Competition

Business By CreativeCakery Updated 19 May 2008 , 5:36pm by chutzpah

CreativeCakery Posted 17 May 2008 , 2:32am
post #1 of 34

Okay, this question is kind of in the pricing category. I read a post about pricing not long ago, where someone proposed prices pretty darn close to mine, and the general consensus was that the prices were too low to make a worthwhile profit.

I did some investigating, adn here in the Buckeye state, almost all of the independent bakeries here charge almost the same as me, except for one who is WAY out of line from the rest of us ($88 for a 6" round?!).

I also read a post that you shouldn't undercut your competition, so what to do? I want to be sure I am charging enough to be truly profitable; plus, it's taken me almost 2 years to sort of really increase my customer base (still just a little ouch.gif ) so I don't want to drastically up my prices. My prices are right around $1.50 for buttercream, more for fondant. Cupcakes are $2.00 each, etc. Everyone except the REALLY high bakery ($88 6-inch) charges $1.50-2.00/svg. for buttercream, at least from what I could gather from websites.

Any thoughts? Sorry this ended up being so long. TIA!!

33 replies
MichelleM77 Posted 17 May 2008 , 2:37am
post #2 of 34

I'm in the buckeye state as well and couldn't make a profit worth my while for under $3 per serving, but then again I only want to do fondant cakes. I don't know how bakeries that have rent to pay and customers to pay, only charge $1 per serving...sometimes less!

My question for you is why are you charging $2 per cupcake, but only $1.50 for cakes? There's a lot more time put into decorating a cake and I think there is more cake in a serving of cake than in a cupcake. Just my two cents. icon_smile.gif

CreativeCakery Posted 17 May 2008 , 2:44am
post #3 of 34

Good to meet a fellow Ohioan! icon_wink.gif

I am ashamed to admit I had never thought of the pricing of cupcakes vs. a serving that way!! I kind of just copied what I saw other bakery sites doing. icon_redface.gif Bad baker!!!

Maybe we could just say that the price is higher to cover the cost of the little baking paper? Then I don't feel so foolish. icon_lol.gif

MichelleM77 Posted 17 May 2008 , 2:51am
post #4 of 34

Ha ha! Sounds good to me.

The bakeries (and I mean bakeries, not grocery stores) are so cheap near me that there is no way I can compete, so I'm trying to find my niche in what I'm good at and what isn't offered in the local bakeries.

Where in Ohio are you?

CreativeCakery Posted 17 May 2008 , 2:54am
post #5 of 34

I'm in a suburb of Columbus. What really kills me is that most of the bakeries I looked at to gauge myself were in really affluent parts of town.

MichelleM77 Posted 17 May 2008 , 3:00am
post #6 of 34

Oh okay, my sister lives near Lancaster.

I'm having a hard time finding my place in the pricing range, especially since I'm just starting in the world of cakes (have been doing cookies for more than a year now). It's funny, because I'm charging more than the locals for cakes, but I'm the cheap cookie girl around here. Go figure.

Mike1394 Posted 17 May 2008 , 9:37am
post #7 of 34

A lot of it depends on your business outlook. The high end bakery would rather sell fewer cakes for a higher price. It's hard to find something to set yourself apart from the rest of the competition. Finding that niche is what business is about. It's the building a better mousetrap idea. Take one thing you do well. Then do it better than anyone else. Charge a fair price for a superior product, and people will flock to your door.

Mike

MichelleM77 Posted 17 May 2008 , 11:36am
post #8 of 34

That's my plan, Mike! I don't know anyone in the area that does a certain technique and my plan is to over the next few months practice that technique and then see how that goes over. I desperately want to find a niche, don't just want to be another lady baking sheet cakes (which I won't do). I don't want to limit myself too much, but then again, that's what a niche is! So confusing!

jadak Posted 17 May 2008 , 1:54pm
post #9 of 34

UGH.......This pricing stuff is too hard! icon_lol.gif I am also in the Buckeye state. I decided on $2 per serving for BC...$3 per serving for fondant. I charge $1 per cupcake that isn't filled with a swirl of icing and $2 for filled cupcakes. Cookies vary.

The problem is, I often under quote when I quote. I have the hardest time saying, "That cake will cost $100 (or whatever)" because it is so out of my realm of comprehension to pay that for cake. Also, I am new and sometimes wonder if I'm good enough to charge what I should charge.

