Why I'm Happier Now: A Lesson In Reality

Business By jenmat Updated 18 Jul 2011 , 1:32am by tokazodo

jenmat Posted 6 Apr 2011 , 12:03am
post #1 of 44

Just thought I'd give my experiences lately a voice, as so many of us go through this transition in the cake business. Hopefully it can help those of you struggling with the direction you should take in the future.

I began my business about 3 years ago. I have a licensed bakery in the basement of our new home, in fact, we built the house on top of the bakery and designed it around that purpose.
Being grocery store trained, I really wanted to include custom sheet cakes and smaller round cakes in my offerings. I also underpriced them (like many of us do).

So, within a year, I was doing 10-12 cakes per weekend, by myself, and then adding wedding cakes in there too. I was turing orders down left and right, and the calls kept coming, and the requests kept getting weirder.
"Can you fit 5 different sports balls on one 8" round? How about combining his love for golf and spaghetti? Is that still $25?"

I was getting soooo drained! The creativity was literally leaking out of me on these stupid little sheet cakes, and by the time I could sit down with the wedding cakes, I had nothing left. And, those 10-12 celebration cakes brought in between $300 and $400. yippee, less than minimum wage.

I knew something had to change, and I looked at a bunch of options. I knew I had underpriced myself and been incredibly lazy in the process. Not only is it lazy to not do your homework with pricing, it is lazy to undervalue yourself. We say its because of confidence issues or people just don't want to pay our prices, but it is also soo much easier to not have to sell yourself. When you underprice, you will get every customer, and you don't have to "do" much to get those people. They know they're getting a good deal, you don't have to sell them on your product.

After about 300 cakes go by, I realized I had to do something if this was going to work out well for me and my family. So I finally got it together and set limits. I now have a minimum of $75 for anything custom. I still offer sheet cakes, but they can have bc roses or polka dots on them. On my custom work, I have "starting at" pricing, and each project gets a quote. And I always over-bid. Even if its by just $5-$10, I overbid what I think it should be because I am trying to train myself to value what I do.

I also raised wedding cake prices by $.20 per serving. I thought this would turn people off, but it has had the exact opposite reaction. People seem to want me more and respect me more that I charge a higher-end price (for my area.) Prices will go up another .10-.20 in June. Why not if they keep calling?

I thought my celebration customers would be irate with me for the changes. While some were disappointed they weren't getting a deal anymore, most have just stopped calling or told me they would use me for bigger events. But I've quickly replaced those "gimme" customers with people who have no problem treating me well, giving me creative license, and not blinking at the extras and costs involved.

My orders have gone down, but my profits really have not. I make just as much but have so much more time to be creative and design fun cakes. AND I am putting much more emphasis on weddings, which is where the real money is. Those wedding cakes are going to be as pristine I can make them because I actually have time and creative energy for it.

So, lessons to learn:
if you undervalue yourself, you will be undervalued
if you don't have boundaries, people will not know to respect them.
you train your customers, so if they are making you angry, blame numero uno.
work smarter, not harder
you CAN'T do everything, so pick what will make you more money and still keep you happy!
Leave the little cakes and little $$$ to the grocery stores, that's what they are there for.

So there you have it, hope it helps someone out there!
j

43 replies
elliespartycake Posted 6 Apr 2011 , 12:24am
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Thank you! Great lesson and a great perspective!

jo3d33 Posted 6 Apr 2011 , 12:42am
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LOVE IT!! I just raised my cupcake prices because I hate doing them....people are still ordering. icon_smile.gif

jason_kraft Posted 6 Apr 2011 , 12:43am
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Excellent post. If you still find yourself having to turn away customers, don't hesitate to continue raising the price until you find the right balance...as you've seen, the higher prices will automatically weed out the less profitable customers. It's usually better to have fewer but larger price increases, so you may want to consider bumping your wedding cake price by 50 cents/serving or more, or add $1/serving with fondant included instead of charging separately for fondant.

LisaMaeCakes Posted 6 Apr 2011 , 12:50am
post #5 of 44

Amen Sister!!!!!!!!!!!!!!!!!!!!!!!!!! I could not agree more. I decided in the beginning that I was not going to be everybody's baker. After working in a church kitchen for 3 years and keeping true to my goals I finally got my own cake studio last August and had real rent to pay. Well, I got a little out of whack. I took on small cakes so that I could be sure to have the cash flow that I wanted. Yes, I'm a type A. Well, I was getting worn out and just like you said, no creative energy for the wedding cakes. Well, I'm realigned again ....still have to fulfill these small orders that I committed to for the next 2 months, but after that, the main thing is the main thing...

cakesdivine Posted 6 Apr 2011 , 1:18am
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I am so proud of you jentreu!

