LoveMeSomeCake615 Posted 8 May 2013 , 11:42pm
post #1 of

There's really not much I can do about this, so this is more of a vent than anything. 

 

In the past several months, we have lost jobs to one competitor in particular. We know because the potential client will call us, get a quote, and then we never hear from them again but we see the exact cake design later on the competitor's page. We've had some that we will send the quote and the client will say everything sounds good and ask us to send a contract over. But then we don't hear back from them, or if we do, it's for them to say they went in a different direction. We know it's due to price because before this they would have talked about how much they loved our cake and are impressed with the pictures of our work, etc. So we know it's not because they decide they don't like our work. 

 

It's just so frustrating. If it's a matter of them just not choosing to go with us from the beginning, that's one thing. But to have someone ready to sign on the line and pay their retainer suddenly changed their mind because someone undercut our pricing...grrrrr. icon_sad.gif

 

Anybody else ever had this problem, especially with a specific competitor? 

24 replies
bct806 Posted 9 May 2013 , 1:00am
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My problem is they want something custom but at Walmart prices. It just doesn't work that way. They don't understand the amount of time that goes into it. They just want a deal. My prices are incredibly low but there are some people that think it is just cake.

BakerBee7468 Posted 9 May 2013 , 6:22pm
post #3 of

A

Original message sent by bct806

My problem is they want something custom but at Walmart prices. It just doesn't work that way. They don't understand the amount of time that goes into it. They just want a deal. My prices are incredibly low but there are some people that think it is just cake.

I've had this discussion with some co workers. I showed them a picture of a giant cupcake and asked how much they would pay for just to know and one said they wouldn't pay more than $25 and I told them thats not gonna happen. They continued to talk about what they could get a Sams and other grocery stores. I tried to educate them that's its not just about ingredients, I also said that grocery store cakes are so cheap because they use all kinds of processed and preservative ingredients. Those cakes are most likely mass produced and grocery stores don't make any money on those cakes they make their money on all the other goods they sell. People don't care about what goes into a price, they just care that's its cheap. I'm thinking about putting information on my website about these things so that I can educate people but also cut down on people even asking me for grocery Store prices. I know I'll still get asked but atleast if its available on the website I can direct people to educate themselves

BakerBee7468 Posted 9 May 2013 , 6:33pm
post #4 of

A

Original message sent by LoveMeSomeCake615

There's really not much I can do about this, so this is more of a vent than anything. 

In the past several months, we have lost jobs to one competitor in particular. We know because the potential client will call us, get a quote, and then we never hear from them again but we see the exact cake design later on the competitor's page. We've had some that we will send the quote and the client will say everything sounds good and ask us to send a contract over. But then we don't hear back from them, or if we do, it's for them to say they went in a different direction. We know it's due to price because before this they would have talked about how much they loved our cake and are impressed with the pictures of our work, etc. So we know it's not because they decide they don't like our work. 

It's just so frustrating. If it's a matter of them just not choosing to go with us from the beginning, that's one thing. But to have someone ready to sign on the line and pay their retainer suddenly changed their mind because someone undercut our pricing...grrrrr. :(

Anybody else ever had this problem, especially with a specific competitor? 

I'm just starting out but I expect I'll have this problem, maybe not with one specific competitor but in general because where I am there is so much competition already and in one area too. I don't see where there is much you can do except get people to buy with you despite you costing more. Think why are u better than your competition?? See if there is something more you can offer that your competitors don't and without going to out of your way.

kikiandkyle Posted 9 May 2013 , 7:07pm
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AIf they are undercutting you, but you're charging a fair price for the market, then they'll eventually either go out of business, or have to raise their prices to the level where they lose that advantage over you if they want to stay open. Clients that go for cheap over quality are the biggest PITA customers anyway so you shouldn't look at it as losing out, but getting off lightly!

