Do My Skills Justify My Price? (Poll-Pls Check My Gallery)
Business By karateka Updated 19 Oct 2010 , 8:30pm by Marianna46
You need to position yourself as a scratch baker who does gourmet cakes. Then emphasize that in all your advertising and market yourself to the people who appreciate that and who don't want boxed mixes. I will NEVER bake from a box, and I have plenty of business.
People know what they know, and most people don't eat scratch cakes anymore because they're not readily available. But when they do taste a good scratch cake they can taste the difference, and do appreciate it. Don't change your baking style becasue you want to play to the lowest common denominator. If you don't like a product, you shouldn't be selling it, because you won't be able to stand behind it. I don't like cake pops and cupcakes, so I don't sell them.
If you want me to look at your website I'd be glad to, I don't see a link to it, but I'll go look at your profile right now to see if there's a link. You probably need to do a few things to market yourself in your area to other professionals, too, but I can't get into the specifics of that now. There's a lot of info that's out there that can help you drum up business, I'd be glad to help if you want.
I can also look you up on twitter, so you have the site linked there?
Alright my friend. Don't make me have lunch with you again just so I can smack ya. Did you forget everything we learned at the WPF?
First off, don't follow the horrible advice about switching to box/doctored mixes. When you make a product you must stand 100% behind it. If you can't you don't sell that product. Also, you would then risk losing your repeat business customers. Where would that leave you? With a ruined reputation. Nothing ticks people off more who are use to one product that they love and have it changed on them. If you don't think they would find out if you kept the same recipes for them and baked mixes for others your wrong. It only takes one person to start talking to others about your changed product and then no more calls at all. I've worked in the food industry now for a number of years. This is a big no-no and a death sentence.
I bake from scratch also, but I started out with mixes years ago. My scratch cakes almost always beat out the mixes/doctored mixes. There are always going to be a few though who prefer the other because that's what they were raised on. Don't take it personally and move on.
Saying your cakes are "old fashioned" in taste is like saying a baked chicken is retro. It doesn't make sense. They preferred a different style of cake. No biggie, they weren't your type of clientele in the first place and not the type of people who you are trying to market to.
This brings me to my next point. Marketing! What are you doing to get your name out there. What are you doing different than others. For one the scratch baking is different than a large percentage of people.
Do not lower your prices. You are training people that your product is worth less than what it is. How many times have you bought something on sale and then the next time didn't want to buy it for the original price? It happens a lot. Also, you then treat your product like it's bargain basement prices. That you could technically sell it for less the whole time in the customers eyes. Everything effects your bottom line. Giving away free product or discounts effects your bottom line which means you make less money. How do I know this, other than it being common sense I too followed the advice of giving a discount (against my better judgment) and it bit me in the butt hard. I lost out money and was disgusted with myself in the end. Every penny counts in a business.
You have to treat your business as a business, not as a hobby. People are bargain shopping more than ever but that doesn't mean I want their business bad enough to discount for it. I don't like working for less money or for free. If this was your pharmacy job and they said "Hey, we want you to do the same work for 25% less and also throw in a few free hours of work." what would you say? I imagine you'd be ticked off and looking for a new job. After all, you have kids and it's taking food out of their mouths. Why treat your business this way. Your going to get where you hate even doing cakes and say screw it.
If you feel like giving an incentive at a cake/bridal show go for it. If you don't then don't do it. You just don't want to be know as the pushover baker is all.
Do you have a list wrote down about how people are hearing about you. Start one if you don't. It will tell you what advertisement works the best and which ones don't. Will give you incite as to where to focus more.
Come up with a game plan. Only you know what will work for your area and what will work for your business/family.
You know I live just 5 hours north of you. Don't make me come down there! 
How do I know this, other than it being common sense I too followed the advice of giving a discount (against my better judgment) and it bit me in the butt hard. I lost out money and was disgusted with myself in the end. Every penny counts in a business.
How did lowering prices come back to bite you? If you are not getting enough business, lowering prices will increase sales volume (unless there is another issue besides price) and increase profit, because you lose money when you are idle. If you are getting too much business, increasing prices will lower volume, keeping profit at the same level (or even increasing profit) with a lighter workload. It's simple economics.