I've decided that I MUST create a firm price list and stick to it...especially with the cost of everything now. If I don't stick by those prices, I won't make any money at all. I have also decided that I need a "higher end" clientelle who expects to pay more for a unique delicious one of a kind cake. I plan to print fliers and pass them out in areas where I know it's important to "keep up with the Jones's." icon_lol.gif I'll put a link to my portfolio on that so people can see my cakes/ cookies. Then, if I get a call, I'll know they believe I am worth my prices (based on decoration anyway) and I'll know they know what they are going to be quoted and there will be no sticker shock.

Sorry to babble. I just think about this a lot too. I really want to establish a larger customer base and actually make a little side money doing this, but it is hard to get started...especially as a home based business operating under the cottage food laws.

MichelleM77 Posted 17 May 2008 , 2:00pm
post #10 of 34
Quote:
Originally Posted by jadak

The problem is, I often under quote when I quote. I have the hardest time saying, "That cake will cost $100 (or whatever)" because it is so out of my realm of comprehension to pay that for cake. Also, I am new and sometimes wonder if I'm good enough to charge what I should charge.




This is exactly how I feel about it!

indydebi Posted 17 May 2008 , 3:01pm
post #11 of 34

First, you can NOT gauge your pricing based on what YOU would spend. My example is cars .... I would NEVER pay $60,000 for a car, but thank goodness the guy who owns the Cadillac dealership (where my husband has a JOB!) doesnt' go by what *I* would pay and opened the dealership anyway!

Second, I recently did a competition check in my area and was surprised to find out that I'm one of the pricier people in town! icon_surprised.gif I'm $3/buttercream (dont' do fondant) and I found 2 bakeries (bakeries .... not groceries) who are in the $2/range. My cake-only wedding sales have doubled over last year's cake-only sales. Evidently I have a niche, but dont' ask me what it is! icon_confused.gif

As I've mentioned a number of times in the past ..... If you don't believe in the value of your product, then how can you expect to be able to explain it to your customer? If I get a bride who questions the price of something on my buffet, I can cite book, chapter and verse the statistical numbers of rising prices, labor involved in creating that dish, and so on and so on. I've never had a problem once I explain what's involved. Sometimes you just have to educate the client.

jadak Posted 17 May 2008 , 6:27pm
post #12 of 34

[quote="indydebi"]First, you can NOT gauge your pricing based on what YOU would spend. My example is cars .... I would NEVER pay $60,000 for a car, but thank goodness the guy who owns the Cadillac dealership (where my husband has a JOB!) doesnt' go by what *I* would pay and opened the dealership anyway!"


I agree. I just have to grow a pair and let people know it is what it is. I can do that with everything else. I think the problem---for me anyway right now----is that ALL of my cake sales have been to friends or family. I have not been able to break out past the people I know to the random customer who can the tell their friends and spread the word about me to people I do not know.

That's why I think a flier sent out to neighborhoods around mine, but not full of people I know, might be a wise move. I KNOW people are willing to spend the money. I just think I'd do better dealing with some strangers. And I know my cakes taste great and I think they look good. I haven't done any wedding cakes and should probably do a dummy or two for the portfolio, but I've done several one of a kinds and I have been proud of them and the recipients have been happy too. In fact, I even donated one to a local cake auction that was a small 8x8 that went for $90! That was one of the highest amt. paid for any single cake there. thumbs_up.gif

So, it boils down to me breaking away from the "locals" and finding a new and improved customer base. I'll get there. With a DH and 3 kids under age 7, I can take it slow in building this as a business. icon_smile.gif

CelebrationsbyLori Posted 17 May 2008 , 6:33pm
post #13 of 34

I'm in a rural area (KS) too so I understand your feelings when you give your prices and everyone tells you how cheap you are! However, raising prices isn't always a business killer (e.g. people are still buying gas!). One thing that has helped me is that most of bakers here in my town are friends and know each other well. When we need to raise prices, we get together and all raise them. This is mostly for wedding cakes, we all vary a bit on sheet/birthday cakes, but weddings we have all tried to keep our prices the same. I get that this may not be an option depending on your competitors, I have been lucky this way. If you have figured every bit of the cost of your product (down to the boards, flavors, everything) and you are making a profit over that that you are comfortable with, then that is your business, if not, you have to raise your prices, no one can do this for free!
HTH -Lori

indydebi Posted 17 May 2008 , 7:50pm
post #14 of 34
Quote:
Originally Posted by CelebrationsbyLori

When we need to raise prices, we get together and all raise them. This is mostly for wedding cakes, we all vary a bit on sheet/birthday cakes, but weddings we have all tried to keep our prices the same.




