Don't get me wrong, I LOVE making cakes and seeing the look on my customers face when I deliver them. However, I just don't think I cut it in the business world. I hate turning away customers, but I just don't get why they think you can get a custom product at a Walmart rate.
I have recently moved and decided I wanted to continue making cakes in my new town. A customer was referred to me by a close friend and I was so excited to start making cakes again and even more excited to start building up my business in the new town. I spent the last two days discussing the design for two different cakes with the woman and finally it was time to price the designs.
This was the design for the first cake:
Since I am new to this area and since she was a very close friend of my friend I decided I would give her a discount when she asked. I told her 110+delivery (since she is so far) for this cake. She thought that was the rate before the discount! I checked and I am not out of range for the area at all- my prices are actually lower! I didn't even bother pricing the second cake (which was an emblem from her sons soccer league which was going to be extremely intricate…)
Should I drop the price more!? I don't want to loose money on this cake, but I'm afraid thats whats going to end up happening if I have to lower the price. I'm also afraid I'm going to have the reputation of a 'too expensive' bakery before I even get my first customer in my new town… What do i do!? Should I take a hit for this cake and then charge full price for the second cake? Or tell her no way and advertise to build customers that way? I just don't want to go broke baking cakes because I'm too nice to turn customers away…
$110 seems low to me for that -- i would tell her what i could do for her for a little less money -- like just price an 8" cake which is probably somewhere around $75 to $100 -- and how far away is she and how much are you charging for delivery --
i love all the silhouettes -- is that orange thing a half a basketball?
AHow "nice" are your vendors to you regarding pricing? Only you can decide whether it is worth it to go on. I we'll say, though, that lowing your pricing when you find you are priced too high for the market is easier than raising it when you realize you are priced too low for the market. On a side note, your website...the cakes on the front page don't appear in your gallery? I find that somewhat strange. Why not include them? Maybe i am mistaken.
What do you mean by vendors? The customers?
I definitely agree. I was just so excited to start again and now I feel so let down. In my last town my business began through word of mouth and just spread. I never really had to do any advertising. I think I'm just stuck and I don't quite know how to begin. Make a great cake would be a good start, but not for that price.
I think you need to discuss pricing sooner in the process. To wait for several days of working out a precise design before discussing budget sets both of you up for disappointment. Discuss that earlier and you could have made a more realistic design. It sounds like you need to review some of the business discussions on cake central on setting prices, not everyone is your customer, how to conduct business, etc.
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Original message sent by denetteb
I think you need to discuss pricing sooner in the process. To wait for several days of working out a precise design before discussing budget sets both of you up for disappointment. Discuss that earlier and you could have made a more realistic design. It sounds like you need to review some of the business discussions on cake central on setting prices, not everyone is your customer, how to conduct business, etc.
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Don't get me wrong, I LOVE making cakes and seeing the look on my customers face when I deliver them. However, I just don't think I cut it in the business world. I hate turning away customers, but I just don't get why they think you can get a custom product at a Walmart rate.
... I spent the last two days discussing the design for two different cakes with the woman and finally it was time to price the designs.
I just don't want to go broke baking cakes because I'm too nice to turn customers away…
You are correct, you need to do a LOT of work on the un-fun-business-side-of-cake BEFORE you try to establish yourself as a custom cake decorator in your new town. Look at this move as the perfect opportunity to begin your cake business the RIGHT way.
You probably already know your first mistake: Price FIRST! then discuss the design.
If you had approached this as a business opportunity instead of an "oh boy! someone wants a custom cake!" opportunity, you would have asked the first question: What is your budget? When the potential customer responds with: $30, you already know this is NOT your customer.
I suggest you do a search on the cakecentral.com site with the keywords: Pricing
You can spend at least a day reading some excellent advice.
I also suggest you look at the possibility of investing in CakeBoss pricing software. Just google: CakeBoss, How Much should I Charge for My Cakes?
p.s. This is NOT the tv show cake boss. It is a separate company. You may see a link on this site.