My favorite example to tell people is this one bride I sat down with and said "I really want a green wedding cake and brown ribbon and fondant pears." I was like, yeah, I can absolutely do that. And she said, "but have you made pears before?" and I said "no... but I've made a car, and I'm thinking a pear may hold less difficulty. " Needless to say I did not get the order.
I had 2 books . One with pics of my cakes and one idea book with pics from the internet and magzs. I told them making cakes was like any other craft. In knitting for example, I may not have made THAT exact sweater, but if I can follow a pattern, I can make any sweater. Id then point to the book of my pics and say This shows you that I can knit. And then point to the internet pic book and say This is the pattern book. They got it.
I don't think you can judge by people at work rating them. I could send something I think is totally nasty to work with my hubby, and it would be gone in one day because it's free.
Abso-freakin-lutely. You put the word free in front of the word food and people act like they havent had a meal in 3 weeks. Its stampede time, get out of the way!
How do I know this, other than it being common sense I too followed the advice of giving a discount (against my better judgment) and it bit me in the butt hard. I lost out money and was disgusted with myself in the end. Every penny counts in a business.
How did lowering prices come back to bite you?.
A very expensive and successful branding expert told me Never discount . Always add value. You can add value by throwing in a flavored filling for free, or waiving delivery fees, or giving a bonus such as 12 chocolate covered strawberries for the bride/groom to share (would I spend about five bucks on berries and chocolate to book a $400 cake? Do the math it works.)
Coming in a future CC magz article is this guys advice that if you discount the price, you piss your customers off because they are thinking If you can lower it now, you could have lowered it on my last two cakes and they feel like theyve been ripped off. As mkolmar said, You are training your customers that your product is worth less than what it is.
Dont discount . Add value.
Saying your cakes are "old fashioned" in taste is like saying a baked chicken is retro. It doesn't make sense.
I also find this confusing. I can never figure out when the term old fashioned is supposed to be a good thing .. or when its supposed to be a bad thing . Because its used both ways, too often.
I am in agreement with those who advise that you shouldnt sell what you personally cant stand behind. Im also in agreement that if you want to keep customers happy then you have to sell what customers are buying. I dont like teriyaki, but my Chicken Teriyake was a big seller on my catering menu. I dont like oatmeal cookies . I had to take them in to work and beg my co-workers for honest opinions because I just DONT LIKE oatmeal cookies at all! They were one of my biggest sellers because they were soft and not crunchy.
I like the advice about advertising your specialty. And you could do this alongside adding some doctored cakes to your menu. The ads could emphasize SPECIALIZING in made-from-scratch butter cakes like gramma used to make! Doesnt mean you dont do other kinds of cakes, but it gets the word out to those who really LUV butter cakes!
A very expensive and successful branding expert told me Never discount . Always add value. You can add value by throwing in a flavored filling for free, or waiving delivery fees, or giving a bonus such as 12 chocolate covered strawberries for the bride/groom to share (would I spend about five bucks on berries and chocolate to book a $400 cake? Do the math it works.)
I agree that adding value is a good first step, but it may not result in the desired increase in sales volume, especially if customers are bypassing you because of your listed prices. You also have to ensure your value-add is better than your competitor's.
Coming in a future CC magz article is this guys advice that if you discount the price, you piss your customers off because they are thinking If you can lower it now, you could have lowered it on my last two cakes and they feel like theyve been ripped off.
I don't understand this argument. How often do you get repeat business from customers? Our specialty is birthday cakes so we usually get 1-2 orders per year per customer. If the same customers are ordering a cake every week the price delta might be an issue, but I doubt most of us have that kind of business.
Only a small minority of repeat customers will even notice if our price has changed since their last order. If the price is lower, they are thrilled, and if the price is higher, I explain how our ingredient costs have gone up and they are always fine with it.
I had a number of corporate accounts that ordered monthly birthday cakes. I am one of 6 kids so with 8 people in the family, that's a lot of brithdays, even if we dont' count the ones for extended family members like favorites aunts and grammas, and special occasions likes graduations.
