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Showing posts with label Why Are Things So Expensive?. Show all posts
Showing posts with label Why Are Things So Expensive?. Show all posts

Friday, August 30, 2013

Why is Cake so Expensive When Cake Mix is so Cheap?

Buying a Cake is Expensive!

I was really wanting some cake the other day and decided to check out some cakes at the grocery store.  They had some really nice looking decorated cakes, but they were expensive!

Following are prices I found in the bakery for simple frosted cakes:

  • 7 inch round cake for $11.99
  • 1/8 sheet cake for $12.99
  • 1/4 sheet cake (9 in x 13 in) for $17.99
  • "cupcake" cake with 30 cupcakes for $27.00
  • 1/2 sheet cake (12 in x 16 in) for $30.99

Decorated cakes for sale at a bakery- expensive!
Image source: Dr. Penny Pincher

Near the checkout, they had single pieces of frosted cake for sale in individual clear plastic boxes for $2.50.  Yes, $2.50 for one piece of cake!

Since I was at the grocery store, I decided to see how much it would cost to make a cake using cake mix, eggs, and oil and top it with frosting.

How Much does it Cost to Make a Cake?

Here are the raw ingredients in the typical sizes sold at the grocery store:
Eggs $1.45/dozen
Vegetable oil $2.59 for 24 oz
Cake mix $1.28 for 15.25 oz (makes 9 in x 13 in cake)
Frosting $1.77 for 16 oz
Dec-a-cake icing $2.29 for 4.25 oz tube

Pillsbury cake mix- on sale cheap
Image source: Dr. Penny Pincher

Things you probably already have at home to bake a cake:
Cake pan $5.99 for 9 in x 13 in
Nonstick spray $2.49 for 5 oz can

Cost of cake ingredients: $1.78
Cake mix $1.28
1 cup water -less than one cent if you use tap water
1/3 cup oil $2.59/18= $0.14
3 eggs $1.45/4=$0.36

Cost of energy for baking a cake: $0.13
Let's consider the cost of energy to bake a cake in the oven at 350 degrees for 34 to 38 minutes.

It takes 2 kilowatt-hours (kW-h) of electricity to run an oven at 350 degrees for one hour.  At 10 cents per kW-h, this is 20 cents of electricity cost per hour to run an oven.  Since the cake only takes 38 minutes the cost of energy to bake a cake is 38/60 x 20 cents= $0.13.

Cost of frosting and cake decorations: $4.06
Frosting and cake decoration cost can vary depending on how much you want to decorate your cake.  Let's include 16oz of frosting and one tube of decoration icing.

Betty Crocker cake frosting- whipped
Image source: Dr. Penny Pincher

Dec-a-cake cake frosting tubes
Image source: Dr. Penny Pincher

The actual cost of making a 1/4 sheet decorated cake at home is: $5.97
This compares with a typical bakery or grocery store price of $17.99.  Your saving is $12.02 by making cake at home rather than buying a cake at a store.

The cost of $5.97 to make a 1/4 sheet decorated cake at home includes all cake ingredients plus frosting and the energy to bake the cake.  If you don't have a cake pan, you will need to buy one, but it is reusable for many years.  You could save money by not buying the Dec-a-cake frosting and using food coloring to make your own colored frosting for decoration.

Why are Cakes so Expensive at the Store?

So my choice between buying a cake at the store and making a cake at home was an easy one!  But why does it cost so much to buy a cake at the store when it is so cheap to make a cake at home?

Ingredient cost?  Bakeries can get ingredients at lower cost than I can since they buy in large quantities, so it can't be ingredient cost.

Labor cost?  I have watched the people working in the bakery- they can frost a sheet cake in a couple minutes, so it can't be labor cost.

I think the reason cakes cost so much comes down to logistics.  It is inexpensive to transport and store the raw ingredients for a cake, but once you bake and decorate a cake it gets expensive.  A decorated cake takes up a lot of space and you have to handle it carefully to avoid damaging it and making it worthless.  The cakes at the bakery I visited were refrigerated, adding to the cost.  Cakes have a limited shelf life of a few days once they are baked- there is risk that cakes will not be sold in time and will get thrown away, also adding to the cost.

Another reason cakes are so expensive- demand.   People are willing to pay for the convenience of picking up a completed cake.  This can be very handy.  You can pick up a birthday cake on the way home from work.  It takes at least an hour to bake a cake from start to finish if you allow the cake to cool before frosting it.  I have even used the shortcut of placing a baked cake in the freezer to cool it off faster.  If you frost a hot cake, the frosting melts and the cake can get torn up, making a mess.

You can order customized cakes, which is also worth the money to some people.  You can get custom designs and edible overlays that you probably couldn't make yourself at home very well.  If you have a kid that is really into Smurfs, you might want to buy them a really slick looking Smurfs cake rather than making a homemade cake and trying to draw a smurf with blue frosting yourself. I don't really care what a cake looks like, as long as it has plenty of frosting.  The rest of my family likes plain cake with no frosting- so that is even easier.  Homemade cakes are the way to go for me.

Elaborately decorated Smurfs cake
Smurfs cake- it would be hard to make a cake like this at home!
Image source: Dr. Penny Pincher

Another reason people would spend lots of money buying cakes from a bakery is if they are serving a lot of people at an event like a graduation party or a wedding.  It is easy enough to make one 9 in x 13 in cake in your kitchen- this should serve 16 people with 2 in x 3 in pieces.  But if you want cake for 100 people, you could spend a lot of time and tie up your oven for a long time baking cakes.  Plus you will need to store the cakes somewhere if you bake them yourself in advance of your event.  If you order cakes from a bakery, they can be delivered all at once at the desired time and location which is really convenient.

