California-Inland Empire
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Accounting

I love my DW but she sucks at accounting for costs involved in our business.I calculated the cost per batch of frosting and it costs me $10 to make it.  She can't wrap her head around why it costs so much.The price to make 2 8" or 9" cake layers starts at $6 and only goes up from there.  She doesn't understand why a chocolate cake costs so much more than a white or vanilla cake.  HELLO, cocoa powder costs A LOT as do liquid flavorings.I haven't even calculated the cost for fillings but I know I spend a pretty penny on fresh fruit, cream, chocolate, etc.We had a chat the other day regarding why I want to charge so much for my decorated cakes.  Well...remember I mentioned I got an order for a baby shower cake?  DW quoted the girl $25.00 (what I normally charge for a plain filled and frosted cake, no decoration) and I freaked out.  How am I supposed to bake a cake, fill it, frost it, decorate it, AND deliver it for $25.00?!?!?!?I understand an 8" or 9" cake is small but being a small business that can't mass produce cakes means I have to charge more than the grocery store.I had to explain to her that we can't just charge $25.00 because it's the same size as the plain cakes I sell.  When accounting for the cost of a special order cake she needs to think about...Cost to make frostingCost to make cakeCost to make fillingCost for my laborCost for gas to deliver itCost of electricity used to make cakeCost of water used in making cake and washing dishesAs I'm now learning, people will pay more for a fresh cake, made exactly the way they want it.  That's why people go to a bakery for special occasion cakes rather than buying them from the grocery store or Costco.If people want a pretty cake just to snack on, they can buy it elsewhere.  My cakes are baked fresh and made from scratch and thats what I hope people realize when they order from me.  My prices are not unfair although DW thinks I am insane for wanting to charge what I believe my cakes and my time are worth.

Re: Accounting

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    edited December 2011
    She must think you're running a non-profit organization.  :P
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    edited December 2011
    Can you put it in writing with the calculations? Maybe she needs to see a visual of the cost, rather than just hearing it?
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    edited December 2011
    Yes I am going to do that.  Only problem is I can't necessarily put the cost of gas, electricity, water or my time down on paper.  She only wants to account for the cost of the cake ingredients, not anything else.
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    edited December 2011
    Sometimes they just don't get it. If DW is anything like my FI she will need to see it on paper. FI is a visual learner. You should also write down your prices for her on a piece of paper that she can keep in her wallet or something. That way if people ask she can bust that out and not quote a super low price.

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    edited December 2011
    I already told her to have people call or email me to get a price.  I have a spread sheet that calculates the costs depending on what people want.  I asked her not to quote prices for cakes at all.
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