margaretb, I also am a hobby baker. As part of the fun of my hobby, I have made up a price list with all the pan sizes I have, a chart that I figured from scratch with serving sizes of a party cake(I went back to the mathmatical formula for area and found mistakes in the Wilton chart and also the Earlene's charts), the price for all the different sizes at $2.00 a serving for tiered cake and an official-looking invoice. When I make a "free" cake, I plug the prices into the invoice and total them up, and then take off the "discount" usually a "family discount". That way my dear family members know exactly what the cake would have cost. With computers these days, this all only takes a couple of minutes and makes me really feel that I am making a contribution to the family event.
I don't charge yet for cakes (I've made fewer than ten but love it) but I work in the costume industry and I see a lot of similarities because we all are selling a product or service that people don't need often or aren't always familiar with.
I've learned that if you price too low, folks will have a lower percieved value of your product (and therefore your time). I've seen this in my tshirt business and our costume business. When our prices were lower people were more hesitant to order from us--I think they were unsure of the quality.
You're always going to have people who balk at your prices. I'm more than happy at the costume shop to let them shop around. I'm confident in our services. It was hard at first, so I did a LOT of research on other shops and did a long study on our costs and now I don't have any problem saying yes, that's the price.
I know how it's difficult, and I'm sure it will be hard to get used to again if I ever do have someone who wants to buy a cake from me. Especially doing something new. But I've seen the cakes on the site and they're great!
I noticed you said earlier that you were "just under" other bakeries in town (or something similar) and my first thought when I read that was:
$1.50 is 50% more than $1. Not what I'd consider "just under". It still may be appropriate or fair, only you know exactly how your product compares to theirs--but my guess would be maybe stay 10-20% below the competition if you feel their product deserves a higher price for whatever reason. You don't want to make customers feel that their price is way too high because your price is so low either.
julitre1 I completely understand where you are coming from. Everyone is very pleased with my work as well. My cakes taste better, look better, and are completely customizable to the clients tastes. I offer over 30 cake flavors and over 20 cake fillings, but I still dont have a large client list or repeat orders. I am having a hard time getting my name out there as well. I will be in business for almost a year now and am averaging only 40$ a month (two cakes). any suggestions anyone?
$1.50 is 50% more than $1.
Charging 50% less than your competitor is absolutely NOT undercharging, it's undercutting.
I'm so glad you two put this in perspective by showing the PERCENTAGE difference. Folks, you can't think of this as "I'm ONLY 50 cents lower." You have to look at the big picture and see that you are 50 PERCENT lower. This also helps you when you're figuring your costs compared to the ever changing cost increases we are dealing with.
I was whining because flour had gone up approx $5 on a 5-lb bag since my last delivery. A friend was poo-poo'ing it because "oh surely you can absorb a lousy $5." So I had to bi*ch slap some sense into her and TRY to get her to understand this represented a 31% increase. If I only do a 20% price increase, then even tho' my price went up, I'm making LESS money. Yes, I can absorb $5 on flour, but I can't combat a 20% price increase against a 31% cost increase!
You can't think of it as only 50 cents or only $5 .... you have to keep the big picture in front of you.
Ok I hate when home bakers say they dont have overhead like gas and electricity so they are lower then bakers. First of all how do you bake that cake? Maybe over a lump of coal? We all have overhead and you should include that in your cost. Gas, Electricty, water, dish detergent, gas for getting supplies. Get a grip and dont be afraid to charge what you are worth. I charge 2.50 per serving and that's still low. Look at your prices and really figure out your cost and charge accordingly. I doesnt matter how long you have been decorating cakes. let me ask you this when you go to the doctor does he charge you less because he is just out of medical school? How about the dentist? The answer is NO! Their price is their price period. You should have pride in your work and make others pay for your gift. Get some pride and let your low cake esteem take a walk!
My thinking has always been that pricing should be a bit above the bakery. They have volume price discounts on ingredients, boxes, etc. You pay for lights, heat, etc wherever you are.
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