Undercharging When You're First Starting Out

Business By buggus Updated 1 Sep 2009 , 9:37pm by indydebi

buggus Posted 1 Sep 2009 , 3:22pm
post #1 of 24

Did you do this?? I'm starting to feel a little jipped now. I charge $1.50 per decorated cookie, and the minimum is 1 dozen, so I get a whopping $18 from an order. I really think I should charge more, or I'm not going to make any money?? But, I was told you should undercharge in the beginning just to get started? I'm starting to think this isn't so true..

23 replies
Kellbella Posted 1 Sep 2009 , 3:26pm
post #2 of 24

I'm guilty of that...I guess I feel like I'm not experienced enough yet to charge someone what they "really" should be charged. I'm doing a wedding cake soon (my first) for 100 people and am only going to charge the bride $100.00. icon_cry.gif

leah_s Posted 1 Sep 2009 , 3:31pm
post #3 of 24

Undercharging and especially undercharging on purpose, devalues our entire industry. How can I charge more than $1 per serving (and I do) when you've established that price in the marketplace? Never. And if you're ever going to be known as quality provider, then you have to charge. Otherwise, you establish your reputation right from the beginning as the "Cheap Cooke Place."

If you need to work on your skills,then do so. Make some lovely cookies using a new technique and give them to the local firehouse, retirement village, or children's home. But what you sell needs to be at market price, or you hurt all of us.

Nchanted1 Posted 1 Sep 2009 , 3:32pm
post #4 of 24

WHO TOLD YOU THAT? WRONG< WRONG< WRONG!

Charge enough to make a profit right from the get go. Have a 2 dozen minimum, and raise your prices right now.

You want to be the BEST cookie person in town, nor the cheapest. It's a luxury product, nobody needs it. If they want deluxe, they must pay deluxe.

Be professional and get paid as a professional. Otherwise you'll just burn out. HTH

LKing12 Posted 1 Sep 2009 , 3:36pm
post #5 of 24

Only your competitor would give you that advice. What happens when your customer, or their referrals orders again and the price has gone up? Yeah, set a fair market price.

LaBellaFlor Posted 1 Sep 2009 , 3:40pm
post #6 of 24

Chartge cheap now, you'll have hell raising your prices. You want to build up skill? Decorate for just family/friends until you feel comfortable charging more. By the way, an average cookie price is $5. Toba Garett (and we're not her of course, just giving an example) charges $15-25 PER cookie. Thats right, for your dozen price, some people get only 1 cookie.

majka_ze Posted 1 Sep 2009 , 3:42pm
post #7 of 24

No, don't undercharge. There are several reasons for this.
First, you have the same cost of ingredients. If you are beginning, it mostly means you work slower than an experienced baker / decorator. Your actual cost is higher - you need to count not only direct costs (meaning ingredients, gas or electricity) but the cost of your time as well.
Second, you will find that you don't want the customers looking for extra cheap cookies / cake you get now. They will not stay with you. You need reasonable prices (not the highest ones in your region, but somewhere in the middle field). When will the time come to charge normal prices? You need to start with it, but it is easier to start now slightly - very slightly lower and to bring new prices because of normal, yearly increase than start low and later get normal prices. Today's customers will see you charge twice as much as before, not that the "before" was too low.
It is easier to give discount for cakes. Mark it as discount if you do it, saying it is because you are building your portfolio and because of that, for this one design you could give special price. But quote the normal price at the invoice and spell the discount out. Make the same for birthday cakes, if you wish.
The same could be done for the cookies - quote normal price and than make special discount. The people need to see what is considered normal price.

Good luck to both of you.

sarkee Posted 1 Sep 2009 , 3:44pm
post #8 of 24

I have only been doing cakes for a short time. Finished classes in May. I was doing this "undercharging" as well. Mainly because the friend that I took classes with charges so little for her cakes. Was very busy at first with rave reviews of cakes provided. The last cake that was ordered I charged more for and don't know if it was coincidence or what, but I haven't had a cake order since. I don't want to do the "cheap" cakes, so I figured I should price myself accordingly, but it's a little discouraging. I don't rely on cakes as my "job". I work full time and have 3 girls.

3GCakes Posted 1 Sep 2009 , 3:44pm
post #9 of 24

You'll thank yourself for raising your prices.