CakeRae80 Posted 9 May 2013 , 7:12pm
post #6 of
Quote:
Originally Posted by BakerBee7468 


I've had this discussion with some co workers. I showed them a picture of a giant cupcake and asked how much they would pay for just to know and one said they wouldn't pay more than $25 and I told them thats not gonna happen. They continued to talk about what they could get a Sams and other grocery stores. I tried to educate them that's its not just about ingredients, I also said that grocery store cakes are so cheap because they use all kinds of processed and preservative ingredients. Those cakes are most likely mass produced and grocery stores don't make any money on those cakes they make their money on all the other goods they sell. People don't care about what goes into a price, they just care that's its cheap. I'm thinking about putting information on my website about these things so that I can educate people but also cut down on people even asking me for grocery Store prices. I know I'll still get asked but atleast if its available on the website I can direct people to educate themselves


I just started to do this, and I read to never undercut the competitors around you. I don't have much where I am. I also had a friend who sells baked goods (muffins, cookies, etc.) in my area clue me in on the prices people will pay around my area. But I explain in my letters or emails that I send, just basically what you've said BakerBee7468! I tell them to remember that all my cakes are made from scratch, any filling they request and frosting is also made from scratch. Lastly, if they choose to go with my rolled marshmallow fondant, that too is made from scratch! Which means there is less preservatives and processed ingredients... People do think that little bake shops or "one man bands" should be cheap like those grocery stores.

BakerBee7468 Posted 9 May 2013 , 9:10pm
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A

Original message sent by CakeRae80

I just started to do this, and I read to never undercut the competitors around you. I don't have much where I am. I also had a friend who sells baked goods (muffins, cookies, etc.) in my area clue me in on the prices people will pay around my area. But I explain in my letters or emails that I send, just basically what you've said BakerBee7468! I tell them to remember that all my cakes are made from scratch, any filling they request and frosting is also made from scratch. Lastly, if they choose to go with my rolled marshmallow fondant, that too is made from scratch! Which means there is less preservatives and processed ingredients... People do think that little bake shops or "one man bands" should be cheap like those grocery stores.

They do but we have to educate people. We can't do that with every single customer but we can do it with a few and put it on our websites or in our emails or brochures or something. I don't see this as losing customers because I never expected grocery store ppl to be my customers

Annabakescakes Posted 9 May 2013 , 9:49pm
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A

Original message sent by kikiandkyle

If they are undercutting you, but you're charging a fair price for the market, then they'll eventually either go out of business, or have to raise their prices to the level where they lose that advantage over you if they want to stay open. Clients that go for cheap over quality are the biggest PITA customers anyway so you shouldn't look at it as losing out, but getting off lightly!

This is so true! For the past 2 years there has been a cupcake business in the area who charges $1.85 per cupcake, with a ton of flavors and a cute place in a shopping strip. I have had to listen to "omg, have you tried ••••••• cupcakes?? They are SO GOOD!" And saw all my friends and clients "checking in" there on Facebook, and people asking why mine are more, since I just have a commercial kitchen... Yadda yadda... And a now the business is closed, because she wasn't making enough, and had a second job, and heart attack.... Terrible! And the saddest thing is that they really were good, and a Gigi's came in, and I think they are gross, but they are doing really good business, so she could've doubled her prices and made some money, rather than being the cheap cupcake place, and running herself ragged.

And to add insult to injury, there was a sign on the door after she closed saying how she was so proud to provide the people of northern Kentucky with reasonably priced cupcakes because this isn't New York City and people here don't want to pay the big bucks for cake... Or some such drivel. I took it to mean she is making a jab at the businesses that were still in business, like me, since my cupcakes are $2.50 for an individual and $24 a dozen. That is how much I have to charge to make any money, and I don't have half the overhead she did.

BakerBee7468 Posted 10 May 2013 , 2:26am
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A

Original message sent by Annabakescakes

This is so true! For the past 2 years there has been a cupcake business in the area who charges $1.85 per cupcake, with a ton of flavors and a cute place in a shopping strip. I have had to listen to "omg, have you tried ••••••• cupcakes?? They are SO GOOD!" And saw all my friends and clients "checking in" there on Facebook, and people asking why mine are more, since I just have a commercial kitchen... Yadda yadda... And a now the business is closed, because she wasn't making enough, and had a second job, and heart attack.... Terrible! And the saddest thing is that they really were good, and a Gigi's came in, and I think they are gross, but they are doing really good business, so she could've doubled her prices and made some money, rather than being the cheap cupcake place, and running herself ragged.

