Advise On Doing Outsourcing

Business By jolmk Updated 31 Dec 2008 , 7:46pm by playingwithsugar

jolmk Posted 29 Dec 2008 , 5:44pm
post #1 of 7

I was asked to do desserts for a new cafe. I need help with pricing as doing this will add to my overhead expences. I know my cost to make my products, I just not sure how much to markup.

TIA
Jo

6 replies
KHalstead Posted 30 Dec 2008 , 8:17pm
post #2 of 7

I would charge the same as if they were ANY ol' customer ordering stuff and then let them mark it up from there to resell!

playingwithsugar Posted 30 Dec 2008 , 10:01pm
post #3 of 7

This is a subject which has been discussed often here on CC. I realize that not all posts wait for you to see them before they end up in the archives, so here's a synopsis of all the opinions I can remember -

Some people would agree with KHalstead, and charge the client full price, regardless as to whether you're their outsource or not.

Others believe that an appropriate discount should be given, according to your expenses.

Still others would add that there should be a minimum amount purchased during a certain time frame, let's pretend about 6-10 inch cakes per week, guaranteed.

And then others (usually legal bakers) will first ask you if you are selling cakes legally. If yes, they would then suggest liability insurance, if you don't already have it. If no, they will let you know that you are doing this illegally, usually with much emotion. And no, I'm not making fun of legal bakers - I'm just stating what they usually say.

Now for my opinion - If you are selling your products legally, then you should offer them a discount, the amount depending upon how much they and how often they purchase, nothing on a contingency basis, and the discount should not go beyond 25% (and that would be for a very large quantity of goods). I also feel that they should be responsible for properly storing said goods, so they can't try to return something that went bad because it was sitting without refrigeration for too long.

Good luck, if you choose to take on this endeavor -

Theresa icon_smile.gif

jolmk Posted 31 Dec 2008 , 2:23am
post #4 of 7

Thank You for your responses,

I am baking legally and I am also insured.

Since I live in Ohio, to be legal I have to report to the federal gov. If I make a large enough profit then I have to pay self employment tax. This adds more to the overhead cost. I just wondered if anyone had some kind of guidelines that they follow.

Thanks Again
Jo

Laura102777 Posted 31 Dec 2008 , 4:49pm
post #5 of 7
Quote:
Originally Posted by playingwithsugar

This is a subject which has been discussed often here on CC. I realize that not all posts wait for you to see them before they end up in the archives, so here's a synopsis of all the opinions I can remember -

Some people would agree with KHalstead, and charge the client full price, regardless as to whether you're their outsource or not.

Others believe that an appropriate discount should be given, according to your expenses.

Still others would add that there should be a minimum amount purchased during a certain time frame, let's pretend about 6-10 inch cakes per week, guaranteed.

And then others (usually legal bakers) will first ask you if you are selling cakes legally. If yes, they would then suggest liability insurance, if you don't already have it. If no, they will let you know that you are doing this illegally, usually with much emotion. And no, I'm not making fun of legal bakers - I'm just stating what they usually say.

Now for my opinion - If you are selling your products legally, then you should offer them a discount, the amount depending upon how much they and how often they purchase, nothing on a contingency basis, and the discount should not go beyond 25% (and that would be for a very large quantity of goods). I also feel that they should be responsible for properly storing said goods, so they can't try to return something that went bad because it was sitting without refrigeration for too long.

Good luck, if you choose to take on this endeavor -

Theresa icon_smile.gif




I love it! It's like the Cliffs Notes version of a CC thread. icon_lol.gif

indydebi Posted 31 Dec 2008 , 5:25pm
post #6 of 7
Quote:
Originally Posted by Laura102777

[I love it! It's like the Cliffs Notes version of a CC thread. icon_lol.gif




icon_lol.gificon_lol.gif Not to mention that she pegged it all perfectly!! icon_lol.gificon_lol.gif

playingwithsugar Posted 31 Dec 2008 , 7:46pm
post #7 of 7

Thanks, Gals! Your opinions mean a lot to me.

IndyDebi, since you're in business for so long, it especially means a lot to me to read that you agree with me so wholeheartedly. I feel so special!

Thanks again!

Jo, you might want to consider turning your business into an LLC (limited liability company) and paying yourself a salary instead. Talk with your accountant about doing this. LLCs cost less to establish, and have less annual paperwork than corporations.

Theresa icon_smile.gif

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