How Do You Deal With Other Baker's Underpricing? Cookies

Business By Spectra Updated 1 Feb 2011 , 4:37pm by scp1127

Spectra Posted 28 Jan 2011 , 9:30pm
post #1 of 9

Okay, I guess this is kind of a rant. I'm getting prepared to sell at my Farmer's Market. Already got my Health and Safety Certificate from the Health Department and got my prices set. No one else here sells decorated cookies, except for one lady who's starting price is $4.50 for a 4inch and she only does wedding favours. So I was pricing mine between $3.50-$4.00 depending on design, etc.

So I'm looking on my local ads online and I see another person selling from their home decorated cookies, bouquets, etc. She is selling decorated cookies $2.00 for a 4 inch and $20 for a 7 cookie bouquet all 4inch cookies.

Should I worry about this type of competition?? I want to order from her just so I can see her cookies up close and taste them :/ Or should I just ignore it and keep my prices as is. Already her ad has tremendous amounts of hits. Am I worrying over nothing? It costs me $0.40 per 4 inch cookie to make, bag, and ribbon.

8 replies
AmysCakesNCandies Posted 28 Jan 2011 , 9:37pm
post #2 of 9

You need to charge what you feel is reasonable to make a decent profit. Although you do need to watch what your competetors charge, you can't let that dictate your prices. Since it soulds like you haven't actually started selling yet, I would suggest starting with the pricing you have set and after a few months step back a take another look. Then you can judge based on your sales and the profits you see if you need to adjust your prices. I re-asses my prices at the start of every year. Good luck with your new business.

costumeczar Posted 28 Jan 2011 , 11:32pm
post #3 of 9

If someone is seriously underpricing like that she won't be in business long because she won't be making any money. Or maybe her cookies are only worth that much, and in that case she will just attract clients who want to eat that brand of nasty. Just price what you need to, and don't worry about it. There are people around here who underprice, but their product isn't good either.

cheatize Posted 28 Jan 2011 , 11:59pm
post #4 of 9

As long as you have done your research to price correctly, then all you need to do is sit back and think, "Thank goodness she's taking the cheapos off my hands! Now I get to deal with people who want and understand custom products!"

jenmat Posted 29 Jan 2011 , 2:09am
post #5 of 9
Quote:
Originally Posted by cheatize

As long as you have done your research to price correctly, then all you need to do is sit back and think, "Thank goodness she's taking the cheapos off my hands! Now I get to deal with people who want and understand custom products!"




Above is EXACTLY what you should be thinking! Now, yes you will need to evaluate to see how it goes, and yes you will need to price at what your market can handle.

But, in my wedding cake biz, I was undercharging what I was actually worth (in some ways, I still am, but I'm at market level). I got a lot of business, and I got a lot of brides who wanted everything for free, or who wanted the bare bones services, actually stating that the cake "wasn't that important to them."

NOW, I've raised my prices to be where the market norm is around here, and viola- my new brides don't CARE how much the cake is, they WANT the upgrades and they are EXCITED about the cake! They are coming to me because I can give them a PRODUCT they want, not just a price they want.

Those are the customers that you want buying your cookies, not just people who are going to use you until you burn out and then find some other cookie lady to take advantage of.

Spectra Posted 29 Jan 2011 , 2:09am
post #6 of 9

Thanks everyone, I will stick with what I plan for now. It's hard when no one else sells them around here really and I haven't sold anything yet. It just shocked me a bit, but now I'm more calm. icon_smile.gif Thanks!

MimiFix Posted 1 Feb 2011 , 1:45pm
post #7 of 9

It's important to know how to calculate the cost of your ingredients and products, then price accurately for profit. It's unfortunate that many people simply don't know how to do this and even more unfortunate that their underpricing hurts our sales.

TexasSugar Posted 1 Feb 2011 , 3:38pm
post #8 of 9
Quote:
Originally Posted by JanBest

It's important to know how to calculate the cost of your ingredients and products, then price accurately for profit. It's unfortunate that many people simply don't know how to do this and even more unfortunate that their underpricing hurts our sales.




I think it is part that people don't know how to do it. The other part is that people don't want to take the time to do it. Alot of people would rather ask for everyone else's prices and pick a number from there, than to actually stop and do the research so they have the right numbers for their specific area.

scp1127 Posted 1 Feb 2011 , 4:37pm
post #9 of 9

Pricing without consideration of competition is not how to find the price. You can price that way if you want, but it is defying the most basic principles of business. It is nice to think that you can add up your expenses, tack on salary and profit and arrive at your number. Your price is determined by the market... all of your competitors. Determine where you fit and that is your price. Consider your decorating skill and the taste. Do this by buying every competing product and honestly analize it. Then figure your expenses. Can you make a living with what is left? If you can't, you must up your skills or lower your overhead. If you can't do that, your business is not viable. I love it when people just make up numbers if they are in my area. They are not competition. Either they are too pricey and no one buys, or they are too cheap and can't keep the business running.

Quote by @%username% on %date%

%body%