And to add insult to injury, there was a sign on the door after she closed saying how she was so proud to provide the people of northern Kentucky with reasonably priced cupcakes because this isn't New York City and people here don't want to pay the big bucks for cake... Or some such drivel. I took it to mean she is making a jab at the businesses that were still in business, like me, since my cupcakes are $2.50 for an individual and $24 a dozen. That is how much I have to charge to make any money, and I don't have half the overhead she did.

So how come yours aren't $30 a dozen? That's $2.50 for each cupcake?

Annabakescakes Posted 10 May 2013 , 5:48am

A

Original message sent by BakerBee7468

[quote name="Annabakescakes" url="/t/758153/undercutting-so-frustrating#post_7392358"]

This is so true! For the past 2 years there has been a cupcake business in the area who charges $1.85 per cupcake, with a ton of flavors and a cute place in a shopping strip. I have had to listen to "omg, have you tried ••••••• cupcakes?? They are SO GOOD!" And saw all my friends and clients "checking in" there on Facebook, and people asking why mine are more, since I just have a commercial kitchen... Yadda yadda... And a now the business is closed, because she wasn't making enough, and had a second job, and heart attack.... Terrible! And the saddest thing is that they really were good, and a Gigi's came in, and I think they are gross, but they are doing really good business, so she could've doubled her prices and made some money, rather than being the cheap cupcake place, and running herself ragged.

And to add insult to injury, there was a sign on the door after she closed saying how she was so proud to provide the people of northern Kentucky with reasonably priced cupcakes because this isn't New York City and people here don't want to pay the big bucks for cake... Or some such drivel. I took it to mean she is making a jab at the businesses that were still in business, like me, since my cupcakes are $2.50 for an individual and $24 a dozen. That is how much I have to charge to make any money, and I don't have half the overhead she did.

So how come yours aren't $30 a dozen? That's $2.50 for each cupcake?[/quote] because packaging for 1 costs 17¢ and packaging for 12 costs 44¢. It is cheaper to sell 12 in a box than 12 singles, so a quantity discount is an incentive for people to buy more.

BakerBee7468 Posted 10 May 2013 , 2:44pm

AOh ok.

Sweetface421 Posted 10 May 2013 , 3:40pm

I'm sorry this has happened to you. I've experienced this too - I've seen a few of my designs being replicated by other local cakers and not getting credit for the design. I really do my best to give credit where it's due when it comes to others designs. I guess I shouldn't let it bother me, but it does.

 

One thing that I'm in the process of changing with my consults is not providing a sketch of the cake design until after a deposit has been paid.

In the past, I've created a sketch for the couple during their tasting and some have asked if they could take a picture of it so they could show their parents or some such excuse.  But then I never hear from them again. I found out that what they were REALLY doing was taking that design to another caker in town who would do it on the cheap.  That was upsetting so I stopped my prospective clients from taking pictures of their sketches.

But now, it seems that some are taking notes and then going to other cakers who have cheaper prices and describing it to them to have the design replicated that way.  

 

I've just come to the realization that people are just RUDE.  And that it's like stealing intellectual proprety, IMHO.  So now, I'm changing my policy and not providing a sketch until I have a deposit in my hot, little hand :/  Ugh.  I hate having to do that.

BakerBee7468 Posted 10 May 2013 , 10:25pm

A

Original message sent by Sweetface421

I'm sorry this has happened to you. I've experienced this too - I've seen a few of my designs being replicated by other local cakers and not getting credit for the design. I really do my best to give credit where it's due when it comes to others designs. I guess I shouldn't let it bother me, but it does.

