jennifercullen Posted 6 Feb 2012 , 9:45am
post #1 of

I've recently started doing a business course in my local area, with the intent after it finishes of becoming a registered small business. (I thought I may as well as I was working on enough cakes to start a small business, and I thought if I get more orders I can learn more stuff icon_smile.gif ) Anyway, I've set up my facebook page a few days ago and have had a couple of enquiries for cakes. For an 8 and 6 inch two tier cake I have charged £60, the last 2 I made I gave them the price and they were absolutely fine with it, but the three enquiries I've had since once I've given them the price I've heard nothing back. I feel like that is a fair price considering when I look at bakeries online they are a lot more expensive (I saw a football cake I charged £30 for for over £100 on one site) and I spend a lot of time on the cakes. It probably works out at £30 or so for me to actually make the cake, not taking into account my electric/gas. so thats an extra £30, for my work, and I spend more than 6 hours on a cake generally putting everything into consideration. I dont really know the other prices of peoples cakes, as none of them are willing to put their prices for everyone to see except two business who I know charges less than me, one person actually had a shop, so had shop overheads to think about too (she recently closed her shop actually so that may be because she wasnt charging enough) But I'm thinking if I want to turn into a business and pay taxes etc etc I'm going to have to be charging more, but at the moment I dont know if that is even a viable option. Is getting enquiries that aren't followed up a daily thing for any of you who have a business? Or should I stay like the majority of other decorators round here and stay an unregistered business?

Sorry this has turned into a bit of a rant....

20 replies
scp1127 Posted 6 Feb 2012 , 10:02am
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If you have a premium product but market to the mainstream, this will be your fate... weeding through all of the inquiries to get a few of your actual target market. Talk to your intstructors about defining your target market. What comes next is your marketing plan to reach that market.

For example, I never get those inquiries. But be aware that the higher income market is just a small number compared to the mainstream market. So don't get discouraged once you start marketing correctly and the amount of inquiries is smaller. You are shooting for quality inquiries with a higher closing (making the sale) ratio.

jennifercullen Posted 6 Feb 2012 , 10:20am
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I do think that that is true. I set up the facebook because I thought it seemed like a good idea for free marketing really, and it seems very popular (most people I know know the name of main competition) I think I will have to do more market research into how to reach the higher end of the market, as I know from my extended family especially a lot of them are not on facebook but would look for a shop if they wanted a cake. Am I over charging though? Or are those other people under charging or what? I'm so confused about how I can charge what I think is a cheap price, yet others are charging less as a business price!

scp1127 Posted 6 Feb 2012 , 11:15am
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Do not worry about overcharging. There is a huge segment of the market that will only buy premium. I am one of those people and so are our professional and personal acquaintances. 25 years ago in an intro econ class, the book stated that if price was the most important aspect of a product, we would all be driving Yugos. Yep, most won't even know what that is.

Don't worry about the price. Since I have expanded my menu, I never get orders for the basics.

What do you want to offer? What do you love to bake? Now is there a market? If there is, why get in the rat race with the middle income bakers? Yes, the market is the largest, but in most areas, this segment is saturated.

Find that niche, something you love that will also set you apart from the crowd. It is actually very easy if you get that mindset and start planning. Even in tough economic times, it is not difficult.

Pm me for how to get that market.

emma_123 Posted 6 Feb 2012 , 11:51am
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Hi jennifercullen, I'm in the UK too and don't think you are over-charging. I've got a page on Facebook for my business and I've found it very useful and it has got me orders but I've also had a lot of inquiries from people who have either not replied or told me its too expensive and they don't want to pay that much. I'm only just starting out so don't charge as much as somebody more experienced would and I did a lot of research into prices and mine aren't bad at all for my area, around the same as other cake decorators who do similar things.

I think some people will pay for a cake whilst others just want to have a fantastic cake and pay the same that they would for picking one up off the shelf from Tescos. There are people out there who are willing to pay and understand the time and effort that goes into making a cake so don't be dis-heartened by those who don't. I've just had a look at your photos and your cakes look amazing (I love the batman one) so you need to be charging for your time and making some money out of it too. I think its also easier to charge more once you are a business too as people understand you have costs to pay for like insurance etc otherwise they just see it as your hobby you are making money from. Good luck with whatever you decide!

sillyoldpoohbear Posted 6 Feb 2012 , 12:10pm
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The trouble with this country is that premium is a very small market & depends on the area you're selling in & the product. If it's childrens cakes most people won't pay top price as Asda, Tesco etc sell so cheaply. Yes they taste like cardboard & are full of additives but but a child isn't going to complain about that, so the parents go for the cheapest option.

It also doesn't help the amount of baking shows that are on tv, making everyone think they can start a cake business with no experience or talent. I've had someone like this in my area. It doesn't help that she used to work with my mom (& was classed as a friend) & the people that are buying from her used to be buy from me, even though she is unlicensed & not of a professional standard. But they don't care, she's cheaper & that's all some people care about.

