Omg! The Competition Is $3.50/serving Higher Than Me!

Business By love2makecakes Updated 28 Oct 2008 , 2:39pm by Beckalita

love2makecakes Posted 27 Oct 2008 , 2:59pm
post #1 of 27

So I live in a small town, I have been in business for just under a year now. When I first started selling cakes I did what I thought would be best and ask what the local cake shop charges per/servings (starting price).... So I went with that.... I have been trying to stick with one price/serving for all cakes; this has become crazy since just this week I did a 3-tier (8-6-4) cake for $42???

TODAYS DELEMA........

Now I am working on a quote for a wedding cake. I have on my website what my starting price per serving for fondant and bc iced cakes. Today I decided to call another cake shop in the area to find out what they start at per serving for a cake covered in fondant. OMG! They are $3.50 more per serving then me! Or another way to look at it is they are over double my price! I in no way want to charge lower than the competition and only get orders because of this or make them start to bad mouth me. What do I do? I already told this couple my original price/serving... to make matters worse; they probably have already gotten a price from them too! I have yet to give them an actual quote, but before they left the cake testing they kept asking me what my estimate would be (I hate this!)....

Sorry this is so long!!!

26 replies
mcdonald Posted 27 Oct 2008 , 3:04pm
post #2 of 27

I I think you have to post something on your website or in the paper or where you advertise that effective such and such date, that your prices are now...... and raise your prices.

I too live in a small town without a bakery but most people aren't used to paying so much for cakes so I price myself low also but am getting ready to go up as well. With the cost of everything.. you have to

leah_s Posted 27 Oct 2008 , 3:04pm
post #3 of 27

Well, if you've committed to a price, then you're committed.

But I guess I don't understand fully. Brides always leave a consultation with a firm price quote that I will honor for 1 week. Always. The pricing on my website is always what I really charge. It's out there in the public domain so it has to be correct. Always. I check my competetion at least once a year, usually twice.

But if you've given them a price, you're committed.

kbw5780 Posted 27 Oct 2008 , 3:05pm
post #4 of 27

Well, I am no professional....more of a hobby for me.....but, I would go ahead and give them the cake for whatever the price is that you told them and then make some changes on your prices afterwards on your website or whatever. I don't think that they will bad mouth you....if anything, they will say that your price is better than everyone elses' prices. Good Luck!! Sorry I am no more help than this!

step0nmi Posted 27 Oct 2008 , 3:06pm
post #5 of 27

icon_surprised.gif $42 for a 3 teired cake!!?? icon_surprised.gif what were you thinking!?

ok...now that that is over. Do you have an actual business out of your home? are you licensed working in your own shop? all of these things make a difference when pricing.

but by my calculations that cake that you just stated is about half the price it should've been...and that is without seeing what kind of detail is on the cake.

did you already quote the couple? if so and they decide to go with you then you are just going to have to chalk it up to experience. you can't back down on a price that you already gave them.

it definitely sounds like you need to up your pricing! could you give us some examples so we can help you figure?

stephaniescakenj Posted 27 Oct 2008 , 3:06pm
post #6 of 27

I think if you already gave them your price per serving that you shouldn't change it but try to add in a few extra dollars elsewhere like on delivery or maybe charge extra for flowers or whatever it might be then for future customers increase your prices. You could probably tell them they caught you just before your prices are set to increase so if they order from you again or refer someone to you there's no sticker shock.

love2makecakes Posted 27 Oct 2008 , 3:08pm
post #7 of 27

Yes, I understand that I am committed to this price for this particular customer.

I am more or less wondering what I should do for future prices. I really do not want to charge the prices they charge because I think it is really high for this area and I really like to do fondant covered cakes so I want people to order them. At the same time I do not want them to think that I am under cutting their prices like that!

leah_s Posted 27 Oct 2008 , 3:11pm
post #8 of 27

But if others are selling fondant cakes at a much higher price, then there's a good market for them. Not a problem.

love2makecakes Posted 27 Oct 2008 , 3:12pm
post #9 of 27

I do have a business out of my house. I am licensed and work from a seperate commerical kitchen.

step0nmi Posted 27 Oct 2008 , 3:13pm
post #10 of 27
Quote:
Originally Posted by leahs

But if others are selling fondant cakes at a much higher price, then there's a good market for them. Not a problem.




totally agree.

even though you may be in a small town you still need to factor in your cost of the fondant. and even though fondant may seem 'easier' to do...it does sometimes take more time.

KatieKake Posted 27 Oct 2008 , 3:16pm
post #11 of 27

first I would think that you have to honor the price per serving you quoted to the couple, regardless of the competitions price.

Then sit down and decide what is a fair price to you, how much to you want to make per hour, do you make more fondant covered cakes, or more buttercream. Do you have a different price for each. Then double check on the competition, and then decide what your price will be.

myslady Posted 27 Oct 2008 , 3:16pm
post #12 of 27

I say this with only the best intentions

Your cakes should not be priced based on what you would pay. They should be priced what they are worth.