Also, if you have a hard time negotiating face to face, tell them to email you what you want and you will give them a quote.

It is MUCH easier for me to give a price on something if I am emailing. Usually when someone asks for a price face-to-face, I tell them I will have to look it up and email them a price. Then when I email, especially if it is an acquaintance, I tell them "Let me know if that's agreeable". I don't want to scare off people I know, but I also don't want to be under the gun face-to-face with someone who may have sticker shock.

And I still do freebies for practice.

indydebi Posted 1 Sep 2009 , 4:00pm
post #10 of 24
Quote:
Originally Posted by buggus

But, I was told you should undercharge in the beginning just to get started? I'm starting to think this isn't so true..




who the he!! told you that? icon_surprised.gif I'm betting it was someone (1) with no business experience or (2) who wanted to buy your stuff CHEAP!!!

My understanding is that when you sell a house, the realtor gets 7% of the fee. Doesn't matter if the realtor has been selling houses for 20 years or 20 minutes.

Any profession has newbies and old pro's. Most of them charge about the same .... attorneys, accountants, doctors, dentists. I agree that there is a slight variance, but in general, no doctor I know says "well, I just opened my practice so I can only charge $25 for an office visit even tho' everyone else charges $75." (If you know one who does that, let me know so I can switch over to him!)

Sharaine Posted 1 Sep 2009 , 4:23pm
post #11 of 24

Ya'll are so smart here. I am so glad I can gain knowledge from you guys. Ya'll are the best. I was to thinking about undercharging, but not now.

costumeczar Posted 1 Sep 2009 , 4:33pm
post #12 of 24
Quote:
Originally Posted by indydebi

Quote:
Originally Posted by buggus

But, I was told you should undercharge in the beginning just to get started? I'm starting to think this isn't so true..



who the he!! told you that? icon_surprised.gif





This was my exact reaction too! I don't need to say it again, but I agree with what everyone else said already.

FullHouse Posted 1 Sep 2009 , 4:41pm
post #13 of 24

The people willing to order at your lower prices might not be the customer base you are ultimately wanting to target. Of course, they will line up for a custom cake at $1 per serving, but will those same people be willing to pay what a custom cake is really worth? You will find yourself very busy taking precious time from your family to give others a good deal. We all want things we can't afford, doesn't mean we should get them. You need to ask yourself how much your time with your family is worth and how much you need to profit in order to give up that time. You owe your family more than you owe the friend/aquaintance who would just love to have that custom cake at a bargain price.

-Tubbs Posted 1 Sep 2009 , 4:53pm
post #14 of 24

Double, or even triple your prices - today - and PRACTICE saying them in the mirror to your relection. I'm not kidding - it helps!! Believe you're worth it, and others will too.

buggus Posted 1 Sep 2009 , 5:07pm
post #15 of 24
Quote:
Originally Posted by FullHouse

You owe your family more than you owe the friend/aquaintance who would just love to have that custom cake at a bargain price.


This line really stuck out for me. It's the friends/acquaintances that have been wanting me to cut deals. I didn't with one person, as I've seen her 1 time in 10 years recently, now she feels some sense of entitlement. I don't friggen think so!!

The person who told me to undercharge was a competitor and I also felt like because I was starting out, I was trying to establish some footing.

I've raised my prices now and bit and will continue to practice. I need the extra cash actually, I started this biz not only because I love it, but we need an extra income to pay down some debt.

indydebi Posted 1 Sep 2009 , 5:38pm
post #16 of 24

[quote="buggus"]

Quote:
Originally Posted by FullHouse

The person who told me to undercharge was a competitor.....



I learned this in my corporate days .... when someone tried to get me to lower my price because "....I can get it from this other manufacturer for this price!" (so why are you trying to buy from me, then?), I learned to tell them, "Oh PLEASE let my competitor make it for you at that price! Because at that price, I won't have to worry about them being my competitor anymore!"

FullHouse Posted 1 Sep 2009 , 6:48pm
post #17 of 24

[quote="indydebi"]

Quote:
Originally Posted by buggus

Quote:
Originally Posted by FullHouse

The person who told me to undercharge was a competitor.....