One thing that I'm in the process of changing with my consults is not providing a sketch of the cake design until after a deposit has been paid. In the past, I've created a sketch for the couple during their tasting and some have asked if they could take a picture of it so they could show their parents or some such excuse.  But then I never hear from them again. I found out that what they were REALLY doing was taking that design to another caker in town who would do it on the cheap.  That was upsetting so I stopped my prospective clients from taking pictures of their sketches. But now, it seems that some are taking notes and then going to other cakers who have cheaper prices and describing it to them to have the design replicated that way.  

I've just come to the realization that people are just RUDE.  And that it's like stealing intellectual proprety, IMHO.  So now, I'm changing my policy and not providing a sketch until I have a deposit in my hot, little hand :/  Ugh.  I hate having to do that.

You do what u have to do, I don't blame u one bit. Some people don't care about what goes into prices or your skill or that they're taking your ideas elsewhere to find cheaper prices for the same work. Another idea could be to charge a fee to see your sketch while they taste your cake, but would be put towards their deposit or refunded upon making a deposit for you to make their cake. I understand it can be frustrating so hopefully this deters people from taking your sketches elsewhere. Another idea if its even possible is to copyright your sketches so no other caker can use your sketches

BakerBee7468 Posted 10 May 2013 , 10:26pm

AAtleast not without approval from you, so you still get the credit for your designs

LoveMeSomeCake615 Posted 11 May 2013 , 12:20am
Quote:
Originally Posted by Sweetface421 

One thing that I'm in the process of changing with my consults is not providing a sketch of the cake design until after a deposit has been paid.

In the past, I've created a sketch for the couple during their tasting and some have asked if they could take a picture of it so they could show their parents or some such excuse.  But then I never hear from them again. I found out that what they were REALLY doing was taking that design to another caker in town who would do it on the cheap.  That was upsetting so I stopped my prospective clients from taking pictures of their sketches.

Oh yes, we never provide a sketch to a prospective client without a retainer paid and contract signed. That's been our policy for a long time. 

Oddly enough, the most recent bride that this happened with had asked me for a sketch so that she could visualize what the cake and cupcakes design she wanted would look like, and I told her we would provide the sketch once she was booked with us. She then asked if I would go ahead and send the contract over (So I'm thinking, ok she's good with everything!) so she could go over it with her planner, whom she was meeting with that weekend. That was the last I heard from her. 

 

Maybe she got offended that I wouldn't provide a sketch until she was booked? She didn't seem ticked off in her response, but who knows. We've never had anyone have a problem with that policy before. 

 

But regardless of whether anyone has a problem with it or not, that policy is not changing! 

costumeczar Posted 11 May 2013 , 11:50am

I don't do sketches either, ever, even after they book with me, unless it's something so generic and vague it makes no difference anyway. I'll write a description of the cake on the contrct but forget the sketching.

 

I have lots of undercutters around here, and one person who tries to block other people by getting into package deals with the venues around here, or discounts for certainvenues. It's aggravating...You might want to try to tell people that if someone offers them a lower price in writing for the same cake that they can bring that contract  to you so that you can see if you can match the price. I'm not saying to match the price, but if you get a few of those bringing you contracts from the same person you can see if there's a pattern of one person undercutting you and how much they're offering to take off. At least you'll know the specifics of what you're dealing with.

LoveMeSomeCake615 Posted 11 May 2013 , 4:03pm
Quote:
Originally Posted by costumeczar 

I don't do sketches either, ever, even after they book with me, unless it's something so generic and vague it makes no difference anyway. I'll write a description of the cake on the contrct but forget the sketching.

 

I have lots of undercutters around here, and one person who tries to block other people by getting into package deals with the venues around here, or discounts for certainvenues. It's aggravating...You might want to try to tell people that if someone offers them a lower price in writing for the same cake that they can bring that contract  to you so that you can see if you can match the price. I'm not saying to match the price, but if you get a few of those bringing you contracts from the same person you can see if there's a pattern of one person undercutting you and how much they're offering to take off. At least you'll know the specifics of what you're dealing with.

