I Have An Overhelming Urge To Undercharge....

Decorating By Mommy_Cakes Updated 19 Apr 2009 , 2:41pm by LP4702

Mommy_Cakes Posted 14 Apr 2009 , 10:07am
post #1 of 46

A lady from work came by my desk yesturday and asked if I ever took 'orders' for cakes.
Now I'm just a hobbiest, however I made a ton of cheesecakes for Christmas and a good majority of my practice cakes have shown up in the kitchen at work.
She asked if I could do a sheet cake for a retirement party that is coming up, I told her I didn't have the right size pan, but I had a 16X16 that would feed over 120 ppl. She asked me for a price so I told her I'd get back with her.

Now they could get a full sheet cake at a local grocerty store for $91.75. I have this overhelming urge to quote them $85.

Like I said I'm a hobbiest, and I could deffinately use the practice. Also we work for a government agency, (here come the economy crap) we haven't had raises in over a year and now we my be facing paycuts and layoffs. And the ppl in the office will be paying for this themselves, and chances are I would end up baking something for it anyways, so it's not like I'm having to do any 'extra work'.

Oh yeah, they want a WASC with raspberry filling.

45 replies
playingwithsugar Posted 14 Apr 2009 , 10:52am
post #2 of 46

Oh, I can envision the hairs on the back of the necks of the pros here - they're standing up on end already. Undercutting on price is a controversial subject here.

Are you planning on making a 2 layer cake? Because that's what you must do to make 120 serves out of a 16x16, whereas the sheet cake they will get from the grocer is only a 1 layer cake. 2 layers, twice the price. Plus fruit filling? All for less than a buck a serve?

For that price, you can do all my cakes, too.

You will end up building a reputation for being easy to get taken advantage of, which would follow you, in the event you would decide to go pro.

Theresa icon_smile.gif

Mommy_Cakes Posted 14 Apr 2009 , 11:12am
post #3 of 46

No offense to the pros., but if they didn't get it from me they would go to that specific grocery store. I've tried different ways for writting it up to justify it to myself...and I just can't.

I don't want the rep. of being easy, and that's why I wanted to right it up so they could see that it was just a disc. for an office function. I especially can't write it up now that I've tried with my price coming in under the grocery stores with there being 38 more servings.....hmmmm.

here's the kicker, they're gonna end up with my cake there anyways, regarless if they pay or not, it's just the size that will be different.

artscallion Posted 14 Apr 2009 , 11:14am
post #4 of 46

I don't see prices of other goods and services going down with the economy. And that includes the cost of the things you need to make that cake. In fact they've gone up!

And what happens when the economy recovers and everyone's flush with money? Suddenly you ask $200 for the same cake? Do you think they'll forget that you can do it for $85? Once you go cheap, you get a reputation that is nearly impossible to escape.

eilidh Posted 14 Apr 2009 , 11:14am
post #5 of 46

Dffiultons I have been in quite a similar position. I have been doing cakes at cost for friends etc till i build up a portfolio and better skills. I saw it as everyones a winner as I helped make cakes for kids parties at cost as a gift and they got a nice cake that others got to see (building up a customer base).

But the reality of it is long term more people ask ...a wider friendship circle and it becomes less fun than doing a cheap cake for close friends. Also, these people that get it cheap for the first few months are NEVER going to be the people who buy it at the real price when you charge what you should so unless you make it VERY clear it is a one off practice cake while you build up experience then no I would not get into that situation.

Hindsight is a wonderful thing!

Mommy_Cakes Posted 14 Apr 2009 , 11:32am
post #6 of 46

I think subconciously (sp?) I posted this so ppl would talk me out of it....haha I think it worked.

Truth is they won't even know it's a practice cake because they already love my cakes. I guess I'll give them the regular price and then I'll subtract a little as 'my contribution'

If they want WASC they'll just have to pay, or get vanilla at the grocery store....look at that I can see my backbone growing already icon_lol.gif

Melvira Posted 14 Apr 2009 , 11:51am
post #7 of 46
Quote:
Originally Posted by Mommy_Cakes

I think subconciously (sp?) I posted this so ppl would talk me out of it....haha I think it worked.