I have a blog that describes how one of my brides pointed out I ended up being the cheaper cake, even tho' my "listed" price was higher than the other 2 places she checked (those dreaded hidden nickels and dimes! )
I have found that most people like to feel they got "a deal" or got "something extra for free". You know what my most common "value added" item was on my caterings? Pototo chips or pretzels! yep, if I told a bride, "and since you're on such a tight budget, I'll even throw in some pretzels on the appetizer table at no extra cost", she thought I was the greatest thing since double ply toilet paper. It was always amazing to me how thrilled they were with this. On a $3000 booking, it cost me an extra seven bucks for pretzels. Wooo. But the client was thrilled because she "got something for nothing" and felt she was a good negotiator.
Sometimes it's not WHAT you offer but the fact that it was offered/given. 
All I know is that when I began following hte advice of my branding expert, my sales numbers showed the difference!
I confess that I have only quickly looked at your cakes, but from what I have seen, I wouldnt call your portfolio old fashioned, you have simply catered for your clients taste.
Sometime people just need something to complain about!
I have the same customers that use me many times through out the year. One company buys desserts a few times a month. Do they notice if the charge is off even by the penny. You bet they do, because every penny effects their bottom line also.
I offered a discount before and was bombarded with orders. After a few weeks of fulfilling those orders on very little sleep I sat down to crunch numbers. I lost hundreds of dollars in that discount. Sure it brought more business in, but at what cost. My family suffered from me burning the midnight oil and I made more work for myself for less profit. It just wasn't worth it. Some people never ordered again because they wanted that discount price all the time. HA! Fat chance. They weren't happy when I told them no, but that's their problem, not mine. I have a business to run.
I have a reputation as a gourmet baker. I bake from scratch using imported ingredients. Making my own fillings and such for orders. I have a higher overhead in ingredients alone than most. By discounting I'm only short changing myself. More work for less money.
Not all discounts are bad, depends on the business and what type of discount they are offering. For me it's not something I will do without giving it plenty of thought first.
Customers notice a price increase even if they only order from you once a year. They may not say anything to you, but the majority will notice. Especially true today since more people are on tighter budgets.
I know the OP and her and I have taken classes together. In one class there was business advice from top pastry chefs and cake decorators. They would have a fit if she was to discount her product because with her baking from scratch and doing the level of work she does she should be charging more, not less.
I have to agree with mkolmar on the price cut thing. If you want to get business for sheer volume, that's one thing if you're a bakery with a staff, but if you're a sole proprietor it's a different issue. If people are shopping solely on the basis of price, they're not going to be a custom baker's customer to begin with. Just like they're not going to buy a custom gown if they're shopping for price alone.
Dropping prices when you're a one-person operation isn't the same as running a sale if you're a storefront, it's comparing apples to oranges. It's like saying "here's a handmade sweater, but I'm going to drop the price to equal that mass-market one from the Gap." It's not the same product. You need to emphasize what sets you apart from the rest of the market and make people see the value in your product.
By the way, the excuses they gave the OP about her cake being not sweet enough sounds like a red herring to me. It sounds like they were shopping for price and went with someone cheaper, which just means that they weren't her customer anyway. We need to get your customer to find you, karateka, and it's not going to be so hard. The idea of doing wedding shows is good, too, gets your name out there.
But while you're at the show you need to promote yourself the right way!
I will add to this about the sweetness thing -
The original OP said she used recipes derived from the Cake Bible. I have made a couple of cakes from that book in the oast. While the crumb is fantastic and has a nice mouth feel, it can taste less sweet than a cake made by the creaming method. I made one of the cakes both ways, the two- stage and the creaming method. While both had the exact same ingredients and amounts, the creaming method cake tasted sweeter. Go figure. I still use the recipes in the book, but i have changed the way I prepare the cake.
I will add to this about the sweetness thing -
The original OP said she used recipes derived from the Cake Bible. I have made a couple of cakes from that book in the oast. While the crumb is fantastic and has a nice mouth feel, it can taste less sweet than a cake made by the creaming method. I made one of the cakes both ways, the two- stage and the creaming method. While both had the exact same ingredients and amounts, the creaming method cake tasted sweeter. Go figure. I still use the recipes in the book, but i have changed the way I prepare the cake.
Interesting...
You say you can't book weddings but you are booking other cakes. That seems to implicate that it's not your prices, or your baking, or your skill level (which is top notch, based on your gallery).