You are providing a custom service and your prices should reflect what custom work goes for in your area.

love2makecakes Posted 27 Oct 2008 , 3:18pm
post #13 of 27

See that is the thing. I do not think there is a huge market around here for fondant. Many people I do cakes for have never even tried it. I was guessing they charge that because A- They hate doing it. Or B- they can charge that because the people that go to them for fondant, really know that they want it and will pay whatever for it.

Besides myself.... I only even know of the to places I mentioned in my original post that sell cakes. (oh and the Walmart and grocery stores of course)

mommyle Posted 27 Oct 2008 , 3:22pm
post #14 of 27

by my calculations you are only charging $1.23 per serving. So for the competition to be charging $4.75 per serving is not unreasonable. If I were you, stick with the quoted price for now, but IMMEDIATELY change it to at least $3.50 per serving.

mixinvixen Posted 27 Oct 2008 , 3:59pm
post #15 of 27

i have no clue where you are located, but i swear i hope it's in a completely different state from me...or maybe where no other cake decorators are in a 150 mile radius...cause if not, then you are gonna have some seriously MADDDDDD designers knocking down your door!

in my opinion, WHO CARES what the other business thinks. it's your livelihood, and you do what's best for you. i think you should charge what they're charging though, if they do the same thing...obviously, if they're in business, there must be a demand for it.

3 tiers for $42...seriously? icon_eek.gifthumbsdown.gif

chutzpah Posted 27 Oct 2008 , 7:27pm
post #16 of 27

C'mon over here and let me slap you up right good, missy, 'cause if anyone deserves it, it is you.

"just this week I did a 3-tier (8-6-4) cake for $42"

How does it feel to be paying people to order cakes from you?



You are not only underpricing these other bakeries... you are UNDERCUTTING, which is way more serious. If you were in my city I'd be on my way to your house with a baseball bat, ready to have a nice little 'civilized' conversation.

step0nmi Posted 27 Oct 2008 , 7:34pm
post #17 of 27
Quote:
Originally Posted by chutzpah

C'mon over here and let me slap you up right good, missy, 'cause if anyone deserves it, it is you.

"just this week I did a 3-tier (8-6-4) cake for $42"

How does it feel to be paying people to order cakes from you?



You are not only underpricing these other bakeries... you are UNDERCUTTING, which is way more serious. If you were in my city I'd be on my way to your house with a baseball bat, ready to have a nice little 'civilized' conversation.




i knew you would be here sooner or later! thumbs_up.gif LOL
I was thinking of you the moment I read this thread icon_biggrin.gif

seriously...it is all in good fun though.

indydebi Posted 27 Oct 2008 , 9:25pm
post #18 of 27

What myslady said and DEFINITELY what chutz said!

If they're charging it, they're getting it, which means people ARE paying it. Stop feeling like your own personal social services dept thinking everyone "deserves" a nice cake, even if you go in the red to do it.

8/6/4 .... serves, what, about 24+12+6=42 servings? My price would have been $126.

Licensed or not, at those prices, you are not a business ... you're a hobbyist.

kelleym Posted 27 Oct 2008 , 10:03pm
post #19 of 27

I know you're taking a lot of flak for this, and I don't mean to beat you up, but did you actually sit tdown and figure out how much that 3-tier cake cost you to make? Ingredients, supplies (boards, dowels, foil), kitchen rent, etc? It's hard for me to imagine that $42 covered it. Never mind getting paid for your precious time and skill! Chutzpah is right, I think you are probably paying other people to make cakes for them. icon_sad.gif

mkolmar Posted 28 Oct 2008 , 12:25am
post #20 of 27

$42 icon_eek.gif *GASP*
You basically made a loss by this cake order. A very big loss.
Go through and re-figure out your expenses. This is everything from plastic wrap to the cake itself and don't forget the rent, insurance and gas it takes to drive and get the supplies and for delivery.
For goodness sakes don't forget to pay yourself also. Do you want to make $10 an hour or more? Add that into the cost of the cake.

I'll pick you up after that beating Chutzpah gave you icon_wink.gif but honestly she was right in what she wrote. I couldn't agree more with her and the others.

One thing you have to think about is what others are going to think of your pricing. Some will go with you just because you are the cheaper baker and *it's just cake*. Some will wonder why you are priced cheaper and take it to mean that your cakes are not as good as the other places and that's why they are cheaper. I know when I see something priced way lower than it should be it means either the product is crap or the person selling it has no clue what to charge and will be out of business in no time.

It's better to turn down an order that you won't make much money on rather than take it and waste valuable time you could be using to do something else, like promoting your business.

snarkybaker Posted 28 Oct 2008 , 12:54am
post #21 of 27

Our price for this cake would be a minimum of $149.00, and that's if we decided to do it, cause those little cakes are a pain in the backside.