I totally get what you mean... you just need that nudge to do 'the right thing'. thumbs_up.gif Well here it is! DON'T UNDERCHARGE! If you do, I will direct K8Memphis to this thread and you will be very sorry you ever said the word CAKE. Hehehehe. I am, of course, just teasing. But she is perhaps the most vocal advocate for people not undercutting themselves and other bakers. She will quickly school you on this issue, and all the detrimental fall out from doing so.

Honestly, I wish you wouldn't call it a 'practice' cake. That implies that you are bad and need to work on your skills. EVERY single cake you do improves you somehow, whether you've been doing it for days or decades. Whether it's something you've done a hundred times, or your first time with a new skill, it's only 'practice' if you're using a piping bag on a piece of cardboard, a la the Wilton courses. (You know what I mean!)

FromScratch Posted 14 Apr 2009 , 11:53am
post #8 of 46

Wow... at that price you will burn yourself out quickly. You cannot compete with the grocery store... PERIOD. They buy ingredients is SUPER bulk and make thousands of cakes per year. They aren't looking to make a living selling cakes... their cakes are there as an impulse buy and to get you into the bakery section. So say it with me again... "I canNOT, nor will I try to, compete with grocery store prices... NO WAY... NO HOW." icon_wink.gif

The thing is, that a lot of homebakers (legal or otherwise) couldn't make that cake for much less than $85, nevermind sell it for that. (I know I couldn't as most of my recipes cost me about $1/serving just in ingredients) You will be making next to nothing for it. And what is your regular price? Have you priced out how much it costs you to make your cakes? I think if you do you will see that you aren't doing that much more than breaking even. Your time is what they are paying your for... not the ingredients. You aren't providing them with flour, eggs, butter, and all that goes into a cake. You are providing them with the service of shopping for those ingredients... taking them home... mixing and baking... leveling and filling... icing and decorating... and then cleaning up after the mess. That's the missing part of most people's caking equation. They get caught up on the cost of the ingredients and forget that the most important factor of all is their time.

Keep that backbone growing!! icon_smile.gif

helpalwaysappreciated Posted 14 Apr 2009 , 11:58am
post #9 of 46

Hi,
I also have a question regarding cakes and prices. It can be tricky!
I am not sure what the going rate for a tiered rate would be,
a 4." high filled 12" base with a 4" high filled 8" round covered with fondant with a big bow, lots of flowers design etc.
If you have any ideas what the basic cost may be I would appreciate it.
Is there any trick to calculating the cost? ie. cost of supplies x2?
Thanks
Vanessa

Melvira Posted 14 Apr 2009 , 12:11pm
post #10 of 46

Vanessa, those prices are going to be determined by your location. There is no industry standard honestly. It's all about where you're located and what the people around you charge. You should check into some local bakeries and find out what they charge so you can be competitive without low balling them or yourself. Some people will tell you they get $5, $7, even $10 a serving for something like that, but here in the midwest I can't charge that. It would be more like $3. So, it's like real estate... location, location, location!

-K8memphis Posted 14 Apr 2009 , 12:26pm
post #11 of 46

Idea for you. Mental exercise.

Pretend your daughter needs to price this cake.
What would you advise your little munchkin
to place a dollar value on her time and life to sell a cake
knowing what you know.

It ain't easy is it.

tx_cupcake Posted 14 Apr 2009 , 12:29pm
post #12 of 46

When you don't charge enough, yes in theory you hurt the industry as a whole, but mostly you are only hurting yourself. You teach others how to treat you in life and in cake!

jguilbeau Posted 14 Apr 2009 , 12:34pm
post #13 of 46

I have given discounts for family and personal friends. I just show the discount as a labor discount. That way they know that is not my normal labor charge.

I feel you do what you feel is best for you. I am like you my cake decorating is more of a hobby, not a business. My friends and family know my price would go up if it were a business. But since I am not a business I do not have to compete with business prices.

Although I have started taking some orders for business, I still charge family and friends differently.

helpalwaysappreciated Posted 14 Apr 2009 , 12:39pm
post #14 of 46

I agree that undercharging creates a multitude of problems, I have similiar issues about charging for my livelihood, however, cakes are new territory and I love equations to figure things out, it makes it much more simple. As a new caker, if I totally took all my time into consideration, my cake would be beutiful but approx. well something crazy like 800$+, I don't think that is really competitive!!!! unfortunatly so!
I will check with locals to see what they charge to give me a start.
Thanks for the input everyone.
Vanessa

-K8memphis Posted 14 Apr 2009 , 12:43pm
post #15 of 46

I mean you could charge exactly what the grocery store charges (at least) and then they get a homemade cake, delivered, and they help you out too.