A$30 for a custom cake! No way! This person is not your customer. I start by saying my cakes start at $80, and they either say okay or that's more than they want to spend. Don't spend time designing something that may not work for them.
You are in a new town and you now have all new customers! Get busy, get creative and show off your work in any way you can. There are sections of the newspaper that highlight new business. Some of my customers still read the local papers. I just did a great bridal show. Check out the bridal shops and the venues. Introduce yourself to everybody. I make big cakes for most of the business owners in my town. And trust me they know what things cost. Have an open house at your bakery. Do a cookie decorating class at the local college or whatever. Get busy! I tell everybody I meet what I do and it works for me. You are your best advertisement. Best of luck, you can do it! Every day I tell myself this is what I have to do to support my passion and bizarre habits like watching an oven like it's a baby sleeping. I love my job, because I hired me!
Well this was just a communication error on my part. She was aware of the price range, but she assumed I was giving her a 'family discount'… which I did, she just didn't think that the price was low enough and I felt quite honestly that she might have been trying to take advantage of me because she knows we have a mutual friend and that I am looking to try expanding in my new location. I don't think in the end I'm going to end up taking her on as a client.
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Well this was just a communication error on my part. She was aware of the price range, but she assumed I was giving her a 'family discount'… which I did, she just didn't think that the price was low enough and I felt quite honestly that she might have been trying to take advantage of me because she knows we have a mutual friend and that I am looking to try expanding in my new location. I don't think in the end I'm going to end up taking her on as a client.
so she thought the family discount meant that your expertise was free? That's ridiculous.
a couple more things to consider. You're not going to get more business by doing someone a favor. It just doesn't happen. We all know it, and we have all experienced it. If you want to make a cake as a labor of love and give it away, that's one thing and I suggest you only do that for people you really love, or organizations you want to help by making a donation.
Discount store prices mean discount store cake. You can get a $30 sheet cake at Costco, but it doesn't have a basketball and a ballerina on it! Someone who doesn't see the difference will NEVER see the difference, so move on.
I suggest you stop what you are doing and make a business plan. It doesn't have to be 100 pages long, but it should include estimates of how much your work costs and how much you need to earn in order to be in business. That's what's real and that's what will keep you in business. If I don't make X dollars per week, selling X number of cakes, I can't pay my son's school tuition or my rent. That's the actual bottom line, and that's running a business. If you don't treat your work this way, you will be forever stuck in this whirlpool of apologies and regret.
FYI, selling a cake to a friend of a friend is not a marketing plan. You need one of those too.
Trust me when I tell you that the more professional you are, the more respect and consideration you will get from potential customers, and by consideration I mean MONEY. We all want to love our jobs, we are lucky if we do, but we are in it to win it, not do everyone favors. Give your friend a heads up when you turn this customer down, so that she will know that it wasn't your fault that you couldn't come to a price with the third person.
good luck
jen
As the others have said above, budget has to be brought up very early in the conversation--for me, the first question is about the date the cake is needed and the second question is about the budget & servings needed.
The exemplar shows a cake that would serve over 50 people--a double barrel 8" cake with a half ball on top. If they need that many servings and the budget is $30......well, we're so far off it's not even funny.
$30, for me, would get an 8 serving buttercream cake it, [iced in white, only, with a simple border] and an edible image on it................and I don't do those types of cakes, so I'm just not her baker........
I don't turn my oven on for less than $150 , my reaction to someone with an unrealistic budget is , I am sorry that I couldn't help you , I hope that your celebration goes well.
AThe only people I give a family discount to are...nobody. Definitely not the friend of a friend!
I've always put "discounts" in the same category as "sales" . . . either they're trying to get rid of a lot of something that nobody wanted, or their prices were too high in the beginning. Since neither of these is the case with custom cakes, neither is warranted. For anybody.
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Original message sent by costumeczar
The only people I give a family discount to are...nobody. Definitely not the friend of a friend!
No kidding! What the heck is all this damn discounting I see?! Why?? You're just perpetuating the awful myth that what we do is negotiable, that we have room for charging less, damn, we don't! Stop it!!
