Undercharge Queen :(

Decorating By nicoles0419 Updated 19 Feb 2010 , 1:25pm by costumeczar

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Mike1394 Posted 15 Feb 2010 , 2:21pm
post #31 of 70
Quote:
Originally Posted by jessielou

This is SO me!!! And I hate myself for it icon_mad.gif Charging is my biggest problem! Im a total people pleaser and big fat chicken! thumbsdown.gif I would actually be happy to make ten bucks off a cake as i usually barely brake even (IF i do!) I am just starting out so I kinda feel like I shouldnt be charging that much. As others have said I just dont think my cakes are good enough to be charging as much. And I DEFINITLY have a hard time when its a good friend. Im doing a wedding cake for a friends daughter in may and have been procrastinating on giving her a price.. icon_sad.gif Its four teirs with bc and fondant accents for 150 ppl. Is 200 fair?




Yeah it's fair TO THE PEOPLE GETTING THE CAKE.

Mike

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costumeczar Posted 15 Feb 2010 , 2:43pm
post #32 of 70
Quote:
Originally Posted by jessielou

Im doing a wedding cake for a friends daughter in may and have been procrastinating on giving her a price.. icon_sad.gif Its four teirs with bc and fondant accents for 150 ppl. Is 200 fair?




Oh no it's not fair (unless it's to the customer, that's true, Mike!) what you're describing would go for a lot more than that. I'm not even going to start telling you how much to charge because every area is different, but you should check around and see what a cake that size and decorated like that would go for in your area. I'd also tell her soon what the price will be, because she might be expecting a super-cheap price and will need time to adjust!

Also, ThreeDGirlie is 100% correct. You have to target your customer when you start a business, not after you've already estabished yourself among a group that isn't your target client. If you want to do low-cost sheet cakes that's going to be one type of client, if you want to do only high-end wedding cakes that's a totally different group. Don't think that you can get a clientele among the sheet cake group and that will generate sales of the high-end stuff.

Also, what she said about cakes generating referrals is sooooo true. People think that they'll build a following by doing cakes cheaply or for free, but it's rare that doing a free or underpriced cake will generate much business, if any at all. If you want to donate a cake, do it to whatever organization you support on your own, but don't expect it to generate any business. The only thing I get from donations is requests for more donations, so I limit it to groups that I would support anyway!

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learnincakes Posted 15 Feb 2010 , 2:44pm
post #33 of 70

Is your friend puchasing the ingrediants? That might be fair if you wanted to do her a favor. Otherwise you are probably going to loose money on the deal.

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ThreeDGirlie Posted 15 Feb 2010 , 2:45pm
post #34 of 70

Jessielou - your cakes are beautiful. STOP selling yourself short - NOW! On pricing, do you have any idea how much is costs you to actually make a cake? For me to bake in my home, it's right around $1.00/serving, and I am in a rural area with low ingredient costs... So your $200 for 150 servings is OK if you're just charging for ingredients and not delivering it... If you plan to make any money on the cake, you should at least double that price. Based on your pics, your cakes are definitely worth it!

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ttehan4 Posted 15 Feb 2010 , 2:55pm
post #35 of 70

Don't doubt yourself or the quality of your work. If they didn't think you work was great they wouldnt keep asking you to make them. They are just to cheap to pay what your worth!

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nicoles0419 Posted 15 Feb 2010 , 3:32pm
post #36 of 70

exactly jessielou, I made my wedding cake for $125 and it fed 150, buttercream with fondant accents. When I hear people say $75 for a birthday cake I fall over, who would pay that much for a cake!! well people do cause they look so good and taste so good I guess, I've never bought a cake in my life my mom made cakes so we have never bought one shes always made them for us, therefore I don't know how much cakes cost to begin with and what people are willing to pay for them, apparently more than I thought, which is good for me icon_smile.gif (since ive been losing $ or breaking even) Time to suck it up and make some $$$$$

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costumeczar Posted 15 Feb 2010 , 3:44pm
post #37 of 70

Nicoles--This is where people make the mistake. The cost of the cake isn't just the ingredients, it's also the time it takes to make it, (Not to mention the electricity, etc) and that's what people don't think about. I just saw a story on businessweek or another site like that that told how much different tech devices cost vs. how much they cost to make. It broke it down by the components only, and said that's what it costs to make. Well, if I want a bunch of computer pieces that's great, but I'd also like to pay someone to put them together for me. That's part of the cost, and that's what people dont' think about when it comes to cakes.

