How did you come to determine what your hourly rate is for decorating work?
JulieB Forum Addict
Joined: Jan 14, 2006
Posts: 868
Location: Nashville, TN
Birthday: Jan 02 Gallery Supporter Member
Posted:
Sat Jun 21, 2008 11:39 am
Do you think an hourly rate really comes into play.
I guess of course it would on a small cake, because you don't want to shortchange yourself. But it, for instance, you're making a one layer cake with buttercream, and you're charging $30 on a cake that costs $10 or less to make, and the cake takes an hour or so to make, that would be okay. But a lot of people think that $10 a hour is good money, and for some, they need at least $20 per hour, and up!
Of course, a bigger, $600-$700 cake would pay more than that, right?
Obviously, I've never thought this through. I've never done a big ole cake, hope to one day.
It's just so easy to shortchange yourself.
txkat Forum Fanatic
Joined: Aug 14, 2006
Posts: 1174
Posted:
Sat Jun 21, 2008 11:43 am
I use $20 per hour plus four times the price of ingredients as my base for pricing.
bonjovibabe Forum SuperStar!
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Location: Quickstepping across the ballroom, cake in hand!
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Posted:
Sat Jun 21, 2008 12:01 pm
I use the price of ingredients & sundries and then add on $10 per hour for the length of time I think it will take me to do (which I always add 25% to as I always underestimate!). Guess I don't value my time much, BUT I do account for shopping/mixing/baking/cleaning time on top of actual decorating time!
tonedna Forum SuperStar!
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Posted:
Sat Jun 21, 2008 12:07 pm
txkat wrote:
I use $20 per hour plus four times the price of ingredients as my base for pricing.
But it, for instance, you're making a one layer cake with buttercream, and you're charging $30 on a cake that costs $10 or less to make, and the cake takes an hour or so to make, that would be okay. But a lot of people think that $10 a hour is good money, and for some, they need at least $20 per hour, and up!
Of course, a bigger, $600-$700 cake would pay more than that, right?
The cost-ineffectiveness of smaller cakes is why a lot of people have a minimum order amount. It would be great if you could make a cake from start to finish in an hour, but ... heh... I can't do it. By the time I've taken the order, worked out design details with the customer, and shopped, I already have at least an hour sunk into it, and I haven't even set foot in the kitchen. Then bake, make icing/filling/fondant, cool, assemble, decorate, clean up and deliver. Whew. Easily a couple more hours right there.
Not everyone figures an hourly rate into their cake price, but it never hurts to think about it. That's the way we "measure" pay, so why shouldn't you also think about how much you're actually getting paid for your time?
Grocery stores around here pay $11-$12 hour for a decorator. I don't think anyone with our skills should work for less than that.
Mike1394 Forum Addict
Joined: Feb 20, 2008
Posts: 798
Location: Michigan
Posted:
Sat Jun 21, 2008 12:16 pm
I don't understnd the need to charge an hour rate. What someone is willing to pay for an hour of your time is certainly less than we think our time is worth. How do you figure that in to the cost of a cake? Plus some days I'm worth a buck an hour some days I'm worth $57,000 an hour.
Mike
Doug Forum SuperStar!
Joined: Jun 28, 2005
Posts: 7881
Posted:
Sat Jun 21, 2008 12:57 pm
Mike1394 wrote:
I don't understnd the need to charge an hour rate. What someone is willing to pay for an hour of your time is certainly less than we think our time is worth. How do you figure that in to the cost of a cake? Plus some days I'm worth a buck an hour some days I'm worth $57,000 an hour.
Mike
had your car fixed lately?
I just had mine worked on this past week.
Total bill: $1,199,25 (! -- 5-yr-old car -- need LOTS of work before a long trip this summer)
Parts: 366.04
LABOR: 783.50
and that labor is based on an $85/hour rate.
and to figure the labor amount they use a book that has the "standard" number of hours it should take to do the job -- the number of the hours it actually takes to do the job.
so if the book says 1 hour, I pay $85 even if it only took 45 min., which would be $63.75.
even as a teacher, who is normally payed a "flat salary," I have an hourly rate that is used to figure how much I should be paid for "extra" work like teaching Saturday Academy.
so-- dang tootin' I'm going to:
1) come up w/ some type of hourly rate to use in figuring how much to charge -- and in my case that has to equal or beat what I can get for teaching, which roughly translates to not turning on the oven for less than $150.