Please please please do not do this and do not put it in writing in a public forum that you do this. Price fixing is so illegal.

See amie202's comments on this thread: http://forum.cakecentral.com/cake-decorating-ftopict-584066.html

CreativeCakery Posted 17 May 2008 , 8:04pm
post #15 of 34

Great thoughts and ideas everybody!!

jadak, I know EXACTLY how you feel, and I do the same underquoting thing. I think you're right too, that we've GOT to get that fixed list and stick by it, that way we won't be so prone to underquote/undersell ourselves.

indydebi, as always, you are SPOT ON with your thoughts, ideas, and advice. Maybe that's your niche!! You are absolutely the best at what you do!! icon_wink.gif You are EXACTLY RIGHT when you say that we can't gauge ourselves based on what we'd pay. The car analogy really hit it home for me. Thank you!! icon_smile.gif I think I will up my prices! thumbs_up.gif

FromScratch Posted 17 May 2008 , 8:40pm
post #16 of 34

A cupcake is equal to a wedding sized slice of cake. You can actually cut it up and create a 1x2x4 piece of cake with a little left over.. (yes I have too much time on my insane hands sometimes icon_wink.gif ). So for me.. a servings of cake and a cupcake are teh same price. icon_smile.gif

I'm with Debi.. you have to believe in what you are offering and market yourself to the right population. I wouldn't pay $300 for a birthday cake.. that's why I make them! icon_wink.gificon_lol.gif

indydebi Posted 18 May 2008 , 1:20pm
post #17 of 34
Quote:
Originally Posted by jadak

I have also decided that I need a "higher end" clientelle who expects to pay more for a unique delicious one of a kind cake. I plan to print fliers and pass them out in areas where I know it's important to "keep up with the Jones's."




I'm not sure that "higher end clientelle" and "flyers" go hand in hand. icon_confused.gif

I've never rec'd a flyer from what I call The Big Boys in town re: their catering, cakes, or other offerings. They don't put papers on my car windshield ... they don't stuff them on the side of my mailbox.... they're not stapled to telephone poles.

If you want to target a certain area or clientelle, I'd suggest you get with a direct mail service .... I met a guy who does this (in one of my networking groups) and he told me "If you come up with a sugar free cake, I can get you a mailing list of families with diabetic children inside a specific zip code that you want to target."

I will throw away a flyer on my mailbox without even looking at it. I will at least LOOK at a postcard that comes in the mail.

I just do not want to associate myself with the psychic palm reader who leaves "flyers" laying around.

jadak Posted 18 May 2008 , 1:31pm
post #18 of 34

Thanks for your opinion.

kneadacookie Posted 18 May 2008 , 1:37pm
post #19 of 34

as usual...debi is right on! i think what we all need is to higher our self esteem!! if we all know we're worth it, then we wouldn't have a problem with our pricing.
this coming from a girl who still has problems quoting prices. i need to get over that there are people out there that are better than me, and start thinking that i really am good and have a good product that is worth the $$.
thanks debi for your never ending encouragment!!!

MichelleM77 Posted 18 May 2008 , 1:43pm
post #20 of 34

As far as the flier goes, I receive those in the mail, never received one just shoved on my car or to the side of my mailbox (I think that's illegal anyway). I don't have a problem with fliers that come in the mail. We just purchased our first house last month and have been getting a lot of mortgage insurance junk mail, but we also have been getting fliers from businesses that got our address (I'm guessing) from our real estate transfer being listed in the newspaper. I'm looking into that as an option for mailers since by the city and the amount they paid for their house, you kind of know if the homebuyer is "higher end" or not....and it's free in the newspaper!

