Panel7124 Posted 22 Feb 2012 , 11:48am
post #1 of

I've lately got some new clients (word of mouth), I know who they are and their financial situation. Let's say they are very rich. I still charged them my standard prices + upcharges for top notch ingredients if they ask for them but I'd charge the same upcharge to anybody else - rich or not. My friends tell me I'm silly and incredibly stupid not to charge them twice or thrice the standard per serving price and that they would spend the money elsewhere no matter what. Frankly, it'd be like stealing to me, I'd not feel comfortable with that and I'm still a beginner in fondant decorating. But I'm probably really stupid. What would you do? Thanks for your opinions!

17 replies
Ursula40 Posted 22 Feb 2012 , 11:59am
post #2 of

No way would I charge more, my prices are my prices, some cannot afford me, others could pay more, but why should they???? It would be unethical in my opinion

AnnieCahill Posted 22 Feb 2012 , 1:18pm
post #3 of

I agree. That just seems so wrong, and it would be very bad if it got around that you were doing that.

traci_doodle Posted 22 Feb 2012 , 1:44pm
post #4 of

Just because they're rich doesn't mean they give out their money for free without further thought! I agree with everybody else. Don't charge more! If I were that customer and I found out you were charging me and only me considerably more money, I'd be very upset and definitely find someone else to do my cakes.

MsGF Posted 22 Feb 2012 , 1:48pm
post #5 of

Have to agree with the others. Seems wrong to me. It seems dishonest. I wouldn't do it. I believe in honesty and integrity. All customers are equal regardless of their large pocket book.

They will appreciate your integrity as a business woman. People with money know others will try to over charge them. Keep your prices the same for everyone and maybe your honesty will lead to more business from the upscale crowd.

leah_s Posted 22 Feb 2012 , 2:04pm
post #6 of

No way. Customers talk. Having different prices for different people will eventually bite you in the backside.

Panel7124 Posted 22 Feb 2012 , 2:07pm
post #7 of

Thanks everybody for your opinions! I'm really happy to know there are still people thinking the same way - I'd rather pass for stupid in eyes of my friends than for a thief in eyes of my customers. Thanks a lot.

jason_kraft Posted 22 Feb 2012 , 4:25pm
post #8 of

It's easy for people to give advice like this when it's not their business on the line.

I agree that you shouldn't charge them more just because, but you could try to upsell on premium products and/or more complex decorations.

Panel7124 Posted 22 Feb 2012 , 5:01pm
post #9 of
Quote:
Originally Posted by jason_kraft

It's easy for people to give advice like this when it's not their business on the line.

I agree that you shouldn't charge them more just because, but you could try to upsell on premium products and/or more complex decorations.




I agree, in fact, they almost always ask for premium products and there is always logically the upcharge (clearly never doubles the price per serving), now for example they want fresh berries in the filling that are not available in winter here - no way I'd use anything frozen. So it takes me a lot of effort and expenses to find them and them being of a good quality at the same time. I surely upcharge for example for inscriptions in Cyrilic as I still didn't find the cutters and have to do everything by hand - but that's not a problem. For complex decorations: I can offer something more complex but can only do what they chose and confirm.

BTW they even don't have any possibility to order somewhere else in my region, nobody does fondant and that's what they want.

But how could I upcharge for example for possibility to speak their language while ordering (there is absolutely no baker speaking English, Russian or Serbian - and I had to spend money and time in the past to learn some foreing languages, so let's say it was an investment). They usually don't speak local language. I don't upcharge for that, just consider it better customer service.

jason_kraft Posted 22 Feb 2012 , 5:25pm

The concept of price discrimination (charging different people different prices for the same product) is actually a valid marketing tactic, and many businesses are very good at using it. For example, when you buy a seat on an airplane, the person sitting next to you may have paid 2-3 times what you paid for the same product.

If you can take advantage of price discrimination you can dramatically increase your profits. It is more difficult for cakes than for more service-based products, but some strategies could be working with an event planner that targets upscale clients and including your cakes at a premium price in the planner's event packages, or shifting your premium cakes to a new product line or brand and increasing those prices while still selling more basic cakes at your original price.

Here's more on price discrimination if you're interested:
http://en.wikipedia.org/wiki/Price_discrimination

sing Posted 22 Feb 2012 , 6:43pm
Quote:
Originally Posted by AnnieCahill

I agree. That just seems so wrong, and it would be very bad if it got around that you were doing that.




thumbs_up.gif

scp1127 Posted 23 Feb 2012 , 8:07am

People have money because they are smart, not stupid... unless they inherited it or won it. In the example Jason suggested, personally, we don't bother with the price game when we are traveling, but we consciously make the decision not to be bothered. It is still an educated choice. I'm sure the person sitting on the plane in the more expensive seat didn't feel like chasing a price all over the internet. Actually, I know very few who practice this method. In the case presented by the OP, it's just deception.

It is common practice to pay more for convenience or other amenities.

