How to Price a Cake (Things I Wish I Knew When I Started My Cake Business)

When I first started selling cakes, I thought pricing was simple: add up the ingredients, pop a price on, and done. Oh, how wrong I was. If you’re just starting your cake business, you’re probably wondering how to price a cake properly so you’re not working for pennies. Let me share the lessons I wish I’d learned much sooner.

1. The Difference Between Gross Profit and Net Profit

It sounds technical, but stay with me — this is the foundation of pricing.

Cost of Goods Sold (COGS): everything that goes directly into the cake. That means ingredients, cake boards, boxes, ribbons, cupcake cases, cling film, dowels, and anything else you use up making or packaging the cake.
Labour (Your Time): your wages for baking, decorating, cleaning up, and boxing that cake. Your time is not “free” — it’s an essential cost.
Gross Profit: your cake price minus those COGS and labour.
Net Profit: what’s left after you also pay for your business overheads (electricity, insurance, water, training, cleaning supplies, website, etc.).

Here’s the trap I fell into: I thought gross profit was mine to keep. But once the bills came in — electric for the oven, insurance renewal, website hosting — I realised my “profit” had vanished.

2. Don’t Forget the Hidden Costs Involved in Pricing a Cake

You’re paying for electricity, insurance, and everything else anyway. If you don’t build those costs into your cake prices, guess who ends up footing the bill? You do — straight out of your wages.

And worse still, because your business looks profitable on paper, you could be taxed on money you never actually got to keep. That stings.

3. Your Time Counts Too

When you’re figuring out how to price a cake, don’t forget the biggest ingredient of all: your time. Baking, decorating, cleaning up, answering emails, boxing, and even delivering — it all takes hours. If you don’t pay yourself for it, you’re essentially working for free.

4. Pricing Properly Isn’t Cheeky

I used to feel nervous charging what a cake was really worth. What if people thought it was too expensive? But here’s the truth: the customers who value handmade cakes aren’t comparing you to supermarket prices. They want your skill, your time, and your creativity. Charging properly isn’t cheeky. It’s professional.

5. The Real Recipe for Cake Pricing

Here’s the real breakdown of how to price a cake:

Ingredients (flour, sugar, butter, eggs, flavourings, decorations)
Consumables and packaging (boxes, boards, cling film, ribbons, dowels, cupcake cases)
Overheads (electricity, insurance, water, website, cleaning products, council fees)
Wages (yes, you are allowed to pay yourself!)

Add them up, and only then will you see the true price your cake should be sold at.

The Shortcut I Wish I Had

When I first started, I spent hours with messy spreadsheets, trying to work out how to price my cakes. It was confusing, time-consuming, and often wrong. That’s why I created my Cake Pricing Calculator — it does the hard work for you.

Just enter your ingredients, consumables, and overheads, and the calculator works out your proper selling price — one that actually covers your costs and pays you a fair wage.

If you’re serious about running a cake business (and not just an expensive hobby), this tool will save you time, stress, and money.

Get the Cake Pricing Calculator here

Because once you know how to price a cake properly, you can stop second-guessing yourself and start enjoying the sweet side of running your business.

For more about why pricing matters, please see my blog post on why cake pricing matters more than you may think.