Whenever anyone on this board has a pesky friend come over to help them make a cake, the friend always ends up saying "I didn't know how hard this was." THAT'S what you want to hear, because it means that one more person's eyes have been opened! icon_razz.gif

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cheatize Posted 15 Feb 2010 , 4:37pm
post #38 of 70

This is where my pricing matrix comes in handy. I made my own using the cost of the ingredients and such so that it's specific to my area. It includes transportation costs along with utilities. I broke down the cost of a disposable piping bag, a dowel, fancy foil- everything. I also included ongoing education, a portion of the price of the pans and tips, advertising, and licensing (I won't use those last ones until I'm legal, though).

It takes all the emotion out of the decision. After all, it is a business decision and not a "please like me" kind of decision. When a firend asks me to make a cake, I simply input the amounts of everything I will need and out pops a number. This number is based on math, not on "but I need the practice, but she expects a deal, but I really want to do this cake, but I want to get my name out there."

Try a pricing matrix. Before you put in the numbers, write down what you would have charged without using the matrix. You know- that number you would have given if you allowed your emotions to have their have their way. Then run the numbers through the matrix and sit in shock for a moment when you realize how often you're taking money from your family budget because you want to be seen as nice. Every buck you lose on a cake comes from somewhere in your personal finances, whether it's from your grocery budget, your electric bill, clothes for the kiddos, or from that "I really want to take a 'real' vacation this year" budget.

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costumeczar Posted 15 Feb 2010 , 5:14pm
post #39 of 70
Quote:
Originally Posted by cheatize


Then run the numbers through the matrix and sit in shock for a moment when you realize how often you're taking money from your family budget because you want to be seen as nice. Every buck you lose on a cake comes from somewhere in your personal finances, whether it's from your grocery budget, your electric bill, clothes for the kiddos, or from that "I really want to take a 'real' vacation this year" budget.




Yeeeeeessssss. Exactly! Time and money you spend doing cakes is valuable, and it also takes time and money from other things you could be doing!

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Sagebrush Posted 15 Feb 2010 , 5:16pm
post #40 of 70
Quote:
Originally Posted by jessielou

I am just starting out so I kinda feel like I shouldnt be charging that much. As others have said I just dont think my cakes are good enough to be charging as much.




Then, figure out what you would charge if you were more comfortable with your skills, and tell your friend, this really ought to be a $xxx cake, but since I'm still learning, I'll only charge you $yyy.

The $yyy should still cover the cost of ALL your ingredients and expenses, any savings come out of the labor category (and the amount you pay yourself for labor should only be sale price reduced, not bargain basement reduced).

Even if your cake doesn't look perfect in your eyes, they are likely to be really impressed, and I'm certain it tastes great. Only a part of the value comes from how it looks.

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Deb_ Posted 15 Feb 2010 , 5:54pm
post #41 of 70
Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by cheatize


Then run the numbers through the matrix and sit in shock for a moment when you realize how often you're taking money from your family budget because you want to be seen as nice. Every buck you lose on a cake comes from somewhere in your personal finances, whether it's from your grocery budget, your electric bill, clothes for the kiddos, or from that "I really want to take a 'real' vacation this year" budget.



Yeeeeeessssss. Exactly! Time and money you spend doing cakes is valuable, and it also takes time and money from other things you could be doing!




Not to be a killjoy here but just thought I'd throw this out there.

To the OP and everyone else that is "just starting out", "not sure what to charge", "wanting to get referrals from cheap cakes".....everytime you grossly underprice a cake you are hurting every one of us that actually IS a business owner trying to pay our overhead.

Why would someone pay $300 from me when they can get it from you for $75? See what I mean?

Just think about that and raise your prices for us.

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Mensch Posted 15 Feb 2010 , 6:06pm
post #42 of 70

I wanted to say that too, Deb. STOP UNDERCUTTING THE COMPETITION.

It's just not right to do that.

Raise the bar for yourself and you raise it for cake decorators everywhere.