I don't think your cakes are that overpriced. You say you have been getting enough orders that you felt you could start a small business, so people must be happy with your cakes & the price you charge. If your'e worried about the competition in your area call & pretend to be a bride etc & make a general enquiry about their cakes. No one knows it's you & it will give you general idea about how your prices compare to theirs. How do you know that the people that have made the enquiries with you on facebook aren't the competition trying to find out your prices?

As for facebook, I used to "advertise" on there but took it down in the end beacuse I got so many dead end enquiries it just wasn't worth the hassle. Yes it's a wonderful promotional tool in one way but can be just as much as a pain in another way.

You will always get enquiries for prices & they never come back, don't take it to heart it's not worth the brain ache lol I used to stress about this but you'll learn that a lot of people are out there to squeeze you as much as they can, we all want a bargain especially in this economy, but don't give on it. If your product is good & you are charging your worth & you're getting plenty of business from your regular customers to keep you going, the new ones will come. All of my business is word of mouth & recomendations from previous customers & that is the best advertising you can get.

nashcedeno Posted 6 Feb 2012 , 12:53pm
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Where I live Puerto Rico is the same I don't have a lot of customers I'm just 1 year and months in the business but so far I satisfy the customers expectations of what they ask for and if a new customer finds it expensive I send them to costco or sams jijiji I don't think they will do custom cakes for the price they want (not yet jijii) little by little you what to have customer that respect your work and dedication. Exito!!

lissyUK Posted 6 Feb 2012 , 3:39pm
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Glad I'm not the only one experiencing this! I get enquiries, which is great, but they regularly don't translate into orders. I've had enough customers (and repeat customers) to know my product is right, my prices are fair. The 'you're too expensive' non-clients all come from my non-targeted marketing - FB, twitter, farmers markets.

Some people don't want to pay much for 'flour and eggs' and that's fine with me - they can go to a supermarket, if that's their budget. (taken me a while to get to this point, but i now understand that not everyone thinks cake is the best thing since sliced bread!).

I work hard. I like my cakes to be a perfect as I can make them. i use top notch ingredients and am proud of my creations. I don't think it's unreasonable to want to pay myself more than minimum wage! It's hard if you look at this as rejection- I try to see it more as not being the right baker for them!

I'm focusing on the wedding market for now and higher end farmers markets that will appreciate the value of my premium ingredients etc. Have you looked at this as an option? Keep your head up and DONT lower your prices. You'll end up resenting your customers and lose passion for your art. Your work is beautiful and the right customers will come x

jennifercullen Posted 6 Feb 2012 , 11:14pm
post #9 of

Thank you so much for all of your replies icon_biggrin.gif they have all made me feel a lot better.

Sorry its taken so long for a reply I've had a busy busy day! Everything is so exciting thinking about starting a new business. Anyway, since I posted I have had someone email me and tell me they would like the £60 cake. I've decided facebook, whilst I do intend to use it, because I do know a few people on there who are definitely in my target market, is not going to be my main source of orders, as a lot of the people on there that I have on my personal friends list even are the kind who wouldn't want to pay £40+ for a cake (and hey I'm not judging, if I didnt make them myself I probaby wouldn't pay it either lol). I have started to write out a market research questionnaire and have asked a friend of mine who owns a kind of upmarket (for the area) salon if she would mind letting her clients have a look and fill one in if they so choose, and am planning on emailing a few out to people that I know and asking them if they would email it round to their contacts.

LissyUK you've definitely given me the right attitude. I'm one of those people thats too nice, and feel bad telling someone a price they cant afford and I know I really need to break the habit of lowering it lol. I decided I wasn't going to do wedding cakes yet, because I didnt think I was good enough, but then I've looked at some and though actually, I can do better than that so why not. everyone has to start somewhere.

scp1127 You've given me something to think about there. (for starters I'm gonna have to google a yugo lol) I like to make literally anything. I do like doing 3d cakes (which I know a lot of people dont) I hope that compared to the rest of the people in my area this sets me apart a little bit already. I would love to extend me recipe list, and get people ordering new flavours. I will definitely pm you icon_smile.gif

I think what I've realised from reading all your posts is that I'm getting ahead of myself and panicking too early. I just need to sit back (not literally of course) and go with it. Market in the right areas and wait for the right customers to come to me, not to sell my services for less than I want to to attract the wrong ones!

scp1127 Posted 8 Feb 2012 , 2:47pm

Good luck Jennifer. It is always the most rewarding to be able to do what you love and find a market vs. having the market force you into making something you don't prefer.

