Hello all! I've recently found out that there is another cake decorator in my area and I live in a VERY small town. Well....actually, this cake decorator has been around for a few years, but I never really considered her competition because, quite frankly, her cakes weren't that pretty (sorry, if that comes off mean, but she was a beginner and you could tell). Anyway, she's gotten alot better and her cakes are definately competition for me. I think I have a pretty good reputation, but I am worried about lost business. Her prices are also alot lower than mine, so bargain hunters are bound to hire her before me. I think I have a pretty good relationship with her, she messages me on facebook sometimes and I do the same to her. I've complemented her work several times and she's done the same. Even given some friendly advice here and there. She's recently asked about my pricing. I did tell her what my prices started at and I advised her that she prob should charge at least that due to her work being very good and to prevent burnout (just speaking from experience). Now I feel like i've given her too much info and she'll be undercuting my prices just to get more jobs. Like I said, very small town!! I've never dealt with competition before. What to you all think?
I would advise you to take the high road and continue your cordial relationship with her. You don't have to give out any of your business secrets but she could have easily gotten your prices in a sneaky manner but she was up front in asking you about it. I would keep everything friendly. You know what your cakes are worth and what your time is worth. And you customers know as well.
She may have such low prices just to get business in the door or maybe because she doesn't have the confidence to charge what she's really worth in the beginning, but I'm sure at some point she will adjust her pricing.
I would continue to exchange compliments but DO NOT give her any other information about how you run your business, especially about pricing. I would also try and find a way to really distinguish yourself from her - fondant cakes, sculpted cakes, free delivery, something.
I think competition is good for us... makes us strive to be better. It can be very beneficial to be friends with other local cake decorators. Some of my best friends are other decorators & when one of us has a problem, we know we have support. Example, a decorator's son passed away unexpectedly & 3 of us pitched in to do her cakes for the week, another time a friend became ill suddenly & a couple of us covered her cakes for a couple weeks. We all have our own way of doing things & our own recipes, no one is out to under cut anyone else or talk down the competition, we have a mutual respect & we all have business. As long as you have a good relationship with her, have confidence in your product & don't worry about alittle competition.
Based on your account her prices are already lower than yours, so she was already undercutting you without knowing your prices. Giving her that information probably just confirmed what she already suspected--not that hard to find out what someone is charging.
Thus I don't think you have hurt yourself by giving her that information. Now if her prices were higher than yours and she cut them to get under, sure there could be a problem. But unless she was planning to raise her prices and your prices stopped her from doing so, no real harm done as she was already under your pricing scheme.
It is just like any other market, if your prices were able to be higher because you were essentially the only game in town (could charge what you wanted) you may have to reassess your pricing scheme.
Or as others have said find a way to differentiate yourself (skills, techniques she cannot do, particular items she does not offer, level of skill, quality of ingredients and flavors). Just simply be better.
A lot of this also hinges on your market, do you live in a depressed area with people looking for bargains? If so you may have to change your prices to reflect it--not something you have to consider when you are the only game in town.
As others have said keep it cordial, last thing you probably want to be involved in an angry race to the bottom where you both are constantly trying to undercut each other.
I agree. Keep it friendly. I also know several other decorators in my area, and one is not friendly but the rest are. (The unfriendly one and I were at the same trade show--a two day show--and at the end of the first evening she went to my booth after I left and took down all my cards and put her ink pens all over my table. There were about half a dozen on the table when I got there the second day. Good thing I was early. How tacky!) Anyway, the ones I get along with are great! We rant about our bridezillas, compare prices, even share a few recipes, just not our signature ones. 
Each of us has our own specialty, so we don't feel like we're stepping on each other's toes, which helps a great deal. I do mostly buttercream, one does mostly cookies, another loves fondant sculpting, another likes to bake but not decorate so much. So we don't really feel like we're competing. One has cancer, and I've offered to help with some of her orders while she's on chemo. I know at some point I may need the same help and feel very comforted knowing that I have other cake friends to rely on. As long as you get along with her now, keep that going. People in your community will also notice that you work together and not against each other, and that will go a long way with your customer bases too.
Maybe someday you two could get together and really go into business!
Yeah, we've kinda joked about it, but I don't think either of us are ready to take the plunge! I am a part time caker with another full time job and she is a busy mom so only really does cakes part time as well. I have given her some referrals though. A few times, I was really swamped, and I had some desperate clients that did not want grocery store or wal mart cakes. I kinda didn't know if that was bad either, but I couldn't just leave these people hanging either!
It is just like any other market, if your prices were able to be higher because you were essentially the only game in town (could charge what you wanted) you may have to reassess your pricing scheme.
No way I can go any lower!! If i would have to, I wouldn't do cakes; not to sell anyway. You guys would cringe at my prices bc they are so low. They have to be though, bc of my area. Seriously, no one would pay over $3 per serving!! No way, No how!! So I keep my costs as low as possible and give the best product I can afford. I still don't think I get paid enough for my time though. I've gone through a few burnouts because of this. I am finally at a comfortable point in my cake business and can live with it. I think her prices are low because her confidence isn't there yet, but now that she's doing more detailed cakes, I think she will quickly learn that she needs to get paid more. Or she will end up in burnout mode for sure!
I just wanted to say, I looked at your pictures and your cakes are beautifully done!
from a business standpoint you can only undercut for so long...her profit margin will be so small that she'll gain a bunch of customers at first but then have to jack up her prices eventually (or go out of business) which will be even better in the long run for you.