It's not that you are providing a charity for them.
Think of it as them supporting you.

Mencked Posted 14 Apr 2009 , 12:47pm
post #16 of 46

Oh K8, I love that example. We certainly wouldn't want our daughter to be taken advantage of, so why would we want to be taken advantage of either.........good one! And I agree, don't undercharge now, keep that backbone growing. Sit down and figure out the actual $$ amount it costs for ingredients from vanilla to pans and parchment paper. Then figure out how many hours this will take.....divide by profit.....truly an eye opener!! My basic 11X15 costs about $12 to make in ingredients alone. I live in an area where prices for cakes (from really great decorators) are around $1.65/wedding cake serving with fondant accents etc..... YIKES!

tx_cupcake Posted 14 Apr 2009 , 12:56pm
post #17 of 46
Quote:
Originally Posted by Mencked

I live in an area where prices for cakes (from really great decorators) is around $1.65/wedding cake serving with fondant accents etc..... YIKES!




icon_eek.gif Whoa! That is insane! That means that you don't even make minimum wage on some cakes. icon_cry.gif

Melvira Posted 14 Apr 2009 , 12:59pm
post #18 of 46

Um, just FYI, I didn't actually sic k8 on you... I think she just has a second sense about these threads. She can smell 'em! icon_lol.gif

AbouttheCake Posted 14 Apr 2009 , 1:01pm
post #19 of 46

You are free to charge what you like, however, you shouldn't undercut the grocery store just to get the order. If they don't like the price, let them go to the grocery store. That's what the grocery store is for.

My cost, as in what I pay for ingredients and utilities, overhead, etc. is $1.65/serving. Yes, I know that sounds high, but that's what it is. I have everything costed out to the pieces of paper and ink for the printer. It all matters. My over head alone (and I work from home no less) is $12.85/hour. So if I only charge $1.00/serving, I am paying them to make the cake.

I am a professional and I do not take offense that you could undercut, however, you are not only undercutting the other bakeries...grocery store or not, you are undercutting your own worth.

fabulosity Posted 14 Apr 2009 , 1:19pm
post #20 of 46

I too am guilty of not charging what I want to. I am new at this too and get all of my orders from family and friends. I do a lot of cakes that are presents also. I feel like I don't make any money out of them and I am taking time away from my kids to do it. I also feel like I am at this point where I am kind of stuck here because I started giving people a discount because they are family or friends. I just can't do this and not make money.

I too need to grow a backbone.

Melvira Posted 14 Apr 2009 , 1:27pm
post #21 of 46
Quote:
Originally Posted by fabulosity

I too am guilty of not charging what I want to. I am new at this too and get all of my orders from family and friends. I do a lot of cakes that are presents also. I feel like I don't make any money out of them and I am taking time away from my kids to do it. I also feel like I am at this point where I am kind of stuck here because I started giving people a discount because they are family or friends. I just can't do this and not make money.

I too need to grow a backbone.




One good way to handle it: Make up a price list or 'menu' for the work you do. Have your REGLUAR prices figured and well displayed, and don't make them crazy cheap. Then give this to your friends and family, letting them know you just want them to have an 'up to date' price list in case they, or someone they know, needs something. You can then say (if you are so inclined) "These prices don't reflect your family discount of XX%." Essentially letting them know up front what it would cost if they want something. That way you don't feel the crunch to come up with some assinine cheap number when they call you! And, if they can't afford or don't want to afford what you charge, they know up front so there is no embarassing exchange. thumbs_up.gif

Mencked Posted 14 Apr 2009 , 1:35pm
post #22 of 46

[quote=" Whoa! That is insane! That means that you don't even make minimum wage on some cakes. icon_cry.gif[/quote]

That is for sure!!!!!

tx_cupcake Posted 14 Apr 2009 , 1:45pm
post #23 of 46
Quote:
Originally Posted by fabulosity

I too am guilty of not charging what I want to. I am new at this too and get all of my orders from family and friends. I do a lot of cakes that are presents also. I feel like I don't make any money out of them and I am taking time away from my kids to do it. I also feel like I am at this point where I am kind of stuck here because I started giving people a discount because they are family or friends. I just can't do this and not make money.

I too need to grow a backbone.