2) come up w/ some type of "standard" time for doing cakes -- just like they have for cars. I know it's always going to take at least:
1 hour and 10 miles (mileage, wear/tear) round trip to shop for ingredients
30 min. for mixing and another
1 hour baking which is also when there is 30 for clean-up, cooling and 30 min. for mixing a basic buttercream
1 hour for deco (or more if doing a squishy filling and have to wait for it to settle so its does have bulge)
so that's 3 hours for a basic cake -- any size 2 layer round based on being able to have to layers in the oven at the same time.
now, if its' a full size sheet -- add at leas another two hours as only one half fits in my oven at a time and I can't start deco until the second half is cool.
so a full size sheet -- 5 hours for a home based business.
like for ANY business -- the 3 basic costs:
1) materials (ingredients)
2) overhead (rent/mortgage, utilities, maintenance, etc.)
3) labor (ya gotta someone -- and for us that is US)
they add those up and then apply a % mark-up to create profit. Depending upon industry that could be as low as 1%-3% (grocery stores) to as high as 1000%+ (designer clothing) I worked in a pharmacy to pay for college; at that store the mark-up was 300%
now for an Independent contractor like a cake decorator, the profit is often see as the same as the labor cost. GREAT if only one person in the business -- bad business tho' as it doesn't represent how a real business is run.
we SHOULD, a part of good business practice, pay self an hourly rate.
we should figure all 3 basic costs and then do a mark-up to get PROFIT.
Profit that can be banked and used for future expenses to build the business
too often when done from home we only see the cost of the ingredients and overlook how many more costs there really are -- costs that would be all too apparent if we were actually running some type of store front.
even a home business has to be run as if a store front to be truly profitable.
------
a way to figure your hourly rate -- what other job could you be doing that would pay and be as easy or easier? how much does it pay? Pay self at least that or better -- more as you are doing CUSTOM work.
example: kelleym pointed out grocery store decorators get $12/hour. I could do that -- if I wanted the stress, the hours, etc. and since I'm going to be doing custom work, I'd set rate a minimum of $20/hour , not $24.
in actuality, my rate is $35, $5 more than I would make an hour doing Saturday Academy (after 32 years of teaching I'm worth $30/hour)
thus, during the school year, there is LITTLE incentive to do any cake selling as by I time figure in the PITA aspects, it is much easier to just do the Saturday Academy for 5.5 hours during which I can also do all that paper grading and lesson planning as an added bonus. Caking is pretty much a summer only thing for me.
----
as for overhead --- well I figure it this way.
Mortgage * 12 / 365 / 24 to get hourly amount.
Total of all electric and other utility bills for the year / 365 / 24 for that hourly rate.
Total of insurance for year / 365 / 24 for that hourly rate.
Total all costs of doing business (any licenses, permits, advertising, cleaning supplies, stationary, business cards, ink for printer, computer, bank fees, etc.) etc. / 365 / 24 for that hourly rate.
add all those up and there's the overhead cost/hour for the cake.
so if a cake costs $30 in ingredients
5 hours in labor at $20/hour = $100
and the overhead is $2/hour. =$10
so that's $140 to start for a cake that takes five hours.
thus my minimum order of $150 -- $10 profit
summernoelle Forum Fanatic
Joined: Mar 08, 2007
Posts: 1214
Posted:
Sat Jun 21, 2008 1:08 pm
That seems really complicated. When someone calls in and want a quick quote, it would take me freakin forever to figure that out. But part of the problem is that I am terrible at figuring out supply cost. I also don't know how long 1 cake would take me. This makes me think that I need to start paying more attention to the details of my business...
I charge starting at $2.50 per serving. And $3 for wedding cakes. It would be hard to get more than that in my area....
Homemade-Goodies Frequent Member
Joined: Mar 08, 2008
Posts: 349
Location: Purmerend, The Netherlands
Birthday: Oct 15
Posted:
Sat Jun 21, 2008 1:14 pm
To quote the great Gary Larson of "The Far Side" fame:
"Blah, blah, blah Ginger!"
Oh Doug...I know you are right somewhere in all that...maybe a bit extremely so, but I am sure I felt it lightly skim my hair as it flew over my head!
But thanks....I am going to review this better later so I can apply what I can.
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Last edited by Homemade-Goodies on Sat Jun 21, 2008 1:32 pm; edited 1 time in total
Mike1394 Forum Addict
Joined: Feb 20, 2008
Posts: 798
Location: Michigan
Posted:
Sat Jun 21, 2008 1:27 pm
Doug that had to hurt. . What I'm saying. Find the cost of your materials. Find what your target is willing to pay. Find the cost of your competitor. Decide whether, or not you want to beat your competitor. Hourly rate doesn't come into play. Some cakes you are going to make 5 bucks an hour, some your going to make 30.