yummys Posted 6 Apr 2011 , 3:34am
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I am so glad that I read this I am going through the same problem. Always tired and feeling like I'm not getting any where. I will take your advice and do my homework so I can price myself properly. icon_smile.gif

indydebi Posted 6 Apr 2011 , 4:49am
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excellent post and well written! Saving this one for future reference as I know it will be helpful to many MANY others down the road! thumbs_up.gif

suzylynn58 Posted 6 Apr 2011 , 11:05am
post #9 of 44

I just raised my prices too. First time in a couple of years. I still work a full time job as well as my cake business and am feeling drained and "uncreative". So I am trying to weed out the cheap cakes. I plan to retire from the full time job later this year and do my cake business full time. I don't want to be bogged down with little cakes. Like others have said, I would love to work less and make the same or more money!

Thanks for posting!

BTW - your work is gorgeous and you deserve every penny you can charge!

TerriLynn Posted 6 Apr 2011 , 11:21am
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Thanks, jentreu

Just what I needed to hear also! icon_wink.gif

pinkpiggie78 Posted 6 Apr 2011 , 11:29am
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Thanks for your post!

DebBTX Posted 6 Apr 2011 , 12:25pm
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Great post.

ilovesprinkles Posted 6 Apr 2011 , 2:43pm
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This is great advice, and I'm glad it has improved your quality of life! I am just starting out so, while I have done a lot of research about prices in my area, I am constantly second guessing my prices. I have a feeling they are going up very soon.

ajwonka Posted 6 Apr 2011 , 2:58pm
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Thanks for sharing your experience! So good for us to hear (over & over!)

Mb20fan Posted 6 Apr 2011 , 3:01pm
post #15 of 44

BE-YOU-tifully written...that made me smile! Congrats and I wish you much success in the future. thumbs_up.gif

ChRiStY_71 Posted 6 Apr 2011 , 3:11pm
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True words of wisdom! Thanks for sharing! icon_smile.gif

dchockeyguy Posted 6 Apr 2011 , 3:15pm
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What a great piece. Thanks for the advice!

llbesq Posted 6 Apr 2011 , 3:19pm
post #18 of 44

Thank you for sharing your experiences. My husband and I were just talking about this very topic on the way to our law office today (cake business is a side business). Your post is very encouraging to me and I am sure to many others today icon_smile.gif

jenmat Posted 6 Apr 2011 , 5:56pm
post #19 of 44

I'm glad it has been an encouragement. I wasn't sure I wanted to post something, but after reading a few posts lately about people overwhelmed with business but can't turn down orders because they need the money, it convinced me that maybe someone would get something from the experience.

@Jason- You are right, a larger increase may be what needs to happen, seeing as it looks like commodity pricing is going to be going up and I should look ahead for 2012.
@debi- I would be more than honored to be in your "stack of stuff!"

FYI- next weekend begins my official "busy season" (aaaahhh!!), and I just took another order- 3 months ago this order would have been $45, and I priced it at $105. And they are driving 2 hours to come and get it. And are HAPPY to do it.

Last year the same weekend I had 14 celebration orders for a total of $350. This year, I have 10 on the same weekend and will gross $750.

Yep, definitely happier.

Solecito Posted 7 Apr 2011 , 9:26pm
post #20 of 44

Thank you so much for this post. i think you put to writting what some of us have been going through and you gave us (or me for that matter) something to think about. Thanks again...

jewordsoflife Posted 8 Apr 2011 , 2:10am
post #21 of 44

What a great post!! I'm a newbie and am just beginning to look at pricing my cakes (haven't sold any as of yet). This is really helpful!!

johnson6ofus Posted 10 Apr 2011 , 6:23am
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In pricing our rental property, I too suffered from "under pricing". Read - fear of vacancy (in GOOD economic times). I found that the "cheap" people were the "bad" tenants and "under pricing" did more harm than good. "Good" tenants said, "what's wrong with the place? It' s so cheap..." Same, I am sure, for cake customers.

Very few, other than WalMart, can build a business on $20 sheet cakes.

DerrellC Posted 13 Apr 2011 , 2:43am
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Thank you,great post. I'm going to print it and tape it to my wife's fridge.I keep telling her she works too hard on smaller cakes and when a wedding cake is ordered she is burned out from doing all the "grocery store" cakes to enjoy the creative aspects of doing the larger,better paying cakes.

Kitagrl Posted 13 Apr 2011 , 3:19am
post #24 of 44

Great posting!!! I had to go ahead and put a $200 minimum order on my cakes...because I need to pull in a profit but do not have time to do lots of cakes...so I wanted to change my business over to only wedding or larger party cakes. I stress out if I'm doing too much cake so if I can keep it to two large projects per weekend its just about right, and the profit is enough to keep me going. (Sorry, not trying to make a big deal about the amount, I'm in a big city area that allows this type of pricing, it is about equal to the other cake shops in the area as far as custom work.)