By the way, the Yugo was a company that came out in the 70's with a drastically cheap car that was far below the market preice of its nearest competitor. It had few creature comforts, it was ugly, and everyone made fun of them and those who bought them. It became a model used in economics books and marketing books in college to drive home the fact that price is usually never the number one factor in a sale. In fact, it is usually not even second. People prefer comfort, prestige from their peers, and looks far above price. It was never stated that the car didn't have value because the price did meet the perceived value. It was just that people did not want to drive such a basic, ugly, uncomfortable car. Not to mention all of the jokes the owners had to endure.

shobelyn Posted 3 Jan 2013 , 2:54am

 I am also starting and I price my 9" round cake at 31.50.My customers think it is very expensive. Should I adjust my price when if I do, I am at loss with the labor alone? Any advice please?

jason_kraft Posted 3 Jan 2013 , 3:35am

A

Original message sent by shobelyn

[I] I am also starting and I price my 9" round cake at 31.50.My customers think it is very expensive. Should I adjust my price when if I do, I am at loss with the labor alone? Any advice please?[/I]

How much do you spend on ingredients for that 9" cake, and how many hours does it take you to complete it (including prep, baking, decorating, and cleanup)? How much do you pay in overhead costs (license fees, insurance, etc.)?

DeniseNH Posted 3 Jan 2013 , 4:04am

I'm in the United States and after 16 years I've noticed that this time of year is traditionally "tire kicking" time.  In other words, there's a lot of inquiries and not a lot of orders.  Those come in February so hang in there.  Whatever you do, don't undersell yourself.  Let the other bakers take the low-ballers - and soon they too will go out of business.

crushed Posted 3 Jan 2013 , 6:11am

AWhen I started, there was this desperation to take any order because I wanted the work and to get my name out there. Well, I got a lot of work, made very little and burned myself out. I have since had fewer orders, numbers wise, but made substantially more money and enjoyed myself in the process.

Annabakescakes Posted 3 Jan 2013 , 3:29pm

A

Original message sent by shobelyn

[I] I am also starting and I price my 9" round cake at 31.50.My customers think it is very expensive. Should I adjust my price when if I do, I am at loss with the labor alone? Any advice please?[/I]

That is $1 a serving! You need new customers if they consider that expensive. My minimum for a 9" is $88.

Jennyc28 Posted 4 Jan 2013 , 3:40pm

£31.50 for a 9 inch and £60 for a two tier?? Guys, that's cheap! Ridiculously cheap in fact!! The general rule of thumb is to add up all your ingredients, gas, electricity, petrol, sundries etc and then multiply that figure by 3 to get your final price. My cakes start at £40 for a 6 inch cake, and I add £10 for every extra inch the cake goes up. So, for example, a 9 inch cake for me would be £70, and a two tier cake (made up of a 6 inch and an 8 inch cake) would be £100. Those prices would also be for the most basic of decoration (sugarpaste, a message, a few simple cut out flowers or something etc) and I would then add money on for anything more complex such as extensive decoration, models, carving etc. 

 

I know how difficult it is with some customers, as they simply don't understand the time, skill or cost of ingredients that go into it, but a good custom-made cake is worth a good custom-made price. Even with my prices, I'm only really making minimum wage for the hours I put in, and if you're charging less than that, then you're soon going to find the numbers don't add up and it's actually costing you money to make the cakes rather than making you any profit. If you persevere with your pricing, eventually you will get the sort of clientele you want, and those that expect to get a bespoke cake for £30, will go off to Tesco's. Don't undervalue yourself or your work, because if you don't, they won't either.

SugaredSaffron Posted 5 Jan 2013 , 1:00pm

You're far too cheap!

shobelyn Posted 5 Jan 2013 , 3:54pm

Well, for the licenses, I spent $ 600.00 on it. Then for my decorating the cakes, I usually stress out a week before then work two nights decorating the cakes.The ingredients are not that expensive though, around $5 plus I use gumpaste and buttercream,fondant for decorating. UH. Guess,I just have to stick on being a hobby baker,I guess. SOmetimes, the stress is not worth it.

howsweet Posted 6 Jan 2013 , 6:48pm

It's normal to have a few customers drop off as you raise your prices. Some people are always going to find the cake lady who works for nothing. It's important to know what others are charging because you want to charge as much as the market will bear, right? So do what you must to find out.  If I remember correctly that woman who is Paul McCartney's ex girl friend, Jane somebody, has her prices on her website.

Jackie80 Posted 19 Jan 2013 , 8:03pm

I think you're totally undercharging and agree with the other members, you have to consider You're cost, overhead, etc. And I've learned from the beginning not every customer is your customer. You have to look at it that way to succeed, if you don't you will in turn begin taking every order you can to build clients and get your business out there but eventually you'll notice your profit margin will stay in the red. Sure you want to charge what's fair, but don't undersell yourself and your talent. If you offer a quality product people will pay quality money for it, if not that's not your customer! £60 for a two tier, that's cheap. scp1127 and Jennyc28 summed it up well. I wish you well with your business.

howsweet Posted 21 Jan 2013 , 11:32pm

here it is - you hav e to click on each cake to see the price http://www.janeasher.com/bespokelist.php?cat=Adult%20Cakes
 

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