There’s no “NICE” way to say this, so I’m just gonna say it…

Most bakers aren't pricing their cakes for profit- and it shows.

You're pricing them to simply survive. To just "make it work." To cover your ass and hopefully have a little something left over at the end of the month.

And friend, that's exactly WHY you're exhausted, overworked, and still not seeing the money you thought you'd be making by now.

Because here's the truth, you’ll probably learn too late…

If you're only charging to cover your ingredient costs and pay yourself an hourly wage, you don't have a business. You have a JOB.

Or worse- a really expensive hobby.

Let me explain.

The Formula Most Bakers Are Using (And Why It's Keeping You Broke)

Here's what I see all day, every day in this industry- Bakers using the formula of:

Ingredient Cost + Supply Cost + My Hourly Rate = Price

Sound familiar?

You're out here calculating how much your butter and sugar cost. You're tracking your time. You're even being "smart" and paying yourself $20, $30, maybe even $40 an hour.

And you think that's profitability.

But it's not.

If you follow that formula, CONGRATULATIONS, you’ve built yourself a non-profit organization.

You're covering your costs. You're paying yourself a wage to live on. But you're leaving NOTHING for the business itself.

So when your mixer dies, or your oven breaks, you’re left scrambling. When you need to hire help, you can't afford it. When you want to expand, there's no money left to do it.

Because you’re missing the ONLY INGREDIENT required to build a SUSTAINABLE business- PROFIT.

What Profit Actually Is (And Why You Need It)

Your paycheck is NOT profit.

Your hourly wage? That's LABOR. That's a cost. That's what you pay yourself to DO the work- just like you'd pay an employee.

But profit? Profit is what's LEFT after all the costs are paid. It's the money that belongs to THE BUSINESS, not you personally.

Think of it like this…

Your salary pays for your groceries, your Netflix subscription, and your kid's soccer cleats.

Profit pays for the $10,000 commercial oven. The staff you need to hire. The fancy packaging. The website build out. The lease on that storefront you've been dreaming about.

Profit is simply an INVESTMENT tool for your business. It should be treated like a SAVINGS account to fund future growth.

And if you're not building profit into your pricing, you will NEVER be able to scale. You will NEVER get out of the daily grind. You will NEVER have the freedom you started this thing for in the first place.

The REAL Formula for Pricing a Cake for Profit

Alright, so WHAT formula should you be using if you want a FOR- PROFIT business? Here's the formula to use:

Costs + Labor Costs (Your Salary) + Desired Profit = Selling Price

Notice the difference? PROFIT is its own line item. It's baked into the price from the jump. It's non-negotiable.

And before you start panicking like, "But Janelle, my customers won't pay that much!"- stay with me because we'll get to that.

First, let's talk about what "costs" actually means. Because I can promise you, you're missing stuff and it’s resulting in YOUR BUSINESS leaving money on the table.

The 8 Things You MUST Include in Your Costs (That You're Probably Forgetting)

Most bakers think "costs" just means flour, eggs, butter and sugar. WRONG!

To arrive at a profitable price, you must factor in eight specific categories:

1. Recipe Ingredients

Pretty self-explanatory, but this is where you’d list out your flour, butter, sugar, eggs, vanilla, etc. The issue here is that MOST bakers don’t break down the costs per item into the products they’re making. The PROPER way to track your ingredient costs is to break it down to the UNIT you're using. Not the bag. Not the container. The OUNCE. The TABLESPOON. The CUP.

And STOP free-pouring. You need to know EXACTLY how much you're using, down to the half Oreo. (Yes, I'm serious. We'll come back to that.)

2. Decorating Supplies

Include everything from gold paint to food coloring and piping gel.

Every. Single. Thing. (YES, this includes sprinkles, glitter, luster dust, all the things!)

3. Paper and Packaging

Account for cake drums, tiered cardboard, boxes, and even the ribbon or logo stickers.

If it goes out the door with the cake, it goes in the cost. PERIOD.

4. Cleaning Supplies

Dish soap. Sponges. Paper towels. The laundry detergent you use to wash your towels.

This stuff adds up FAST, and you're eating the cost if you're not tracking it.

5. Utilities

Your gas and electric bill goes UP when you're running a business out of your home.

Track the difference and add it to your costs. Because if you don't, you're literally robbing your own household to fund your business.

6. Equipment Usage Fee

That $500 mixer? That $2,000 refrigerator? You need to PAY YOURSELF BACK for that investment. And you need to SAVE for when it eventually breaks.

Add a flat fee to every order- something like $21 per cake- to build up that fund.

7. Labor/Time

This is YOU. Your hourly rate. Every minute you spend on an order.