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indydebi Posted 15 Feb 2010 , 6:08pm
post #43 of 70
Quote:
Originally Posted by Mike1394

Quote:
Originally Posted by jessielou

Im doing a wedding cake for a friends daughter in may and have been procrastinating on giving her a price.. icon_sad.gif Its four teirs with bc and fondant accents for 150 ppl. Is 200 fair?



Yeah it's fair TO THE PEOPLE GETTING THE CAKE.

Mike



My price would be MORE than TWICE your $200 quote.

Another step to achieving "pricing fear independence" is to STOP thinking in terms of "is this FAIR?" (Usually) women use this phrase, not in the sense of worrying about if it's a legitimately fair market price, but in the sense of "will they not be mad at me if I charge them this much money?" (wring hands, look worried, stress about if they will let you in the cool kids club.)

Stop thinking like a kid on the playground who thinks that everyone should play "nice" and play "fair" ..... start thinking like the playground supervisor who just tells the kids, "These are the rules .... follow them or you can't play on the monkeybars."

Which translates into:

"This is the price of the cake. Pay this price or you cant have my cake."

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costumeczar Posted 15 Feb 2010 , 6:20pm
post #44 of 70
Quote:
Originally Posted by Deb_

Not to be a killjoy here but just thought I'd throw this out there.

To the OP and everyone else that is "just starting out", "not sure what to charge", "wanting to get referrals from cheap cakes".....everytime you grossly underprice a cake you are hurting every one of us that actually IS a business owner trying to pay our overhead.

Why would someone pay $300 from me when they can get it from you for $75? See what I mean?

Just think about that and raise your prices for us.




And get a business license, too.

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Deb_ Posted 15 Feb 2010 , 6:20pm
post #45 of 70
Quote:
Originally Posted by Mensch

I wanted to say that too, Deb. STOP UNDERCUTTING THE COMPETITION.

It's just not right to do that.

Raise the bar for yourself and you raise it for cake decorators everywhere.




I know after reading 3 pages of coddling I couldn't stand it any more. Since you, Mike or Leah didn't say it I figured I would. icon_wink.gif

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Mensch Posted 15 Feb 2010 , 6:26pm
post #46 of 70

kudos

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this-mama-rocks Posted 15 Feb 2010 , 6:31pm
post #47 of 70
Quote:
Originally Posted by costumeczar



And get a business license, too.




what she said!

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joenshan Posted 15 Feb 2010 , 6:38pm
post #48 of 70

To nichole and jessie, your cakes are beautiful. You should be pricing what ever the market norm is.

Secondly, I just have to chime in on the 'friends' part. My best friend since grade school owns an auto repair shop. You know, I actually will not bring my car to her because she refuses to charge me full price. She is my friend and I want to pay for their services to contribute to her success.

I really don't get these 'friends' that want you to work hard so they can save money...some friends.

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Mensch Posted 15 Feb 2010 , 6:42pm
post #49 of 70

Well, most people think that grocery store cakes are the 'market norm'.

Ugh.

I have the most expensive cakes in town. I'm fully booked every week.

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Mike1394 Posted 15 Feb 2010 , 7:31pm
post #50 of 70
Quote:
Originally Posted by Deb_

Quote:
Originally Posted by Mensch

I wanted to say that too, Deb. STOP UNDERCUTTING THE COMPETITION.

It's just not right to do that.

Raise the bar for yourself and you raise it for cake decorators everywhere.



I know after reading 3 pages of coddling I couldn't stand it any more. Since you, Mike or Leah didn't say it I figured I would. icon_wink.gif




Why, and then get blasted for not being nice and huggy smoochy. Let them under cut everyone else. Then when they start to charge a "normal" price all their "regular" customers can go back to walmart.

Mike

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Deb_ Posted 15 Feb 2010 , 7:34pm
post #51 of 70

I'd never blast you for that Mike! icon_wink.gif

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jessielou Posted 15 Feb 2010 , 8:13pm
post #52 of 70

Sorry! Didnt mean to upset anyone. I completely understand the whole undercutting the competition thing and that is not at all my intention! I think that is actually part of my issue. There is NO competition in my area (except groceries of course) so I have nothing to compare my prices to and honestly just dont know what people charge. There used to be a lady about 40 min from me but she was not at all ...hmmm...helpful icon_wink.gif and I believe she has since closed.

