Howdy everyone! This is officially my first post, though I have been lurking for a long time.
I run a home based cupcakery so I do everything by special order and bake fresh, never freezing. I've been in business for almost two years now but as with anything I'm still learning as I go. Wholesaling is an area I would love to branch out into but I have lots of questions....
Today I was contacted by a husband/wife team who just purchased a cafe about 20 minutes from my home. The previous owner bought cupcakes from a bakery in a town further away from myself and the cafe. He picked them up on his way to work. The new owners are looking for someone more local to provide cupcakes for them. They have asked me to send them a price sheet and to do a tasting for them of my flavors.
I'm looking for suggestions on how to handle this situation. How would you handle the consultation? I have read some people say it's crazy to give a tasting for cupcakes? What do you normally suggest charging for wholesaling of cupcakes to a cafe? I'm assuming I need to charge them less then what I retail to customers for. What type of guidelines do you give the cafe as far as minimum to order of each flavor, how often they order per week, free delivery or charge for delivery? I'm afraid if I charge too much they will not use me but I'm also afraid if I don't charge enough it will be a waste of my time and I won't make any money. I know I'm already undercharging in my area for the special design and hand piping work I do on my cupcakes. So I fear if I have to wholesale for less I'll never make anything. I've been better about increasing my prices over time but I'm still not up to par with retail stores. However, no one else in my area will do design work like I do either. They all focus on flavors rather then details. Any advice would be appreciated.
Also, do you suggest a contract or just treat each weekly order like any other order from a customer?
Thanks so much! You can look at my Facebook page if that gives anyone an idea of the type of work(detail) I am doing so you can offer suggestions on what I should be charging. For a basic cupcake with swirled buttercream I start at $1.25. For specialty cake flavors I charge 25 cents extra per cupcake and a specialty buttercream is also 25 cent extra. Special design cupcakes which is the majority of my work start at $1.50 and then I upcharge for the flavor choices I just mentioned.
What is your cost per cupcake, how much do you pay yourself for an hourly wage, what is your profit margin, and how much does the cafe plan on selling the cupcakes for retail?
I suggest you ask them some questions.
See what their ideal price range is and how many they plan on buying a week.
If they only want a few dozen sell em for more. If they want an excess amount give them a price break possibly.
Dont feel like you have to give them a good deal so they can make money. If you make them cheap enough so they sell them for the same price as you will you ultimately lose business to them for your same cupcakes?
If it is something you really want to do and need/want the guaranteed business then you just need to decide how much you're willing to sacrifice.
I give people a 15% discount off my single cupcake price if they buy 2 dozen or more.
Possibly even say " This is my price for you, and this is the suggested retail price"
Hope this helps!
I don't discount my time. I discount only the time savings by the higher quantity of the same product and the savings on individual packaging. In essence, it is no discount at all. I make the same per hour from wholesale as I do retailing. As I get faster and find shortcuts, my wholesale income per hour is more than my retail. If I was going to make less, I wouldn't take the job.
Another issue no one has brought up... have you checked with your health dept concerning wholesale licensing? In most areas there is an additional license and added requirements. In many areas wholesale goods cannot be produced in a home kitchen. Look into these issues as the owner of the shop my not know the law.
As far as the tasting, of course they need to sample your product and you should not charge them. When I was offered a national wholesale contract, I provided a very generous sampling of every product they wanted to purchase. I presented the products at the meeting and we struck a deal that day. I worked up the price the same as any other product. I do a cost plus time factor to arrive at the price. Whether it was wholesale or retail was inconsequential. If I can't get my price, I decline the job.
Your prices seem low for any area. So many people look at home based businesses as a way to make the price cheaper rather than see the home based business as an opportunity to make a higher profit. If you compare your product to the competition and price it according to the relative value, the savings is in your pocket. If you discount because you are home based, you give your profit to the strangers who buy from you.