I started my own cupcake business based out of my home this last March. I work full time outside of our home and took this on as a hobby. Needless to say my little hobby has turned into a monster. I am booked which I love but living in a small town I worry that I am charging too much.

I have looked up bakerys in larger towns and see where cupcakes go for as much as $3.00 each....there is just no way I could get this kind of a profit where I live.

The local grocery store has a small bakery and they have cupcakes and cakes. You can buy a 1/2 dozen cupcakes for $6.00 and people are paying that but I make specialty cupcakes and for whatever reason it's hard for me to get people to pay more for them.

Figuring out my expenses and time I am barely making any money.
Any ideas?

"I am booked which I love...."

"...but am worried I am charging too much."

For real?

I guess I worded this wrong....I am booked but by the time I add up my time, ingredients and what not I'm hardly making anything. When I quote a price to someone I get the whole "well you can't charge big city prices here" and I bring my price down to match the grocery store to keep my business open.

you're not a grocery store so stop charging as though you were. I too live in a small town and pricing is hard. For me I looked at what the local grocery stores charged and then what the "fancy" bakeries charged and priced myself smack in the middle. For me and my area it works. Don't sell yourself short. You offer something far more apatizing than any grocery store can churn out. If your clients want cheep, they can go to the store, if they want good, then they can come to you...and pay for it.

If you're booked, then you are not charging too much. I think you should be more concerned that you may be under charging. Don't think you have to compete with the grocery stores or chain store prices. You are not offering the same type of products. For me, I only want the clientel that appreciates what I do, not ones that just any old cupcake will.

your not wanting to charge big city prices - you want to charge prices that actually pay you a wage! if people dont want to pay that, then tell them where the grocery is!

its tough cause u want to make money doing something you love... but if all you do is invest time for little return, whats the point? better to take on fewer jobs where you make money, than to have dozens of jobs where you barely break even.

re-asess your pricing. forget what others charge - what do you need to charge to cover *all* your costs and your labour?

you wont have a business next year if you dont do what a business needs to do - make money!

maybe look at the wider area and how you can market your self to people further away than your small town. (have a look at your marketing in general - forget leaflets in grocery stores, think business cards in top dollar locations emphasising your 'custom' and 'exclusive' and 'delicious' goods)
xx

also, people wont pay your prices unless you make them. i bet small town gossip has had you in its sights - 'go to her, and if she gives you a price, just um and ah and say its more than you wanted to spend, and she will totally cut the price for you!'

You can not charge what grocery stores are charging. You have different expenses and overheads.

And how much profit do you think those places in the 'big city' are really making off that $6 cupcake. When you factor in all the overhead and expences I bet it isn't as much as you think it is.

Why should you work for free to give them cheap cupcakes? If they don't want to pay what your time away from your family and your life, then send them somewhere else and enjoy that time you have.

Thank you so much for the advice. I feel like that is exactly what's going on...when I give someone a price they tell me that they can get it cheaper at the grocery store so I cave.
So what kind of prices are you charging?
Right now I am charging $24.00 for a dozen specialty cupcakes. This is up from $18.00 because I'm just not making it.

I charge $18 for a dozen, and although I get a lot of people who aren't willing to pay that price, I also get many people who come up to me after they have tried my cupcakes and say that it was totally worth it and I could be charging more, just stick with it. Word of mouth, especially in a small town is the best thing that can happen for you. Not everyone can be your customer (even though we all wish it could be that way ) And I agree that putting together fliers and such and putting them in a higher traffic and higher class areas could help you a lot, plus its cheap so if it doesn't work then you aren't out very much. Also, I've teamed up with a local salon and offer samples at her place along with 10% coupons, we are also going to start implenting a deal for brides to get their test hair done and a cake tasting at the same time. Bring your cupcakes to local business, not only will it make their day but it can bring a lot of business! Good luck!

I charge $2.50 for a plain frosted cupcake, set to go to $3 in the new year. Other decorations are extra.

I too live in a small town (pop. 5500) and I charge 2.00 per cupcake with a dozen minimum order. I also live 2 blks away from Safeway where you can get a dozen cupcakes for 5.99......So yeah I get some people who say, "what?! 24 dollars for a dozen?, I can get them WAY cheaper at safeway....) But that's okay, let them, My time is valuable and I can't devote an entire evening of my time for 5.99/dozen!
I will admit, I don't get a lot of cupcake orders- in our area, people would rather have a cake anyways- the whole cupcake mania hasn't quite reached our neck of WY yet. But those, who have had my cupcakes have a hard time going back to the Safeway ones.

I agree with what everyone else is saying. I only started in July and had a hard time coming up with a good price plan. In the end, if people want to be cheap and not pay what your time is worth, than I move on. Shockingly thus far, I've had customer who weren't interested in my prices. They just wanted me to make them a cake (esp since they've tried them)! Now, when they got the bill they had a quick moment of sticker shock, but my prices are clearly displayed on my website, so there's no hidden anything. If you don't have a price plan set up for people to see, either online or on paper, I suggest getting one. It's there. In writing.

If someone complains about your prices tell them that you make gourmet cupcakes and of course they are going to be more expensive! If they want plain cupcakes then they should definitely go to the grocery store.

Say it with confidence. If someone does not want to pay your prices then they were never your customer to begin with.

If you lower your price because someone complains or threatens to take their business somewhere else, word will spread super fast. You're going to burn out super fast.

My business is in a tiny town (500). I am lucky to draw customers from a large area (or we wouldn't survive), but I have discovered people will pay more for a quality product. I no longer want the customer that thinks I should price the same as big box stores. I feel my business is unique and our desserts are worth the extra money....I'm sure yours are as well.

while I agree there is a thread (!) of truth in small town pricing, but I am sick of the assumption that all people who live in small towns are poor and destitute and have no money at all and can't afford anything but generic foods and walmart sheet cakes, and that all people who live in "big cities' are rich and will pay any price for any item.

Here are my two stances on this:

1) Some areas cannot support a high end business regardless of what it is. There is a REASON Nordstrom's doesn't open a store in every po-dunk town in America .... because the demographics tell them the business won't survive in that area. If that's what your area is like, then dont' even contemplate getting into a custom cake business.

2) the baker's assumption is wrong. People who have great jobs with fabulous incomes choose to live in small towns .... aka "bedroom communities" .... because they dont' want to raise their kids "in the big city", or becuase the cost of living (i.e. rent/housing) is cheaper in a smaller town. So there ARE people who can afford custom cakes who live in small town communities.

It all boils down to market research and what you do with that info.

If you are booked up then you must not be overpriced Small town or big town I think is irrelevant, it all depends on the potential customer base as other posts have mentioned. You are not a supermarket and you can't price that way, I was a bakery director for a supermarket chain and I can tell you first hand its all about making money through volume. When you are a custom cake shop you are not churning out hundreds of cookies cutter cakes and you pricing needs to reflct that if you pplan to make any money.

So one way to look at the "small town" pricing is this....let's say you live in a city of 100,000 people and only 5% can afford your custom cupcake price of 4.00 each. That's 5000 potential customers in your market. So lets say you live in a town of 3000 people and still 5% can afford the 4.00 cupcake but this only leaves you with 150 potential clients, so what do you do to increase your market base?, that's right, lower the price. Knock it down to 2.00 a cupcake and you've just become a reasonable option to 35% percent of the town instead of 5%.
And sadly, my town is do "podunk" we don't even get a Wal-Mart. But that brings up the great thing about small towns.....a captive market!