Undercharging usually hides in the parts you do not count. A defensible custom-cake price is not a round number that feels fair. It is recipe cost, plus labour, plus packaging, plus delivery (when you offer it), plus overhead, then a selling price that leaves you a real margin.
Build full cost = ingredients + labour + packaging + delivery + overhead, then set the quote so your margin holds.
If any cost line is missing, or if you treat margin like a simple add-on, the gap shows up after the order is done. The same habit protects every bake you sell: bread loaves, cookie boxes, pastry trays, and wedding cakes alike.
1. Start from the recipe, not the vibe
List every ingredient for that exact order at today's supplier prices. Custom work changes order to order, and even "standard" products drift when butter or chocolate moves. A static price list goes stale. When costs move, the next quote should move with it.
2. Put labour in the quote before the oven is on
Orders burn hours before baking starts and after it comes out: consults, shopping, prep, baking, cooling time you cannot fill with other paid work, filling, coating, decorating, packing, cleanup, pickup or delivery. Decide your hourly rate, estimate the hours for this order honestly, and add that labour as its own line. If labour never makes it into the quote, you are volunteering it.
3. Add packaging, delivery, and rush as real lines
Boxes, boards, ribbons, labels, and delivery are not nice extras. They are costs. Rush work is not a favour: price it. Keep deposits and the balance attached to the same order so payment status does not live in a separate DM thread.
4. Add overhead as a percentage of cost
Overhead is the running cost of the bakery: rent or kitchen hire, utilities, insurance, phone and internet, software, and tools. In Bakerflow, overhead is a percentage applied to your ingredients, packaging, and labour (not a flat dollar you invent per cake). Delivery stays as its own order line outside that percentage.
A common starting point is about 20%. Example: if ingredients, packaging, and labour add up to $286, then 20% overhead is $57.20. Adjust the percentage as you learn your real fixed costs.
5. Set margin as a share of the selling price
Margin is the share of the final price that is profit after every cost line above. It is not the same as markup (adding a percent on top of cost).
In Bakerflow, the default is Profit Margin. To hit a target margin:
Quote = full cost ÷ (1 − margin)
Example: full cost $368.20 and a 30% margin → $368.20 ÷ 0.70 = $526. Profit is about $158, which is 30% of the selling price. Adding 30% on top of cost would understate what you need.
Choose a margin, run that division, and check the number before you commit.
Worked example: two-tier birthday cake (serves about 20)
Buttercream-simple cottage order. Hours cover consult, bake, cool, fill, coat, decorate, pack, and cleanup. Ingredient dollars are an Australian supermarket-style ballpark for a dressed buttercream cake (not fondant work). Swap in your own costs.
| Line | Detail | Amount (AUD) |
|---|---|---|
| Ingredients | Sponges, filling, buttercream, simple decor at current prices | $72.00 |
| Labour | 7 hours × $28/hour | $196.00 |
| Packaging | Boards, box, dowels, ribbon, labels | $18.00 |
| Subtotal before overhead | Ingredients + labour + packaging | $286.00 |
| Overhead | 20% of that subtotal (Bakerflow-style) | $57.20 |
| Delivery | Local drop-off | $25.00 |
| Full cost | Everything before margin | $368.20 |
| Target margin | 30% of the selling price | |
| Quote | $368.20 ÷ (1 − 0.30) | $526 |
Profit on this quote is about $158, which is 30% of $526.
If that number feels high compared with what you have been charging, that is the point of the exercise: the gap was usually unpaid labour and overhead, not greed. You can still choose a different margin or simplify the design. When you are ready to price your next real order the same way, try Bakerflow free for 14 days (no credit card) at https://www.bakerflow.com/
Where Bakerflow fits
Bakerflow is bakery software for home bakers, cottage bakeries, and growing pastry teams. You calculate recipe costs, add labour, packaging, and overhead as a percentage, add delivery when you need it, then set a selling price that holds your margin, and keep the accepted quote connected to payment and production so it does not disappear into DMs, notes, and spreadsheets. Use it for custom cakes when those are your orders, and for everyday products, boxes, and wholesale-style trays when those are the work on the bench.
- Who it is for: bakers and small bakery businesses who need real costing, clear quotes, and a clean path from order to bake day.
- Who it is not for: high-volume wholesale ERP buyers who need multi-route delivery and lot-audit manufacturing stacks.
- Pricing: try Pro free for 14 days (no credit card). Plans from $29 AUD/month. Start your free trial
Built by Arvin, a working baker and Great Australian Bake Off winner, for bakers who were tired of underpricing.
Checklist before you hit send on a quote
- Ingredient costs are current for this order
- Labour hours are estimated honestly and priced
- Packaging (and delivery, if any) is included
- Overhead is a percentage of ingredients + packaging + labour
- Margin is set as a share of the selling price (not a markup tacked on cost)
- Deposit and balance sit on the same order record