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costumeczar Posted 15 Feb 2010 , 8:47pm
post #53 of 70
Quote:
Originally Posted by jessielou

Sorry! Didnt mean to upset anyone. I completely understand the whole undercutting the competition thing and that is not at all my intention! I think that is actually part of my issue. There is NO competition in my area (except groceries of course) so I have nothing to compare my prices to and honestly just dont know what people charge. There used to be a lady about 40 min from me but she was not at all ...hmmm...helpful icon_wink.gif and I believe she has since closed.




Ha, probably because she wasn't charging enough and couldn't stay in business! icon_lol.gif

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jessielou Posted 15 Feb 2010 , 8:55pm
post #54 of 70
Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by jessielou

Sorry! Didnt mean to upset anyone. I completely understand the whole undercutting the competition thing and that is not at all my intention! I think that is actually part of my issue. There is NO competition in my area (except groceries of course) so I have nothing to compare my prices to and honestly just dont know what people charge. There used to be a lady about 40 min from me but she was not at all ...hmmm...helpful icon_wink.gif and I believe she has since closed.



Ha, probably because she wasn't charging enough and couldn't stay in business! icon_lol.gif




haha maybe! I had never been to her bakery or had anything from her but ive heard thru the grapevine that she was pretty expensive. But again of course coming from ppl that have no idea what goes into making cakes that doesnt mean much.

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Mike1394 Posted 15 Feb 2010 , 9:08pm
post #55 of 70
Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by jessielou

Sorry! Didnt mean to upset anyone. I completely understand the whole undercutting the competition thing and that is not at all my intention! I think that is actually part of my issue. There is NO competition in my area (except groceries of course) so I have nothing to compare my prices to and honestly just dont know what people charge. There used to be a lady about 40 min from me but she was not at all ...hmmm...helpful icon_wink.gif and I believe she has since closed.



Ha, probably because she wasn't charging enough and couldn't stay in business! icon_lol.gif




OR she got undercut from hobbiests looking to just get thier ingredient cost back.

Mike

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Deb_ Posted 15 Feb 2010 , 9:41pm
post #56 of 70
Quote:
Originally Posted by Mike1394

Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by jessielou

Sorry! Didnt mean to upset anyone. I completely understand the whole undercutting the competition thing and that is not at all my intention! I think that is actually part of my issue. There is NO competition in my area (except groceries of course) so I have nothing to compare my prices to and honestly just dont know what people charge. There used to be a lady about 40 min from me but she was not at all ...hmmm...helpful icon_wink.gif and I believe she has since closed.



Ha, probably because she wasn't charging enough and couldn't stay in business! icon_lol.gif



OR she got undercut from hobbiests looking to just get thier ingredient cost back.

Mike




Now there's the Mike we've all grown to love.....lol!! icon_lol.gif

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Mike1394 Posted 15 Feb 2010 , 9:42pm
post #57 of 70

icon_biggrin.gif

Mike

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mirda6275 Posted 15 Feb 2010 , 10:13pm
post #58 of 70

I've been guilty of this as well, for all the reasons mentioned before. I'm just starting to expand my customer base but the first thing I did was sit down with the pricing matrix and I took a notepad to the grocery store to make sure I was using the real prices, not sales prices.

Then I did a google search for any cake bakers in my area. I glanced at craigslist ads, but mostly focused on the websites I could find of others to make sure my pricing wasn't undercutting others in my area.

Once I had that info, I had my pricing ready to go.

Now I will say the hard part has been standing up for my pricing. I've found that it's much easier for me to stick to my pricing in an e-mail vs. on the phone. It gives me the time to think of my wording and to respond professionally. (i.e. not telling a woman she was crazy and there was no way I could make 30 cupcakes for $30, which was my initial reaction.)

I've lost some initial orders, but I don't want people to get used to rediculously cheap cakes and then try to increase prices as I go on and burn out from not having time with my family.

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prterrell Posted 15 Feb 2010 , 10:31pm
post #59 of 70

Why should you care if they go get their cake at Wal-mart? I'd rather not do a cake than do a cake and make a pittance on it.

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jessielou Posted 15 Feb 2010 , 10:32pm
post #60 of 70

ok so where is this pricing matrix??

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