I have been hit out of the blue....a local caterer that I know has asked me about working with them....not doing too many cakes, but LOTS of little dainties, etc. I am licensed and inspected for doing cakes out of my home...that is not a problem. I don't have a clue how to price any of this type of thing. They have contacted me as of today...asking for a pricing guide for things such as cake squares, mints, cheese straws, etc. Items that I make...they are also allowing me to use their facilities that they work out of....I have so many questions...I need some input! Thank you for anyone who can guide me or direct me to any help....
33 views and no ideas?
I do cake balls for a coffee shop and I just use my standard pricing structure and add a 15% discount if they order more than 3dz at a time. If you already have a pricing structure for theese items for standard clients then you just need to figure if you can afford within that pricing structure to offer them a discount and the create a document that lists the products/ flavors & prices per dz (or lb or ea- however you plan to do it). I only offer discounts to retail partners if they order a ceratin volume, because it costs me the same to make them for a standard customer and for them, my only savings comes into play is labor. I find I can make 4dz of something in not much more time than 2dz of something, so I offer retail partners volume discounts. You will also need to make sure you provide them with ingredient information, in case a customer asks.
I'm not sure what benefit using thier facilities would be if you are already inspected and licenced....I don't neccesarily think the savings on utilities to bake would be that significant. Although it might be more convenient for you.
If you are going to use thier facility you will need to find out if your liability insurance will cover you if you damage thier facility. When I was in Illinois I had to cover my rental facilities in my liability insurance.
Personally, having rented a space before and working out of my home now, I prefer the flexibility of a home kitchen, hands down.
This is great. I think some of the cottage food laws say you can't sell wholesale from home so maybe that's why they offered the use of their facilities. Maybe they think it will be cheaper for you because it's their electric bill etc.
Questions and considerations:
If you work there, do you bring your ingredients or use theirs? This would effect your pricing.
How busy are you now? Are you currently turning down regular business? If so how will taking on a caterer effect your business and your timelines.
For discounting this is about making up in consistent volume what you would make if you retailed the product yourself. For example, if they order 400 dainties and that means you have to turn down a cake order, what was your profit margin on the 400 vs your profit margin on the cake order. If the cake order was a better deal for you then you have to adjust your wholesale pricing or you will be loosing money.
How much notice is the caterer expected to give you? Is it understood that you can say no to the caterer if you're regular cake business is already booked up?
It sounds like a great opportunity, just start looking at a calendar and evaluate if the caterer called today and asked for x, can you work that into your existing schedule.
If you have a lot of free time then this is an excellent business decision because it fills in the holes in your current calendar. If you're already busy then this could be a burden not a help.