I read that you do the tastings in your dining room and I would assume that you don't do tastings for birthday and other celebration cakes, just weddings.
I'm going to walk on eggshells here but have you honestly and objectively evaluated the tasting environment? Do you have a trusted friend who would do that for you if you asked? Sometimes we don't see (or smell) what's right under our noses but someone new walking in does. Could there be an odor? Even dinner from 2 nights ago can linger and be offensive and we don't even notice because we've lived with it. Is there a baby and/or toddler in the house? Diaper smells linger, too, even after the trash goes out. Pets? Is it dusty? Is the furniture/carpet/paint worn and/or dirty?
If everything else is in place, it could be worth looking into or trying some tastings elsewhere like a coffeshop or the bride to be's home.
I understand that you make a great scratch cake, and you don't want to change. But really its about your customers likes. Could you offer a sample of each, and let the customer decide which cake they want. You don't have to give up your wonderful scratch cake, just let them have an option. All tastes are different. I personally don't like scratch white cakes. I love my scratch chocolate, and carrot cake, but scratch white cakes, not so much. Last year I went to a wedding, and had a white scratch wedding cake, and I ended up throwing it away, and it was from a famous bakery in town. So I know its just my tastes. Other people like them. White cakes either taste flat to me, or floury, dry. texture is off. Its just not my taste. I know I probably haven't found a good one, but at this point I am getting tired of trying.
I hope you don't mind my thoughts on this matter, I'm just saying that there are some people out there that don't like scratch cakes, and you are trying to figure out why you are losing bookings. Good luck, and you could ask customers what they like in a cake, if they were brought up on cake mixes, its probably what they like.
Your cakes are beautiful, so i'm just trying to figure out what is going on.
I offered a discount before and was bombarded with orders. After a few weeks of fulfilling those orders on very little sleep I sat down to crunch numbers.
If you were operating at less than your ideal capacity, offering a discount was a smart move, but it sounds like you either discounted too much or you were already at a capacity you were comfortable with, in which case there's really no reason to offer a discount.
When we first started our business, we were getting orders at a slow and steady pace (which was good, since we were still working out our processes). Eventually we ended up with significant idle time, as we had become more efficient producing the same amount of orders. So we dropped our prices slightly and our volume picked up.
Fast forward a year or so, and we started having to turn away orders because we couldn't maintain our desired level of quality at that volume. I then raised prices slightly (a little higher than they were at the beginning), and our volume dipped to a level we were more comfortable with. I'm not talking about huge swings in price here, the delta is typically 10-15% in either direction.
Adjusting prices has by far been the most effective control of sales volume, we've tried adding value with things like free cupcakes and seasonal products, but those offers didn't make a big impact. Perhaps it's the nature of our business, most of our orders are for individual consumers and are in the $50-120 range. We are also literally the only game in town for many of our customers due to their food allergies.
You say you can't book weddings but you are booking other cakes. That seems to implicate that it's not your prices, or your baking, or your skill level (which is top notch, based on your gallery).
I read that you do the tastings in your dining room and I would assume that you don't do tastings for birthday and other celebration cakes, just weddings.
I'm going to walk on eggshells here but have you honestly and objectively evaluated the tasting environment? Do you have a trusted friend who would do that for you if you asked? Sometimes we don't see (or smell) what's right under our noses but someone new walking in does. Could there be an odor? Even dinner from 2 nights ago can linger and be offensive and we don't even notice because we've lived with it. Is there a baby and/or toddler in the house? Diaper smells linger, too, even after the trash goes out. Pets? Is it dusty? Is the furniture/carpet/paint worn and/or dirty?
If everything else is in place, it could be worth looking into or trying some tastings elsewhere like a coffeshop or the bride to be's home.
It's a good thought. The dining room furniture is all cherry. We bought it when we were young and stupid with too much money and not enough time on our hands. The place is dusted and vacuumed prior to each tasting, and sometimes polished with wood oil, if needed. We don't have any pets as I am a licensed home baker. I guess the odor thing is something to think about....but DH has such a fine nose for that sort of thing (he is always griping about the smell of the garbage can or whatall) that I never figured that might be a problem. The carpet isn't new, but it looks good due to it being low traffic all these years. We do actually need to paint in there, due to having a chandelier moved...but the overall paint job still looks good aside from that one patch (we are having trouble matching the paint). I could try to find someone to come in and evaluate that whole situation.