Customer service. Shopping. Prep. Baking. Decorating. Delivery.

Log every single MINUTE you are spending in order to bring this order to life.

8. Profit Margin

This is the WHOLE point of running a business. For custom, handcrafted cakes, you should be aiming for a gross profit margin of 30% to 60%.

50-60% is the sweet spot.

And before you freak out and think that's "too much," let me remind you- you're not working at Walmart. You're running a CUSTOM bakery business.

Big difference.

The Oreo Rule (Or Why Every Penny Matters)

I tell this story to my one-to-one clients and students all the time because it’s IMPORTANT.

Let's say you sell a cupcake for $2. You top it with an Oreo cookie that costs you $0.15.

You think, "Eh, it's just 15 cents. No big deal."

But here's the math…

(A pack of Oreos (on average) is around $3 for a pack of about 20 cookies. Do the math, that’s $.15 per cookie. If you sell the cupcake for $2, but FAIL to add $.15 to the COST of the cupcake, you’ve just robbed yourself of a 7.5% profit! So one little cookie could cost you nearly 10% of your profit! People do that all the time because they’re unaware of their costs.)

EVERY penny counts, especially when you’re talking about a very low price point like $1-$3 for a cupcake.

Make sure you “FEEL GOOD” about the prices you come up with. (BULLSHIT) It doesn’t matter how you FEEL about the price!.. (That’s probably our biggest issue in the cake industry. Women are just pulling prices from the sky based on what they THINK someone is willing to pay.)

Business is math, not magic.

And if you don't know your numbers down to the penny, you're guessing. And guessing = losing money.

"But My Customers Won't Pay That Much!"

Let's talk about this because I hear this objection ALL the time. And it's usually code for one of two things:

1. You're scared to charge what the price ACTUALLY is because you would never pay that much for whatever it is you’re offering.
2. You’re marketing to the WRONG people.

Here's the thing…

Your customers aren't "clueless" because they're cheap. They're clueless because YOU haven't educated them.

They think cake is cake. They see it at the grocery store for $12.99 and think, "Why would I pay $80?" Because they don't KNOW.

They don't know you're using Belgian chocolate and Madagascar vanilla.

They don't know you're spending 6 hours on a single cake.

They don't know you're running a licensed facility with food safety standards.

They don't know it's EDIBLE ART.

So guess what? It's your job as the BUSINESS OWNER to educate them.

And if you're still getting pushback after that? They're simply not your customer. Move on.

The "Good, Better, Best" Framework (So You Stop Saying No to Money)

Here's a pricing hack that'll change everything: Instead of offering one price that might lead to a "no," offer three tiered options.

Good. Better. Best.

This moves the customer from a "dilemma" (can I afford it?) to a "choice" (which option fits my budget?) without you having to discount your labor.

So let's say someone asks for a birthday cake. An example of the Good, Better, Best strategy would look like this:

• Option #1 BEST: (MOST EXPENSIVE option, with OVER-THE-TOP details and design elements.) Multi-tier, hand-painted, edible gold accents. $250.
• Option #2 BETTER: (Less expensive than the BEST option, still has the same details and design elements as the BEST, but is scaled back a bit.) Custom colors, piped details, fresh florals. $125.
• Option #3 GOOD: (*NOTE: This option is the least expensive option, but still has design elements that the customer asked for in the original request) Basic buttercream, simple design. $75.

Now instead of asking themselves, "Can I afford this?"-they're asking, "Which one do I want?"

You just turned a DILEMMA into a CHOICE. And you didn't have to discount a damn thing.

Stop Running a Non-Profit. Start Running a Business.

You probably didn't start this business to "be all about the money." There’s a good chance you actually love what you do, and you wanna help people celebrate.

But here's the thing…

No money, no mission.

If your business can't sustain itself, you won't be around to serve ANYONE.

So stop feeling guilty about charging what it actually COSTS you to bring your products to life.

Stop underpricing because you "just want to help people."

And stop letting fear and limiting beliefs steal your profit.

Because the REAL way you help people is by staying in business long enough to actually serve them.

Ready to Finally Get Your Pricing Right?

If you made it this far and you're like, "Okay Janelle, I HEAR YOU… but I still don't know what my ACTUAL costs are"- you’re not alone.

And that's exactly why I built Costli.

It's a tool that helps you track your ingredient costs, labor, and overhead IN REAL TIME- so you always know what to charge for true profit.

No more guessing. No more spreadsheets you never update. No more underpricing because you "think" it's good enough.

Join the Costli waitlist here and be the first to know when it launches.

Because your business deserves better than break-even pricing.

And so do you.