Penny Pinching Tips
  • Make your own cake at home for under $6 and save $12 on a 1/4 sheet cake
  • Shop around to find the best deal from bakeries if you are buying large quantities of cake for an event

Recommended Reading
How much does it cost to make coffee?

Copyright © 2013 Dr. Penny Pincher.  All Rights Reserved.  Privacy Policy

Wednesday, January 23, 2013

Pet Food: Why is dog food and cat food so expensive? Would it be cheaper to feed my pet meat?

Why is Pet Food so Expensive?

Why does pet food cost so much?  Would it be less expensive to just feed pets meat and vegetables?  Is dog food and cat food a good deal, or could you make your own pet food for less?  We'll check the cost of popular pet food brands per pound vs. the cost of meat and other pet food ingredients per pound.

Pet Food Catastrophe

There was a minor catastrophe last night.  The cats ran out of food.  Cats get annoying when they are really hungry, so a late night trip to the grocery store was in order.  I brought home a bag of Purina One Beyond for the cats and filled their bowls.  However, they seemed unimpressed with my efforts.

The next day, I went to Walmart to see if I could find a larger bag of cat food for a better price.  (Target did not have this brand.)  The bag from the grocery store was $8.48 for 3.5 pounds  I even brought the bag with me so I could match the correct chicken flavor.  The picture below shows the bag from the late night run to the grocery store on the left, and the larger bag on the right.  Can you spot the problem?

2 bags of pet food
Two bags of cat food- can you spot the problem?
Image source: Dr. Penny Pincher

Both bags are Purina One Beyond.  Both are chicken flavor.  Look closely at the picture of the animal in the circle.  The one on the left is DOG food!  No wonder my cats wouldn't eat it...  My dogs seem to like it, even though it's not their usual brand, so no harm done.

At least the larger bag was cheaper- "only" $14.88 for 6 pounds.

Why is Pet Food so Expensive?

Did I really pay $14.88 for 6 pounds of cat food?  Good grief, couldn't I just feed the cats real fish and chicken for this price?

Of course there is a range of pet food quality and price, and Purina One Beyond must be near the top.  The higher quality pet foods use meat and meat products as the main ingredients, the lower quality ones use corn and other grains as the main ingredients.  I decided to see how much more the higher quality foods cost than the cheap stuff.  Since I have both cats and dogs, I checked out cat food and dog food.  I selected various sized bags of pet food of various quality.  The tables below show the price per pound for popular dog food and cat food brands.  The column with Weight indicates the size of the bag.

Table of Cat Food Prices
Image source: Dr. Penny Pincher

Table of Dog Food Prices
Image source: Dr. Penny Pincher

Generic is the price winner for both dog food and cat food.  The more expensive brands are about 3x more expensive than generic per pound in the same size bag.  The size of the bag makes a big difference, the same food costs quite a bit less if you simply buy it in larger bags.    Many of the lower cost "Name Brands" are not much more expensive than generic.  I would bet that the ingredient list is similar as well.

Why Don't I Just Feed My Pets Fish, Chicken, and Beef?

Animal nutrition is a complex topic, I'll look at this from the cost angle here.  I walked around the grocery store looking for food that I could conceivably use in pet food, especially cheaper meats.  Dogs like peanut butter, so I thought peanuts would be a good ingredient.  I hear rice mentioned as a pet food ingredient, so I'll use that as well.  I wanted meat without bones- I wouldn't be willing to put too much work into making pet food.  I wanted ingredients that don't require a lot of work.  My question is: is it cheaper to buy pet food or would it be cheaper to feed them groceries.

My grocery selections for pet food are in the table below, along with cost per pound.  The bottom line of the table is the average for all of the items above.

Table of Pet Food Ingredient Prices
Image source: Dr. Penny Pincher

If you think pet food is expensive, buying groceries for your pets is much more expensive.  Even the most inexpensive meat, like generic bologna, is more expensive than dog food or cat food if you buy larger bags.  The average cost for my pet food formula: $3.85 per pound.  High quality pet food sells for about $1.50 per pound.

Pet Food is a Good Value

High quality pet food is a good deal for the money.  You couldn't make something comparable without spending more than even the most expensive pet food.  Pet food includes vitamins and minerals as well as the basic ingredients.  Seeing that pet food is actually less than buying groceries for the pets makes me feel a little better.

I think of dry pet food as "meat cereal".  Pet food contains most of the things that cereal contains- grains, vitamins  minerals, etc.  If you consider the price of cereal, and then think of adding expensive ingredients like meat, it makes sense to me why pet food costs so much.

You might ask why a penny pincher like me buys the most expensive brand of cat food at the store.  Because my wife makes me.  She thinks it's good for the cats, and she's probably right.  I don't let my kids eat a lot of junk food, so I don't want to feed my pets junk food.  They will be healthier and happier with a quality diet.

Penny Pinching Tips:

  • Buy pet food in large bags to save money.  The same food costs much more in smaller bags.
  • Rather than buying cheap pet food to save money, feed your pet the right amount of higher quality food.  Many pets are overweight, so save money and improve their health by feeding them less until they reach ideal weight.
  • Pet Food is a good deal compared with grocery prices

Recommended Reading:
Dog Sunglasses Buying Guide
Cat Claw Caps: Are Cat Nail Caps a Good Alternative to Declawing?
Malshi: Cross of Maltese and Shih-Tzu Dog Breeds

Amazon offer: Raw Dog Food: Make It Easy for You and Your Dog

Copyright © 2013 Dr. Penny Pincher.  All Rights Reserved.  Privacy Policy