You also may want to reconsider your 'family discount' if you want a profitable business and not just a hobby that pays for itself. If you consider a friend of a friend for your family discount it will be really tough to make a successful business.
this ^^^
another way to think of it is if you get a call from any familiar person -- consider them to be offering support to your business -- that that is a confidence boost to your excellence and money in the till -- not a drain to your resources -- even if the caller meant it to be the latter -- they get this:
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bam!
Regrettably, many cheap cakers are so clueless and so desperate for business, they charge very little and still give discounts. Unfortunately, there's an endless supply of these cheap cakers.
It's gotta stop. The customers are not the problem. Repeat after me: The Customers Are. Not. The. Problem. The cheap negotiable rates of the inexperienced seller who doesn't have the gall to demand what they're worth, when they have reached a worthy price point, is who is to blame. PERIOD. And there is NO reason to sell until you have reached a worthy selling point.
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What do you mean by vendors? The customers?
Vendors are your suppliers. You can't walk into the grocery store or call up Satin Ice and beat them down on price. Ingredients & supplies cost a certain amount and that should be considered when you price a cake. Giving discounts is a slippery slope and each time I try to be nice and give one I end up losing. 
Oh. My. God. I just heard from another baker in town that she got a call from someone who had been quoted $26 for an 8" fondant cake, and was still calling around to see if she could find a better deal. And SHE PROBABLY WILL. I'm so done with undercutting, undercharging, facebook/craigslist advertising people who will take one dollar less and drive every business that charges an appropriate price out of business. 
Someone please teach these people the basics of running a business and the meaning of the words "living wage"! I've been harping on it for years and all I get is "There's enough business for everyone." 
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Original message sent by costumeczar
"There's enough business for everyone."
If people are going to charge $26 or less for an 8" fondant cake, there probably will be business for a lot of people - because for that price, people will buy a custom cake to celebrate Thursdays, and waking up in the morning, and their dog digging a hole in the backyard, and the first blossom on their tree. And that will mean everyone will get a custom cake for every celebration for a short time until the undercutting and undercharging bakers are broke or dead or burned out! And then the industry will re-start with custom cakes being special and made only by people who charge appropriately for them. But enough of fantasy land....
Last week I had a call from a mother at my daughters' (very expensive) school wanting a 3D custom car cake to serve 20, bright red, dairy-free, custom all the way. Sent the quote and then heard from her that she had a budget of $50-60 (which wouldn't cover my ingredient cost!). I hadn't checked in with her on budget because these parents have seen my cakes raffled off and valued at school events time and time again - they know what my cakes cost! So no cake for her....I sent her to a bakery to get a sheet cake with an edible image on top, but she said that they're trying to avoid artificial colours too (but she wanted an entirely RED car!) So she went to the expensive patisserie and paid $80 for a not-car cake at all. Hope the eight year old boy loved his gateau Opera....
The thing is, the $28 for an 8 inch fondant cake makers aren't really in it to make money, they don't really calculate their costs, just get their ingredients when they do their family shopping so don't even know what that cake costs them, probably they only thing they really consider is the cost of fondant. The are in it for the flattery and praise and compliments. That is their payday. At most they figure the money they get paid pays for their hobby and are fine with that. And they don't give any thought to the other bakers at all.
You also have to realise that it is okay to lose an order.If people can't afford you it isn't personal. I have people enquire for cake and they can't afford me. It is not their fault , it is not my fault. A bespoke custom cake is just not in their budget. I have had people that have not ordered with me because of cost then save up to have one of my cakes. I would rather have a weekend off than pay people to have one of my cakes. ( this rarely happens by the way , I WISH )
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Original message sent by denetteb
The thing is, the $28 for an 8 inch fondant cake makers aren't really in it to make money, they don't really calculate their costs, just get their ingredients when they do their family shopping so don't even know what that cake costs them, probably they only thing they really consider is the cost of fondant. The are in it for the flattery and praise and compliments. That is their payday. At most they figure the money they get paid pays for their hobby and are fine with that. And they don't give any thought to the other bakers at all.
AThe first blossom on their tree!! Lmao winniemog that was hilarious
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