Mike1394 Posted 18 May 2008 , 1:48pm
post #21 of 34

Ok now I've read a bunch about higher clientele. Targeting the higher $$$. There is certainly nothing wrong with that out look. Keep one thing in mind though. Ray Kroc made a couple of pennies selling hamburger to the masses. Now that is not to say try, and compete w/ Wally World, or your local grocery chain. If you try, and do that you'll go broke faster than Enron did. I think the tile grout is getting to me LOLOL

Mike

jadak Posted 18 May 2008 , 1:48pm
post #22 of 34
Quote:
Originally Posted by MichelleM77

As far as the flier goes, I receive those in the mail, never received one just shoved on my car or to the side of my mailbox (I think that's illegal anyway). I don't have a problem with fliers that come in the mail. We just purchased our first house last month and have been getting a lot of mortgage insurance junk mail, but we also have been getting fliers from businesses that got our address (I'm guessing) from our real estate transfer being listed in the newspaper. I'm looking into that as an option for mailers since by the city and the amount they paid for their house, you kind of know if the homebuyer is "higher end" or not....and it's free in the newspaper!




This is more what I was thinking, Michelle. I wasn't planning to put them on people's doors or windshields. I don't think what I posted matched what I was thinking. icon_redface.gif Anyway, the newspaper is a great idea, IMHO, and I may look into that as well. Thanks.

chutzpah Posted 18 May 2008 , 3:32pm
post #23 of 34

Stop breathing the grout, Mikie.

I reapeat... PUT DOWN THE GROUT and back away slowly.

MichelleM77 Posted 18 May 2008 , 3:38pm
post #24 of 34

Whatcha workin on, Mike? I love playing with grout. Maybe because it's like icing. Sometimes you even get to put it in a pastry bag! icon_smile.gif

Mike1394 Posted 18 May 2008 , 3:41pm
post #25 of 34

LOLOL I'm laying ceramic tile in the renovation of my upstair apt. to soon be a comm. kitchen. OHHHH I like grout out of a pastry bag. I have to think on that one. It would sure aid in clean up. icon_biggrin.gif

Mike

lovinkakes Posted 19 May 2008 , 6:56am
post #26 of 34

This title "competition" caught my attention. This is one of the things my mom is saying to keep me from getting started. She's concerned there are so many people doing this already. Kind of related to this post, although you guys are talking money, she's talking saturation!

indydebi Posted 19 May 2008 , 12:41pm
post #27 of 34
Quote:
Originally Posted by lovinkakes

This title "competition" caught my attention. This is one of the things my mom is saying to keep me from getting started. She's concerned there are so many people doing this already. Kind of related to this post, although you guys are talking money, she's talking saturation!



I tell everyone that I don't have competition .... there is enough business for everyone! There are SO many different levels of caking. I dont' do fondant, so those who DO fondant aren't really competing with me ... we're doing different things. I refer lots of my overflow brides to other cake decorators in the area when I'm alreayd booked for that date. I do the same with other caterers.

It's all in how you look at it and how you handle it.

JenWhitlock Posted 19 May 2008 , 1:09pm
post #28 of 34

I agree with the previous posts, and again indydebi is so wise and to the point!

I just moved to a new smallish town and there is another baker here. she specializes in unique flavors and a 'as mom used to make' vibe. her stuff is really good but not that elegant. I enjoy doing the difficult highly decorated fondant and piping work, so that's how I see us fitting in here.

it's interesting too, I was pricing at $2/serving in CA and when I moved I saw it as an opportunity to reset my prices to $4/serving (I do a lot of fondant and gumpaste work). I've been working on my costs and, todate I have a handle on the cost of my cakes and my time (but I haven't worked on my electric and gas consumption) what's shocking to me is that even at $4/serving (well, plus a 10% discount to a lot of folks) I'm not making money! I am just covering my materials and most of my labor at $10/hour. I'm not as effiecent as most folks here, but I am doing enough cakes right now to value my time and my sleep icon_lol.gificon_cry.gif that I need to stick to my guns with my prices. (I should have kept my old job at $40/hour icon_lol.gif )

so I guess my advise is that workout your costs, don't loose money because you will burn out!!!

lovinkakes Posted 19 May 2008 , 1:12pm
post #29 of 34

Thanks. I think I bumbled something about "if you're doing what you love, then there's room in the world for everyone." You know, some crap even a 5 year old wouldn't buy. OK, I will try to be only so remotely as eloquent as you next time!

kneadacookie Posted 19 May 2008 , 1:18pm
post #30 of 34

Mike...where in michigan are you opening a kitchen??? are you renting out space or is this just for you??? inquiring minds...

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