A number of factors during the mixing and baking process can cause cakes to fall. When cakes fall, however, all is not lost. You may be able to salvage part of the cake, or frost the cake creatively so that it can still look attractive. Even professional bakers experience a fallen cake or two now and then, due to subtle differences in air pressure, temperature, or the ingredients used. One of the most important things you can do to prevent falling cakes is to use fresh ingredients and to measure consistently.
Temperature is a major factor. Cakes fall when they are cooked at a temperature which is too low, or too high. The oven should be preheated all the way before inserting the cake pan, and you may want to use an oven thermometer to ensure that the oven is at the proper temperature. It is also important to cook the cake for the recommended amount of time, making adjustments for substituted ingredients, and to avoid jostling the cake while it bakes or cools. Cakes fall as they cool sometimes, so make sure to put the cake in a safe place.
Factors within the ingredients can also make cakes fall. Using insufficient liquid, for example, or not enough oil. An excess of sugar or flour can also create problems with the batter which may lead to falling cake. It is very important to measure properly, tamping down ingredients as needed or sifting as directed. Use clear measuring cups and try placing them at eye level on the counter so that you can see the amount you have measured out clearly.
Cakes fall because of how they are mixed, as well. If the cake is overbeaten, it may fall because of the excess of air trapped in the batter. Underbeaten cakes, on the other hand, may fall because the batter is too dense and is unable to rise. Follow the mixing directions in the cake recipe carefully to reduce this problem. Sometimes the mixing can cause cakes to fall after they mound up in the middle, leading to a large mess. However, when cakes fall like this, you may be able to salvage them as "volcano cakes," especially if you have young children with a penchant for oozing frosting.
Finally, cakes fall when they are baked at altitude. High altitude baking is a skill which requires some trial and error. Some cookbooks include corrections for altitude baking, and if you live in at a high elevation, you should probably consider acquiring a specialized high altitude baking cookbook. As a general rule, you want to increase the liquid, decrease the sugar, and decrease the amount of baking powder included in a recipe. If your cakes fall frequently when you are baking at altitude, you may want to ask a local baker for tips.