I feel SO bad sometimes when previous customers want smaller cakes or people want a cake for their child for under $200... and I do have a very VERY small handful of people I will agree to make a smaller cake for...but I just can't do it. A cake friend and I were just talking about how it takes just as much work to do a $300 sculptured cake as it is to do a $600 wedding cake...but the wedding cake is more profit because its more servings and less detail!

I have figured out that if I am standing there grumbling and upset about a cake...it means I undercharged. So my goal has been to charge enough that I am not grumbling and upset that I'm having to do that particular cake. haha. A few times its been borderline and maybe a little grumbling, but so far I think I'm doing a lot better pricing myself (and limiting myself) than I was a couple years ago!

maisyone2 Posted 13 Apr 2011 , 3:20am
post #25 of 44

I had a co-worker/friend call me the other day who wanted to tell me about the cake someone bought for her daughters surprise birthday. She started out by asking me if I made topsy turvy cakes and I told her that I did. She said this was the type of cake that was purchased for her daughter. She said it was ok, but the frosting was horrible.

The actual point to her call was to tell me how much this cake cost. She said for the 2 tier topsy turvy it cost the buyer $83.00. I commented that she got it cheap. My friend sounded surprised as she thought the $83.00 was expensive.

I made sure she understood that there are a few select people that I give very good deals to when I make them cakes, and she is one of them...but I can't give those same prices to everyone. I'm honestly thinking that my "few special" people are going to be getting higher price quotes as they need to see the value of my talent.

cake_architect Posted 13 Apr 2011 , 3:24am
post #26 of 44

such great information and advice, thank you op icon_biggrin.gif

Kitagrl Posted 13 Apr 2011 , 3:29am
post #27 of 44
Quote:
Originally Posted by maisyone2

I had a co-worker/friend call me the other day who wanted to tell me about the cake someone bought for her daughters surprise birthday. She started out by asking me if I made topsy turvy cakes and I told her that I did. She said this was the type of cake that was purchased for her daughter. She said it was ok, but the frosting was horrible.

The actual point to her call was to tell me how much this cake cost. She said for the 2 tier topsy turvy it cost the buyer $83.00. I commented that she got it cheap. My friend sounded surprised as she thought the $83.00 was expensive.

I made sure she understood that there are a few select people that I give very good deals to when I make them cakes, and she is one of them...but I can't give those same prices to everyone. I'm honestly thinking that my "few special" people are going to be getting higher price quotes as they need to see the value of my talent.




LOL! This reminds me of a cake I delivered recently...its the drum cake in my pix.

Anyway...a totally unrelated lady saw me take it in and really liked it...and as I came out she launched into a store of a horrible cake she ordered from a bakery, and she kept repeating that it was $150 and how it was such a waste of $150 and they could not eat the cake and they did not get a refund and on and on (and I did feel bad for her, since $150 really is a lot of money, at least for me!). But she told me several times that it was $150.

Of course then she asked me how much the drum cake was. I kinda gulped and said "Well if you are with the party, you might want to ask the client, I do not know if I should share that information." She said "Oh I'm not with that party, I don't even know them."

So I hesitated and then gave her a roundabout price which was a good 4 to 5 times the price she had just told me about. Her mouth literally dropped open, and I felt pretty weird. LOL. But yeah...like tons of people have said on here before...everyone has seen the cake shows, but nobody is aware of the pricing!!!!!

Cakes-and-bakes Posted 13 Apr 2011 , 8:57am
post #28 of 44

wonderful for you!!!!
I had been doing work for about a year before i came to that realization. I guess because I myself am not a person who could really afford custom prices, I assumed if I raised my prices no one would order. well I increased my prices to what I felt would be, to me, worth all the work. And people still call! I have less work but since i raised the price im making more than I ever was.when i look back I cant believe i was doing all that work for so little. I also tell them now they can only choose from 1-6 flavors depending on order size, where before I didnt.

indydebi Posted 13 Apr 2011 , 2:52pm
post #29 of 44
Quote:
Originally Posted by Cakes-and-bakes

when i look back I cant believe i was doing all that work for so little.


Been there .... done that! icon_lol.gificon_lol.gif

clmiller1206 Posted 14 Apr 2011 , 6:31pm
post #30 of 44

Thank you for such a great post! It is so nice to know that others have the experience of undervaluing their work. I have found myself kicking my own behind after spending hours on a something for little money in return, with no one to blame but myself. I optimistically call these experiences "personal assertiveness development" - ha! Even some of my customers tell me that I should charge more for what I do. I know that there is a balance there somewhere - I just need to find it!

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