I hate to say it but family and friends are the worst when it comes to having to pay full price. I do all of the family birthday cakes, and for my close friends as well because I WANT to. However, the minute I'm expected to do it, someone's getting a bill.

costumeczar Posted 14 Apr 2009 , 1:47pm
post #24 of 46
Quote:
Originally Posted by Mommy_Cakes


here's the kicker, they're gonna end up with my cake there anyways, regarless if they pay or not, it's just the size that will be different.





Uhhhh...Why?? icon_confused.gif

clovely Posted 14 Apr 2009 , 1:51pm
post #25 of 46

I have struggled with "pricing" for a long time even though I'm strictly a "hobbyist" - because I'm in a state where I can't legally do this from my home and have no other options. Someone above was right when they said doing it for "friends" is a great way to expand your circle of "friends"! And it quickly becomes more stressful and no fun. I just don't enjoy spending hours and hours slaving away for strangers.

I started to realize, as I get a little more skilled and start working with more specialty and custom orders and materials (the kind of cakes I enjoy doing), and maybe as prices have creeped up, I'm not even covering the costs of my "hobby" by ball-parking what I need or being vague about my costs for reimbursement. I have so many people offer to go buy me the stuff - maybe I should make up a grocery list and say "knock yourself out" - they'd faint if they saw everything I actually need! But I am now trying to compile a reasonable and realistic list of materials and costs to share with people.

Pro's here are getting hundreds of dollars for cakes I'm getting "reimbursed" $50 for! I don't consider myself undercutting the pro's because I'm not one, I'm very upfront about that, and I'm in a state that makes a very clear distinction. I tell people they CAN'T pay me to do this. But I've realized I've undercut myself a lot of times! I agree with others who say you don't do yourself any favors either that way.

FromScratch Posted 14 Apr 2009 , 1:53pm
post #26 of 46
Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by Mommy_Cakes


here's the kicker, they're gonna end up with my cake there anyways, regarless if they pay or not, it's just the size that will be different.




Uhhhh...Why?? icon_confused.gif




I missed this part in reading your post the first time... they won't pay because they just expect you to bring it in. STOP... get yourself some dummies to practice new techniques on so there are no leftover cakes to share. When they stop getting cakes just because... maybe they will appreciate what they had.

kweenofengland Posted 14 Apr 2009 , 1:59pm
post #27 of 46

OMG! be prepared to start getting pounded by 'your not a legit business and you shouldnt charge anything, regardless....' I know I did! Also got criticized for undercutting legit businesses....you stepped on a landmind!

mommyle Posted 14 Apr 2009 , 1:59pm
post #28 of 46

Here is my spreadsheet for pricing. Now, I haven't updated for a while, so prices might be out, but then the pricing in Canada seems to be higher than in the States, so at this point it might be a wash.

This will give you the exact COST of making a cake. No extra for time and effort.

if you have any questions, please feel free to PM me.

-K8memphis Posted 14 Apr 2009 , 2:15pm
post #29 of 46
Quote:
Originally Posted by Melvira

Um, just FYI, I didn't actually sic k8 on you... I think she just has a second sense about these threads. She can smell 'em! icon_lol.gif




Apart from hoaxes, some of my favorite threads are pricing ones. icon_biggrin.gif

Rahhhr.

You scared??? icon_lol.gificon_lol.gif

But there's a business person's brain being overshadowed and pummeled by that beating timid heart there. Op, you have asked the essential question of income caking and you know you want to be talked off the ledge of underpricing.

You know you don't want your Munchkin to sell her/his little self short. It ain't right. Only one person can teach 'em that. And it ain't about the money.

costumeczar Posted 14 Apr 2009 , 2:24pm
post #30 of 46
Quote:
Originally Posted by clovely


Pro's here are getting hundreds of dollars for cakes I'm getting "reimbursed" $50 for! I don't consider myself undercutting the pro's because I'm not one, I'm very upfront about that, and I'm in a state that makes a very clear distinction. I tell people they CAN'T pay me to do this. But I've realized I've undercut myself a lot of times! I agree with others who say you don't do yourself any favors either that way.




I'm very big on working legally, but that isn't what I want to address here...If you are selling for less than the market price then you ARE undercutting people. Regardless of whether you are professional or not, selling lowball is undercutting businesses.

I'm glad to see that you've also discovered that underpricing isn't a good time. It will make you hate doing cakes faster than anything.

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