I've been getting a lot of feedback lately that my prices are too low and that I need to raise them. I know that I am in the average range for high end cakes in my area and don't think that my prices are unreasonably low. (And I'm pretty confident in my abilities and and have no problem asking for what I'm worth.)
All my friends and loved ones, of course, think that I should raise my prices. I don't really buy into it, because, well, they're my friends and family. Lately, though, I've been hearing it from lots of other people.
I recently did made a 1st birthday cake for a client who threw a really nice party for her little girl. She throws a ton of parties, very high end, and is an excellent hostess. She told me that, for what whe got, she expected to pay at least double what I charged (!!!) She told me that several of her friends at the party had assumed that she paid at least double to triple what I charged. Several of them have taken to calling me the "cheap" cake-maker (hardly the image I want, as I strive to be very upscale and exclusive). Now, I did give her a discount (she didn't ask for one, I just gave one to her, because we're pretty friendly and because she was such a pleasure to work with) and I also gave her the smash cake and delivery for free (again, unasked) -- we attended the party with kids in tow, so it was no problem for me to bring it. I probably gave her a 10 - 15% total discount off what I would have charged someone I didn't know. She told me roughly what she wanted, and I gave her a price. Then, when I showed up with the cake, she insisted on giving me more, which I refused.
The caterer at the party also told me I needed to up my prices and that I charged less than other cake-makers he used and referred out (and since that party has called me several times for cakes).
An aquaintance of mine (her son goes to school with my daughter) who owns a successful catering business also advised me to raise my prices, telling me that I'm under-market for the quality of the work I do. These are just a few examples. I am starting to hear it pretty regularly from all sorts of different people.
I don't know if these people are saying this to flatter me, kind of like a nice compliment, or because they actually mean it. I get enough business that I turn a fair amount away... I guess my question is, at what point should a person raise their prices? I do know that I'm at the high end of the price spectrum already and don't want to my business to completely die from the higher prices. BTW, I've been in business, legitimately, for less than a year and am mostly a one-woman operation. I think it might be early for a price hike already? Please let me know what you think... TIA, CCers!
Well, what are you charging? Without numbers it's hard to tell if you are selling your stuff too cheap!
Geesh, how many direct "hints" do you have to have before you get the message?
C'mon over here and let me SLAP YOU UP.
You said it yourself, folks are calling you the cheap cake lady and you don't want that. WELL FOR GD'S SAKE DO SOMETHING ABOUT IT THEN.
We can't change your situation for you, only you have the power to do that. If you are too much the wimp to do anything then you'll just have to continue being the cheap cake lady (and have everyone laugh behind your back 'cause they're getting good cakes so CHEAPLY).
I'd say you are overdue. If even your CUSTOMERS are telling you that you are not charging enough, that's a sure-fire sign you need to reassess your prices.
You may have people balk if you raise your prices, but you also have to look at the flip side of it. The more you make on one cake, the less cakes you have to make.
Making one cake and charging $120 for it is better than making two of the same size cakes and only charging $60 a piece.
If everyone is telling you you are too cheap then take what they are saying to heart and raise your prices.
What other signs do you need exactly??!! RAISE YOUR PRICES
Generally, I'd say it's time for a price increase if: (1) You are getting more orders than you want, (2) You are not making enough money for it to be worth the time put into it, or (3) People are referring to you as "The Cheap Cake Lady"!
Clearly, if several of you customers are telling you your prices are too low and trying to give you more money, that you must not be charging enough for higher end cakes they are getting. Your prices may be average to high average for a basic decorated cake, but obviously you must be giving people much more than basic, so charge more for those cakes.
Thanks so much for all the replies -- for some reason, I wasn't notified via email like I normally am that I had received any!
OK, so the cake I did where my client and the caterer (and the friends) told me to raise my prices was a 10-8-6 stacked, fondant, with a gumpaste figurine topper (not crazy detailed), some loop bows, and some basic fondant decorations for a 1 yr old's party, which is 74 servings per Wilton. I charged $785 (including a 10-15% discount). My base prices are $7/ serving and up for buttercream and $8/serving and up for fondant. Sculpted cakes are typically $10-$15/ serving and up. I've done kids' cakes for over $2000 (for 100-150 people). I maintain a $600 minimum on decorated cakes and a $250 for dessert cakes (which start at $5/ serving). I am almost on par with the high-end and well-established bakeries in town. I do charge the same base price but tend to charge less for the "extras" above the base price. I've only made one wedding cake and make primarily birthday and other celebration cakes.
Now, I know I do a good job at what I do. But I haven't been decorating that long. And, I think that I charge a goodly amount for the product I make. I am getting lots of feedback to raise prices, but *I* feel like I charge a fair and reasonable rate... Of course, from a business perspective, I understand that I'm not the one paying for it, and if others are telling me to up the prices (especially clients), maybe I should heed their advice...
Well, you are definitely high-end...the only thing I would get from my customers at those prices are turning them into cake decorators, because my market would not pay those prices!!LOL
To me, it doesn't seem as if you're undercharging. If you have good business and are doing well with your current pricing, perhaps you can stay where you are and increase in the future. However, if you go by others' recommendations, maybe you can increase slightly and still maintain your flow of customers. Maybe that can be your 1st anniversary "gift"...upping the price and celebrating a good 1st business year!