Hmm, that's not a bad idea! Thanks! 

As far as not doing sketches period, I wouldn't mind adopting that policy. I hate doing sketches! icon_twisted.gif

costumeczar Posted 11 May 2013 , 6:26pm
Quote:
Originally Posted by LoveMeSomeCake615 

Hmm, that's not a bad idea! Thanks! 

As far as not doing sketches period, I wouldn't mind adopting that policy. I hate doing sketches! icon_twisted.gif

Yeah, it's too easy for people to trot them around town fishing for the cheapest quote.

Norasmom Posted 11 May 2013 , 6:47pm

I am a very small volume business, but I feel fortunate, there are very few cake shops in my area and the work they do isn't as creative as mine.  And they don't offer delivery.  Our prices are about equal for basic buttercream, but my custom prices are higher and people are okay with that.  I seem to be getting many word-of-mouth referrals.  Is there any way you can differentiate yourself from the under cutter by doing something unique they will not be able to duplicate?   If it's true they are undercharging, you may have little to worry about as they won't be able to sustain long-term growth.  Also, do you charge too much?  We live in a world of competition, so take a look at your pricing numbers.  

LoveMeSomeCake615 Posted 11 May 2013 , 8:48pm
Quote:
Originally Posted by Norasmom 

Is there any way you can differentiate yourself from the under cutter by doing something unique they will not be able to duplicate?   If it's true they are undercharging, you may have little to worry about as they won't be able to sustain long-term growth.  Also, do you charge too much?  We live in a world of competition, so take a look at your pricing numbers.  

Well, not to sound conceited, but we do feel like we offer a higher quality product as far as our design work and execution. We do more gum paste work than they do (figures, flowers, etc.) though I would like to get into more of that. 

We most certainly do not charge too much, we are on the lower to middle end of the going rate for custom cakes and wedding cakes in our area. We actually really need to raise our prices. 

Norasmom Posted 12 May 2013 , 2:33am

It might work to raise your prices.  Sometimes people do believe "you get what you pay for..."  If your prices are already on the lower end and they are undercutting you, they won't survive.  Hope it all works out.  

jason_kraft Posted 12 May 2013 , 3:52am

A

Original message sent by Norasmom

It might work to raise your prices.  Sometimes people do believe "you get what you pay for..."  

Agreed. If you are providing a higher quality product, your price should reflect that, and a higher price will help scare off "value" customers.

kikiandkyle Posted 12 May 2013 , 1:51pm

Raise your prices and you'll make more from the better quality clients you'll get and the cheap clients will continue going to the cheap baker. There is a segment of the market that pays what it costs for quality, no matter how much. Those people don't look for low prices as a sign of quality, they look for high prices.

LoveMeSomeCake615 Posted 13 May 2013 , 4:13am

Yeah, I know we need to. Just a scary thing to do! Our direct competitors in the area of the city we are in (not the same one I was talking about before who undercuts specific jobs) is a bakery that has been there for many years and is very well established. They are quite a bit cheaper than us, both in their storefront products and their custom cakes. Once again, their quality is not what ours is, but we have dealt with people being so used to their pricing that they balk at our prices. We do have customers that see the value and the difference in our work, but a lot who don't, or they do but it's not important enough to them to spend the extra money. So I guess what I am saying is that I'm afraid if we raise our prices, we'll price ourselves out of what our market will bear. 

vgcea Posted 13 May 2013 , 6:59am

Then you could do it gradually and adjust as you find necessary. Maybe a slight increase in your most popular offering e.g. BC cakes or cupcakes, and see how customers respond. I know people often say here "raise your prices," what they don't add is: Be prepared for a mini-drought. There's a bit of a transition as the old grocery-store-pricing-seeking customers freak out or try to bully you down on your prices, your backbone gets stronger and "NO" becomes even more familiar as a response to folks wanting the moon for $0.25, and then more and more of those who stick around or show up end up being people who are willing to pay what your products are worth because they know they can't get that quality anywhere else.

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