I personally don't care if a baker decides to undercut on price. A business can't stay around forever losing money, and in this economy, it's probably the easiest way to thin the competition.

aligotmatt Posted 28 Oct 2008 , 1:11am
post #22 of 27

my competition here has a pretty healthy range, about $2 less than me per serving up to about $4 more than me per serving. I don't freak out about it. Okay, I did one day when I found out that they were making twice as much as me on the exact same cake. But then I thought, ya know what... I make a lot of money, and it would be nice to double it, but double the money comes double the pressure, and I'm good right here.

Anyway, $1 per serving for that 3 tier cake??? I agree with everyone else, re-check your costs...

love2makecakes Posted 28 Oct 2008 , 2:42am
post #23 of 27

Thanks for all the replies! I really have been meaning to post on here and ask some advice, but I guess I really didn't want to look like a dumb *&%$! I guess that is official anyway! icon_wink.gif

One of my biggest problem with the pricing is that I do it from home so I tend not to figure the cost of my kitchen, gas, electricity, water... Etc.
I really do need to raise my prices!

It sucks though that soooo many people around here have the "its just cake" mentality or they are completely ignorant to what actually goes into making a cake. Even my best friend will not pay over $50 for a cake and she knows how hard I work!

I am going to take all comments as constructive criticism and really re-evaluate what I need to be charging!!!!!!

Do you all list your prices on your websites? I am starting to think that maybe I should not list my starting price because then people do all this calculating their cake before I even quote them....

Like I said before I think that my first problem is that I went with the same price per serving that the other local cake shop uses. I am assuming now that they use that starting price and then tack on a bunch of charges from there?

Thanks again everyone!

indydebi Posted 28 Oct 2008 , 2:55am
post #24 of 27
Quote:
Originally Posted by crlovescakes

One of my biggest problem with the pricing is that I do it from home so I tend not to figure the cost of my kitchen, gas, electricity, water... Etc.



That's easy to do especially at home because you aren't getting a second and separate bill for it. What you need to consider is that if you ever move to a separate shop, that you WILL have those separate bills and your pricing will have to cover those .... your customers will go into shell-shock at the price jump.

Even you are never planning on moving to a separate shop, you need to think like a separate business.

Quote:
Originally Posted by crlovescakes

It sucks though that soooo many people around here have the "its just cake" mentality



My response? "Oh? You wanted a "Just Cake" cake? That would be Walmart ... AIsle 8 .... knock yourself out!"

Hubby says I should make a styro cake that is butter knife iced, with those little grocery store candy letters that spell out "happy birthday" (with it misspelled, of course!), with a sign that says "This is what you get when you want "just cake"." icon_lol.gif

Quote:
Originally Posted by crlovescakes

Do you all list your prices on your websites? I am starting to think that maybe I should not list my starting price because then people do all this calculating their cake before I even quote them....



I do, but I'm a flat rate price person .... I have only a couple of exceptions that have an extra Design Fee involved. But the fact that they know my price right up front, to me, is a good thing. It works as a pre-qualifier. If they can't afford me or dont' want to pay my price, then they aren't wasting my time. If they can't/won't pay your price when they see it on your website, what makes you think they can/will pay your price when you tell it to them over the phone?

There are a number of schools of thought on this issue ..... it's one of those that you pick whichever one works best for YOU. thumbs_up.gif

Quote:
Originally Posted by crlovescakes

Like I said before I think that my first problem is that I went with the same price per serving that the other local cake shop uses. I am assuming now that they use that starting price and then tack on a bunch of charges from there?



Very well could be.

gr8cakemaker Posted 28 Oct 2008 , 3:06am
post #25 of 27
Quote:
Originally Posted by myslady

I say this with only the best intentions

Your cakes should not be priced based on what you would pay. They should be priced what they are worth.

You are providing a custom service and your prices should reflect what custom work goes for in your area.




I totally agree with this! You have to factor in all of your costs, including your electric, water etc. THESE ARE ALL COSTS EVEN FOR A HOME BAKER!!!

By under cutting your prices this much, you are not only doing a HUGE disservice to yourself but to the other bakery in your town. Put a true value on your product or your customers will not truly value you!

Mike1394 Posted 28 Oct 2008 , 8:59am
post #26 of 27

I feel bad for ya. It probably cost close to 42 just to bake the cakes. You spent more in utilities than you made. I know this is all kind of shocking like right between the eyes thing. With 6 pans in the oven I'm going to assume you did this in two batches. These cakes took close to 2 1/2 hrs. Then you can add in preheat, and post heat time. Right off the bat make your prices 50 cents lower than the competition, before you even wipe the sleep out. You might not get as many orders, but you might also start getting more too.

Mike

Beckalita Posted 28 Oct 2008 , 2:39pm
post #27 of 27

I would have charged a MINIMUM of $90 for that 3-tier in buttercream, and that's cheap for my area. Recalculate your costs, and start charging accordingly! (Don't forget to include a proper hourly wage for your labor). Good Luck!

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