Mike
playingwithsugar Forum SuperStar!
Joined: Aug 31, 2005
Posts: 4756
Location: USA - Operation Baking Gals - See My Signature For The Link!
Birthday: Nov 20 Gallery Supporter Member
Posted:
Sat Jun 21, 2008 1:32 pm
I know two master decorators who charge a basic fee per serving (basic decorations - 2 borders, a couple of flowers here and there), then charge $25 per hour for any other detailed decorations. And it doesn't matter what it is - GP or fondant accents, RI work, general BC piping of intricate designs like basketweave or fleur de lis.
I know others who charge by the design only, sometimes with a minimum purchase.
I know others who charge ala carte by the detail involved - $4.00 for a medium gumpaste flower, $100 for a gumpaste rose garland, $1.00 more per serve for basketweave piping.
These decorators know their strengths, and how fast they can knock out those decorations, and then charge according to which they can make the most money in the least amount of time.
Theresa
Doug Forum SuperStar!
Joined: Jun 28, 2005
Posts: 7881
Posted:
Sat Jun 21, 2008 2:06 pm
summernoelle wrote:
That seems really complicated. When someone calls in and want a quick quote, it would take me freakin forever to figure that out. But part of the problem is that I am terrible at figuring out supply cost. I also don't know how long 1 cake would take me. This makes me think that I need to start paying more attention to the details of my business...
I charge starting at $2.50 per serving. And $3 for wedding cakes. It would be hard to get more than that in my area....
which is why you do that all once using a spread sheet.
then derive from it a per serving amount
and then it comes down to -- (with calculator in hand as you talk on phone -- tho' for me -- at computer using Excel)
how many servings??
150???
my per serving amount is $3
so that's $450.
it's figuring that $3/serving --
it has to include costs, overhead, LABOR, and profit!
---
or as KelleyM and others have repeatedly said --
just get CakeBoss -- pump in a few numbers and it will do all that MATH (ARGH!) for you.
(and no, I don't use CakeBoss nor am I associated w/ them in any way --- stubborn German here who still insists on doing it himself using Excel.)
this spreadsheet gives you an idea. play with it and see how your figures come out.
Doug that had to hurt. . What I'm saying. Find the cost of your materials. Find what your target is willing to pay. Find the cost of your competitor. Decide whether, or not you want to beat your competitor. Hourly rate doesn't come into play. Some cakes you are going to make 5 bucks an hour, some your going to make 30.
Mike
on car -- knew it was coming. ALL motor mounts broken and if not fixed NOW, it would also have been radiator (motor banging into it w/ each bump!) and the A/C compressor (tho the belt was shot)...and it needed it's second total major tune up in 110K miles -- so that's not THAT bad!
what really hurt -- got that bill same day dentist told me -- We'll see in a couple of weeks to put on a NEW CROWN on that tooth! OUCH! NOOOOOO!
tonedna Forum SuperStar!
Joined: Jul 19, 2007
Posts: 2712
Location: Florida..were the magic begins!
Birthday: Apr 23 Gallery Supporter Member
Posted:
Sat Jun 21, 2008 2:58 pm
Doug wrote:
Mike1394 wrote:
Doug that had to hurt. . What I'm saying. Find the cost of your materials. Find what your target is willing to pay. Find the cost of your competitor. Decide whether, or not you want to beat your competitor. Hourly rate doesn't come into play. Some cakes you are going to make 5 bucks an hour, some your going to make 30.
Mike
on car -- knew it was coming. ALL motor mounts broken and if not fixed NOW, it would also have been radiator (motor banging into it w/ each bump!) and the A/C compressor (tho the belt was shot)...and it needed it's second total major tune up in 110K miles -- so that's not THAT bad!
what really hurt -- got that bill same day dentist told me -- We'll see in a couple of weeks to put on a NEW CROWN on that tooth! OUCH! NOOOOOO!
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By the time I've taken the order, worked out design details with the customer, and shopped, I already have at least an hour sunk into it, and I haven't even set foot in the kitchen. Then bake, make icing/filling/fondant, cool, assemble, decorate, clean up and deliver. Whew. Easily a couple more hours right there.
-- 5-yr-old car -- need LOTS of work before a long trip this summer)