I cater to only upper income, and they are also my friends and acquaintances. Don't misinterpret having more disposable income with ignorance in spending. We and they are just as aware of market prices as anyone else. We just choose convenience and other values over lowest cost.

Norasmom Posted 23 Feb 2012 , 2:27pm

I used to sell cars...it was a regular practice to do this. Needless to say, I didn't do this for long.

BlakesCakes Posted 24 Feb 2012 , 4:56am

I deal with "up-pricing" all of the time because of my address and home...........I'm fortunate enough to live in a lovely home in a nice neighborhood.
I've been given lawn mowing quotes, painting quotes, etc. that are more than double those given to friends who live in more another town less than 2 miles away. The quotes have come from the same individuals for the same services, so it's very much an apples to apples comparison. The only difference is the zip code.....................

So, they pay $30 dollars to have their .75 acre mowed and I was quoted $50 by the same lawn service--nothing requested in the quote except mowing......I called the guy on it, asking for an explanation and he had none...........made me mad as hell, too.
Friends referred me to a painter, he shows up, I ask for an hourly rate, and he quotes me 2X what he charged them................

Given how I feel about it, I could never do it to another person.

Rae

scp1127 Posted 24 Feb 2012 , 6:10am

I live in an affluent neighborhood also. I get quotes all the time. I tell all that I am accepting quotes from at least three contractors. I never get prices that are out of line because I let them know I am informed. I am a licensed contractor and no one tries to pull that game on me. They may start the conversation out that way, but they quickly see it won't work and offer a quote that is in line.

Blakes actually proved my earlier point. We are informed. Yes, you can try, but it won't work.

For the used car issue, it isn't by income level that you pay more. It's by being uninformed. I paid $500.00 over sticker for my vehicle. You know why? Because I looked it up on the internet and that was the going rate. You can shop a used car too on the internet. It is so simple. I did it for my daughter. I got the best price I could in a 100 mile area. I did it myself even though my ex owns a used car wholesaling company. He approved of my find.

Again, higher income usually means a higher education level either formally or the school of hard knocks. Either way, stupidity and ingorance do not happen.

ChristaBaker Posted 26 Feb 2012 , 7:11pm

I wouldn't put it quite that way - I would charge more simply because I am always "working out deals" and giving discounts to the majority of my clients for varoius reasons, so if I knew someone was willing to pay whatever I asked, I would simply charge FULL PRICE, not overcharge them. That does not seem unethical to me. People are always coming to me and asking how I can do a great cake for them on a tight budget, and I try to work with them within reason (scaling down the design or the size a bit so I can do it for less). So it would be nice for once to be able to say, unflinchingly, the price is X dollars and feel really confident that they can manage that. Or to be able to really go all out with a design idea and not have to scale it back for budget reasons.

When I was really new to this, I once lost a cake order because I charged too little. The client thought I must not be as good as my competitor, so she went with them instead. Lesson learned!

Panel7124 Posted 26 Feb 2012 , 7:53pm

scp, I would not try, just simply quote the same price as for anyone else. The funny thing is they even don't ask about the price, we agree about all the details, then I have to ask:

'Would you like to know the final price of your cake?
'...yeah,.... ok' (can't care less)

These people are different from those you may know. They are the 'new rich' and you are right to say that people spend the money the same way they earned them - let's say everybody knows how these people got their money. These are the same people that 30 years ago drove at full gas their tanks in woods of my country, lived in horrible block of flats gluing newspapers on the window panes instead of using curtains, exchanging caviar for bad quality jeans etc. etc. I know them very well - their mentality, habits (eating habits - that's handy now), taste, style of thinking, culture, language.

I'm mostly interested in decorating as I'm already a good baker and what I was thinking was as ChristaBaker said: 'it would be nice ... to be able to really go all out with a design idea and not have to scale it back for budget reasons'. Here the families are really small, even the parties are smallish - usually not more than 20 people, 30 serving is considered quite a lot. The average wedding cake is 40 servings and 'standard' icon_lol.gif budget for that is around $ 500 - 550. You can consider yourself lucky if you get one wedding cake a month. It's not so much a question of budget, people just don't need massive cakes. So it would be nice to have the possibility of designing and making something without being always limited by servings number as these 'new rich' don't mind having 50 servings left at all, just want a good looking and great tasting cake.

I would really prefer (and I suppose everybody) to make 5 very detailed cakes a month and earn the same money to making 15 smaller, less detailed for the same money. Let's see how it goes, wish me luck! Anyway, I'd never give higher price 'just because' to anybody - I've got the same thing many times. Are you a woman and calling the electrician because all the lights suddenly stopped working? Be ready they will quote you double just because you are woman (and you supposedly don't understand anything about it icon_lol.gif). The same will happen if you give 'wrong' ZIP code - in this case means 'warning, warning: rich zone client! up the prices!! Seems like this works in the same manner everywhere.

scp1127 Posted 27 Feb 2012 , 4:48am

? I'm not understanding your post.

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