There's only so long she can last doing that. Stick it out and you'll be fine! Bummer she used your generous info against you! I'm pretty sure that's something you should keep to yourself in the future 
...listing your general by-the-serving prices is fine, but just like my husband at work, he is never allowed to share companies bids for entire projects. Very unethical.
many decades ago, I was in tears when I found out the only bakery in town was cheaper than me. (Hey! I was 20! What did I know?) I cried for about 10 minutes, then started my list of ideas of what I could offer that they didn't.
- They didnt' deliver. So I delivered free within a certain radius.
- They absolutely didn't stay and cut the cake. That became a service that was standard with my cakes (small town, lower volume, it was do-able back then).
- They didn't offer package receptions of cake, punch, mints, nuts, plates, forks, cups, tablecloths, delivery, set-up, cake cutting, clean-up and tear down. I became the first one-stop-shop wedding cake lady in my area.
So get a cup of coffee and figure out what it is that YOU can offer that she .... or any competitor ...... doesn't offer.
Answer the age-old question the bride is asking: "What's in it for ME?" Or in other words, why should the bride buy from YOU instead of someone else?
I don't think you did anything wrong by sharing your prices. (as you mentioned, she was already charging less than you.) What you've done is provided her with something to think about... now she'll realize she needs to raise her prices to charge what you are getting. It's a good thing!
At one of my other businesses, we occasionally get calls from our competition asking about pricing (and they aren't anonymous). We aren't shy telling them our prices, or insisting that they should also be charging what is reasonable and customary for the industry. They're happy because they can make more, we're happy because they aren't undercutting us, and if everyone has similar competitive pricing within the industry then the customer realizes that's the going rate for the area!
many decades ago, I was in tears when I found out the only bakery in town was cheaper than me. (Hey! I was 20! What did I know?) I cried for about 10 minutes, then started my list of ideas of what I could offer that they didn't.
- They didnt' deliver. So I delivered free within a certain radius.
- They absolutely didn't stay and cut the cake. That became a service that was standard with my cakes (small town, lower volume, it was do-able back then).
- They didn't offer package receptions of cake, punch, mints, nuts, plates, forks, cups, tablecloths, delivery, set-up, cake cutting, clean-up and tear down. I became the first one-stop-shop wedding cake lady in my area.
So get a cup of coffee and figure out what it is that YOU can offer that she .... or any competitor ...... doesn't offer.
Answer the age-old question the bride is asking: "What's in it for ME?" Or in other words, why should the bride buy from YOU instead of someone else?
Ditto. And maybe you can vary your product line a little, as in you offering cake balls and cupcakes, or you concentrating on fondant vs. bc or vice versa.
don't think you did anything wrong by sharing your prices. (as you mentioned, she was already charging less than you.) What you've done is provided her with something to think about... now she'll realize she needs to raise her prices to charge what you are getting. It's a good thing!
Yeah, that's what I was thinking when I shared this info with her. I remember when I first started out, I was extremely cheap too. More experienced cakers would tell me all the time that I was nuts and that I would burnout fast. And they were right! Just trying to help her out and let her know that she is worth more.
I'm just a newbie, so I don't know too much about the business side of this, but I agree, differ yourself from her.
My full time job is being a hair stylist, and one thing I do (because there is A LOT of competition within my area) is client referrals. When handing out my business cards to current clients, I tell them to write their name on the back, and hand them out to friends to spread my name around. When I get cards in return with names on it, or when I have a new client call, I ask how they heard about me, and if it was from a current client, I give that client a small discount on her next service (free hair cut with color service). That way, you are generating new business, and people will want their friends to go to you instead of the competition because they will get discounts/credit.
Like I said, I haven't been doing cakes for too long, but make it worth your time for the discount. Half a dozen free cupcakes WITH their next order (then they are paying for a cake, but getting something extra, you are still getting business, but throwing in a freebie) or $5 off an order of $50, or more (10% off)
Hope that helps. Your work is great, so don't lower your prices. Another thing i learned doing hair is if you are too under prices, people will think you are cheap because your work is cheap. Make sure you value your talent.
It's a small town. Lots of people have probably already told her your prices, even when she didn't want to hear it. One or two of those people probably gave her the right price, too.
All you did was confirm it for her. Now she can either rest on her laurels and keep her prices the same while you are quietly differentiating your work or she can raise her prices to be more in line with yours and therefore make it harder for the price conscious shopper to choose.
This has been a huge topic for my sis & I lately. We have firmly decided that what we want to stay happy & positive.
My mom is a quilter & we sew. We previously sold our pillows at fairs & shows. We would have people who sew walk into our booth pick up a pillow & ask what weight thread we used, where were bought our fabric & then take pictures so they could go home & make them. Yeah, so smile through that & refrain from making snarky comments. We learned a TON from those experiences.
People will always make cakes. New people will start & some people will stop. If we turn it into an ugly competition thing, the only people we are hurting is us. That is a lot of wasted energy we could be putting into new designs.
A bride recently brought us a picture from a competitors website. We point blank said we admired her work but would not copy & gave her our design. She booked with us & everyone was happy. All we can hope is that our competition would do the same. Even in small towns we are all on the web & aware of who is out there.
Sounds like everything will work out. Like you said, she is going to get burned out underpricing herself and either decide it is not worth it or price them correctly. And if you do this part time, and she is doing the mom thing, there is only so much each one of you can do....Keep things friendly, and give extra effort to make your business the best, whether it be through signature recipes, customer service, etc.
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