I learned this in my corporate days .... when someone tried to get me to lower my price because "....I can get it from this other manufacturer for this price!" (so why are you trying to buy from me, then?), I learned to tell them, "Oh PLEASE let my competitor make it for you at that price! Because at that price, I won't have to worry about them being my competitor anymore!"




hmmm... that wasn't my quote. Like the advice though icon_smile.gif.

indydebi Posted 1 Sep 2009 , 7:01pm
post #18 of 24

[quote="FullHouse"]

Quote:
Originally Posted by indydebi

Quote:
Originally Posted by buggus

Quote:
Originally Posted by FullHouse

The person who told me to undercharge was a competitor.....


I learned this in my corporate days .... when someone tried to get me to lower my price because "....I can get it from this other manufacturer for this price!" (so why are you trying to buy from me, then?), I learned to tell them, "Oh PLEASE let my competitor make it for you at that price! Because at that price, I won't have to worry about them being my competitor anymore!"



hmmm... that wasn't my quote. Like the advice though icon_smile.gif.




ooops! Must have err'd in the editing! icon_redface.gif

Carolynlovescake Posted 1 Sep 2009 , 7:06pm
post #19 of 24
Quote:
Originally Posted by TubbsCookies

Believe you're worth it, and others will too.




This is the best quote that needs to be applied to all aspects of our lives.

If you don't believe in yourself, no one else will either.


As for starting cheap... don't. When it comes time to up your prices people will leave you for another "cheap" person.

buggus Posted 1 Sep 2009 , 7:08pm
post #20 of 24

Okay, so what's the average you would charge for a slice of wedding cake? Just a ballpark figure?

Wesha Posted 1 Sep 2009 , 7:14pm
post #21 of 24
Quote:
Originally Posted by buggus

Okay, so what's the average you would charge for a slice of wedding cake? Just a ballpark figure?




For buttercream 3.00 per serving and 4.00 for fondant. I had someone to reach out to me today and wanted a two tier cake to feed 50 people. Once I quoted a base price of 150.00, I did not hear back from her. I explained that tiered cake prices are the same as wedding cake prices. (Learned that from Indy).

CeeTee Posted 1 Sep 2009 , 7:56pm
post #22 of 24

Undercharging on cakes is only good for

1) Killing any deisre to make cakes either as a living or a hobby
2) Plummeting your esteem to new depths
3) Finding out who your real friends are
4) Pharmacutecal companies who profit off your sudden need for massive amounts of Excedrine, Tums, and Prozac.

dreamcakesmom Posted 1 Sep 2009 , 9:27pm
post #23 of 24

Obviously you have gotten a ton of feedback but wanted to tell you I was also in your shoes. I started selling my cakes just december (0icon_cool.gif and started doing so at a ridiculously low rate. I think the first was a 1/4 sheet for like $25. I VERY quickly reevaluated and realized both the ingredients and my time are worth well more than that so I stepped back from production and focused on the business side of things for a while. I really looked at cost of ingredients, how much time I was spending on each step, the baking, decorating, etc. Also, I spent some tiem researching local cake makers, everywhere from established store front bakeries to newer in home cake artists. Soon after changed my prices to match my competitors of what I considered equal skill. I have 2 rules now. 1. I will not undervalu the talent I do have 2. I will know my limits. I will not take a job that requires a skill level that I have not accumulated. I will politely refer them to a baker who can and in the long run I know this will establish my name as a reputable baker. I keep a list of clients and people who have enquired for prices, etc. and remind them via email to check back to see my latest designs so that they can see the repertoire of work I am establish growing. Good luck.

indydebi Posted 1 Sep 2009 , 9:37pm
post #24 of 24

A common thread in these pricing threads, that I see, is that people will account for the price of ingredients but not for their time.

I highly recommend that as Onceuponadreamcakes states, step back and look at the business side.

Pretend you are an employee for a baker. Pretend that every time you do something for a cake, you have to "clock in". When you're on the phone or talking to the client face to face, when you're driving to the store for supplies (and by the way, you'd keep track of your gas or mileage so your "employer" could reimburse you for travel expenses), the actual production time, clean up time, delivery time. Once you are back home with your feet propped up .... clock out.

If you were an employee, how much would you be paid to make this cake? Not counting the ingredient expense, just your time?

I think most would be very surprised.

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