labor cost back.

Show you 2 examples here:

A) You need to produce 40 cup cakes and you total raw ingredient and packaging cost added up to be $36.00. You will divide $36/.4 to get your minimum selling price of $2.25 a piece.

B) If need to produce a fancy wedding cake and you need a minimum of 6 working hours to complete the cake and your total ingredients cost $95. You first have to determine how much your worth (For example $6000.00 a month; you will divide $6000 by 26 days and get your hourly wages at 28.85/hour). Add you total hour wages to ingredient cost to get your minimum selling price, in this case $95+(6X28.85)=$268.00.

Keep in mind the 4Ps of marketing (Price, Promotion, Place and Product) are inter-related to each other. For example, if you are in a high rental area, your operation cost is higher than those produce from home. Good luck ladies, hope everyone makes lots of money so that can come and buy more from me

Hi Jay,

I like the way you shared your calculation over here. But looking at calculation no. 2 - this has imposed some dilemma in me, especially when i have a full time work to juggle and some baking to do (for part time).

Imagine this ... a career woman earning RM10k a month (not me, just giving a scenario), and would still wanna do baking ... a 3-tier of elegant cake would cost a lot!

Haha ...

by kitchencapers on Sun Nov 15, 2009 8:30 am

wahhhh!! I find this "rocket science". I leave that to my hubby. He calculates everything for me. I just bake, or cook, he just price tagged it . Smile

by jaywong on Sun Nov 15, 2009 11:07 am

Soo Chin, that is why I mention the 4ps of marketing.... you can ask to charge anything for your cake, if there is no DEMAND, no point...

For our market, I think charging hourly wage of RM20.00 -- RM40.00 is resonable.

by Amy on Tue Nov 17, 2009 12:44 pm

Whao, Gina

You so lucky that your hubby calculates for you - save you alot of headache.

Thanks Jay for your info, will read thru again and thanks to eriuschang too. So helpful.