Yes, if the price counts the time. Cake and candy melts cost pennies a pop; dipping and decorating take three minutes for a basic pop and six for a custom one, and that time is most of the cost. Priced for it, cake pops keep a good margin; priced like a bake sale, they barely pay. Margin = (price − cost) ÷ price. In the example below, a basic cake pop costs $1.49 to make and sell and goes for $2.50, a 40.2% margin. A month of four ways of selling brings $2,070 of sales and about $850 of gross profit.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- Count your time as a cost, even if you don't pay yourself yet.
- A basic pop: $1.49, $2.50, 40.2%.
- Decorating time is most of the cost.
- Custom designs take twice as long: price them by the minute.
- Wedding favors sell a hundred at a time.
- TaroStack costs each pop from what each batch used. More below.
A cake pop, costed
Bluebird Cake Pops, the made-up home baker in Cheyenne, Wyoming, I use in these examples, makes basic and custom cake pops, dozens and wedding favors:
| A basic cake pop | Cost |
|---|---|
| Cake, frosting and candy melts | $0.24 |
| Stick, bag and tie | $0.18 |
| Dipping and decorating, 3 minutes at $20 an hour | $1.00 |
| Card fees, 3% of $2.50 | $0.08 |
| Cost | $1.49 |
Setting the price is in how to price cake pops, and the year in cake pop business plan.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Basic cake pop | Markets, single | $2.50 | $1.49 | $1.01 | 40.2% |
| Basic dozen | Preorders | $30.00 | $17.93 | $12.07 | 40.2% |
| Custom themed dozen | Preorders | $57.00 | $33.15 | $23.85 | 41.8% |
| 100 wedding favors | Weddings | $225.00 | $132.04 | $92.96 | 41.3% |
The custom dozen keeps 41.8%, with six minutes of decorating in every pop; the favors keep 41.3%, in batches of a hundred.
A month's numbers
A month for Bluebird Cake Pops:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Basic cake pop, markets | 120 | $300 | $121 |
| Basic dozen, preorders | 25 | $750 | $302 |
| Custom themed dozen, preorders | 10 | $570 | $238 |
| 100 wedding favors, weddings | 2 | $450 | $186 |
| Month | $2,070 | $847 |
The dozens bring the most gross profit for the hours; singles at the market sell the pops and bring the preorders. At a bake-sale price of a dollar, a basic pop would lose money once the decorating time counts. The difference between margin and markup is in markup vs margin.
Get the calculator
Download the cake pop margin calculator. One sheet: one line for each product and channel, with its price, materials, packaging, labor and fee rate; the cost, gross profit, margin, markup and the price your target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator holds one decorating time. A themed order that takes eight minutes a pop, candy melts that went up, and pops that crack and get remade change the month.
How TaroStack does it
TaroStack costs each pop from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes cake, frosting and candy melts at the price of the deliveries they came from, so a price rise shows in the next batch's cost.
Labor on the batch. The minutes a batch took are recorded on it, so the hours behind each product are on record.
Margins by product. Margins are reported per product on that actual cost, and a price-creep report per supplier shows whose prices moved.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What a pop cost | One price from last season | Cost from the batch's deliveries |
| The hours behind a batch | Remembered | Labor minutes on the batch |
| An ingredient creeping up | Noticed late | A price-creep report |
| Margins by product | Re-worked by hand | Margins on real cost |
Recipes, batches, costing and margin reports are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.