I will add to this about the sweetness thing -
The original OP said she used recipes derived from the Cake Bible. I have made a couple of cakes from that book in the oast. While the crumb is fantastic and has a nice mouth feel, it can taste less sweet than a cake made by the creaming method. I made one of the cakes both ways, the two- stage and the creaming method. While both had the exact same ingredients and amounts, the creaming method cake tasted sweeter. Go figure. I still use the recipes in the book, but i have changed the way I prepare the cake.
Interesting...
Sorry for the thread hijack. But if you test this and blog about, please let me know. Also we could start another topic on this too. I just got an email from another person interested in this, but i don't know if there enough other people who want to discuss method preparation to start another thread.
Back to your regularly scheduled program.......
I need to hop out here soon. Maybe I'll grab a DH mix and see what I can do to it. Just for giggles.
Try a Duncan Hines white mix....then add 4 whole eggs...a Jello brand pudding box (white chocolate, vanilla, or cheesecake flavors), 2-3 TB oil, and 1 cup of water, plus a healthy squirt of pure vanilla.
Then don't taste it until you wrap it up while still warm and freeze overnight...then thaw in the fridge.
Then ice with your frosting (fill with whipped ganache or preserves) and sit at room temp for a couple hours...
THEN taste it and see what you think.
Do you follow the directions on the box as well. I'd like to try this for a cake this weekend.
I will add to this about the sweetness thing -
The original OP said she used recipes derived from the Cake Bible. I have made a couple of cakes from that book in the oast. While the crumb is fantastic and has a nice mouth feel, it can taste less sweet than a cake made by the creaming method. I made one of the cakes both ways, the two- stage and the creaming method. While both had the exact same ingredients and amounts, the creaming method cake tasted sweeter. Go figure. I still use the recipes in the book, but i have changed the way I prepare the cake.
Interesting...
Sorry for the thread hijack. But if you test this and blog about, please let me know. Also we could start another topic on this too. I just got an email from another person interested in this, but i don't know if there enough other people who want to discuss method preparation to start another thread.
Back to your regularly scheduled program.......
I will hijack a little too...I was going to test the recipe that I was writing about on my blog by using the creaming method instead of adding the liquids in, so keep an eye on the blog. I don't know why it would make it seem sweeter, but who knows? Okay, back to pricing debates 
I voted for your keeping your prices as is, but on second thought, I think you could even raise them a little. I don't see a lot of wedding cakes in your photos. Do you think you might need to make up a few dummy wedding cakes to show off your specifically wedding-cake-oriented skills? I thought Indydebi's comment about having two portfolios - those you've made and ideas from other places - was terrific and the knitting metaphor was priceless! Since i'm trying to drum up some wedding cake business myself, I think I'm going to follow those two pieces of advice, and I'm also in the process of making some dummy wedding cakes, since I've had no real orders for any yet. Best of luck!
Jasonkraft -- I'm a licensed home baker. Sounds like your working from a storefront which is different. I also work as a pastry chef for a facility so I get where you are coming from. Although at the facility we also don't discount products ever for weddings and special events. The OP is a licensed baker also so that's why I put the information in there.
Karateka -- I'll be flat out blunt and honest. Stick by your guns. You make a great product that you know is good. Don't bother switching to a mix. Stay with what you do and do it well. If someone wants a cake mix cake then let them go to another baker, they weren't the clientele you were aiming for in the first place. Get your name out there for doing wedding cakes by doing a bridal show/expo. Start networking with others in your area so if they can't do a cake then you are the one they refer to. Good luck, I'm sure with a few minor changes things will turn around for you as far as the wedding orders go.
Cake baking is my hobby that I get paid for only not my "business" . . . but I have to add my .02 to the situation. The posters here who are telling you not to discount your cakes are correct. You need to determine a price point for your cakes based on location, competition, ingredient cost, skill/time to make what the customer is asking for, etc. Once that complex equation is figured out, you can do a little tweaking but STICK to it! I have a background in the hotel business. We have a slang term in our industry: "Heads in beds." For the cake business it could be "mouths with cake." If you don't have mouths with cake, you aren't going to make any money --- BUT --- the most important thing about the hotel business was not just "heads in beds" - it was figuring out the ADR - the average daily rate for a room. I could get a ton of heads in beds by offering rooms for $40 a night, but what kind of clientele would I be pursuing (SLEAZY, CHEAP, etc) -- they would probably strip a room and sell the clock radio at a pawn shop. Or, I could invest in my rooms, invest in my staff - from maintenance to housekeeping, to my front desk professionals --- and based on the amazing customer service and quality lodging experience that I offered them, justify charging an ADR of $75.00 or higher. If you lower your prices, you are automatically resigning yourself to putting quantity or quality, and that just doesn't seem to be who you are. I would definitely put in some of the suggestions here: the chef's tasting/bride's tasting, offering a "bakery style" cake in addition to your "from scratch artisan" butter cakes. Other than doing "in your face" marketing at bridal fairs, I can't see anything else that you are doing "wrong."
Jasonkraft -- I'm a licensed home baker. Sounds like your working from a storefront which is different.
We don't have a storefront, but we do rent a commercial kitchen. We only have two pastry chefs, one of whom is part-time, so that's why we have an upper limit on sales volume.
Our kitchen rental costs are variable (meaning we pay by the hour), so the situation is quite similar to home bakers, where idle capacity is not a huge concern (although you still have to factor in opportunity cost). Renting a retail storefront with a fixed monthly cost would be a different situation.
The posters here who are telling you not to discount your cakes are correct. You need to determine a price point for your cakes based on location, competition, ingredient cost, skill/time to make what the customer is asking for, etc. Once that complex equation is figured out, you can do a little tweaking but STICK to it!
No one is suggesting drastic price cuts down to grocery store levels (see the poll), which would be the equivalent of getting "lower class" clientele in your hotel. Instead I'm advocating tweaking prices (in the 10-15% delta range) if you aren't happy with your current sales volume. If idle capacity is not an issue because of low overhead (which would be the case for a home baker), you have time to play around with offering different value-added options, but in my experience that's usually not enough to significantly increase volume.
There is still no indication that the OP knows her market. You cannot talk about "sticking to your guns" pricing without a thorough market study. I will guarantee that indydebi, costumeczar, and jasonkraft all know every detail of every one of their competitors and can answer client questions with this detailed knowledge. Determining market positioning and only then establishing price is vital to any business success. I am a scratch baker that markets to a higher income clientele. But a narrower market requires more market knowledge, a marketing plan that zeroes in on a specific group, and the undeniable knowledge (through research) that the product is highly desired and worthy of the price. You can beat jasonkraft up all you want, but in economics, price is king. It controls sales. You must have a product value that is higher than the amount of money that the consumer must give up... that is the definition of a sale. If you are not getting the sales you want, you can only up the value or lower the price. But the market plan, along with a business plan, must come first.
There are talented people who opened up a business, started selling, and became successful with no real knowledge of market position. But that is not the norm. Lack of research leads to small business failure.
I looked at the pricing in the OP's area, and it ranges from $3 a serving to $3.75 for buttercream for the bakeries that list prices on their sites. Any business lost due to pricing would be to lowballers, and you don't want to price-match them anyway.
scp1127, Ithik that we were posting at the sametime. My post about the prices in her area wasn't intended as a response to you, just as general information. you're right about knowing your market, too!
See to me a 25 cents to 50 cents a serving drop is a big discount. Heck, even a 10 cent discount a serving adds up. Everyone runs their business the way they feel fit. If it works for you offering discounts great. Renting a kitchen (which I did before) gives you the ability to pump out more volume. You can probably discount some and not have too many issues because you have the ability to do a larger scale volume. However, you also have overhead from workers, rent, car insurance if you deliver that is usually triple the normal rate, taxes you have to match for your workers...etc. I'm able to crank out desserts with commercial equipment but at home not so much, not to mention there is a lack of counter/table space. Like someone said earlier it's like comparing apples to oranges. There is different variables for every business to take into consideration. I happen to know the OP so I have more insight of her situation, thus my advice of no discounts.
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