rrratch Posted 8 Jul 2013 , 4:27am
post #1 of

AHi everyone! I'm new to CC and fairly new to the cake decorating business so please bear with me if my plight is one that you've heard before and maybe even weighed in on.

I recently was contacted by my a friend of a friend (someone I've never met) who saw my cakes and was enquiring about a cake for her 3 year old twins' birthday party. She would have been my first client whom I had no personal connection to and also the first person I would be charging properly (so far, I have only done cakes for friends and charged for materials only). Her initial email to me asked for a quote for either cupcakes or a cupcake cake with 2 very different and disconnected themes to serve roughly 30 people. I wrote her back with an estimate and after some email exchange and phone conversation she decided to go with a 3 dozen cupcakes split between 2 cupcake cakes. She also had concerns about nut allergies and I assured her that I would not use any nut products, provide a list of ingredients and also repurchase ingredients to minimise the risk of cross-contamination.

I drew up 2 sketches, one had 18 cupcakes, a fondant mermaid figurine sitting on a rock (to match the one on her invitation), a starfish, a sand dollar, a crab and 2 shells. And the other had 18 cupcakes a racetrack made of fondant, a Lightning McQueen car and some stars shooting out of the ground with the son's name and age. I quoted $65 for the first one and $55 for the second. I know there aren't any pictures to prove it but I'm super detail oriented and spend a lot of time perfecting my figurines so I knew the mermaid and car would take me a good amount of time. After I emailed off the sketches and quote, she came back saying that she loved the designs but she and her husband had gone over the budget and realised they were well over even without the cakes and therefore would not be moving forward with the order.

Of course I suspect that it was the price that scared her off so my question is...was I way off the mark with this one? I honestly don't feel like the price was too much given that I know how much time I would have put into it and I still feel like I would have underpaid myself. And I also have been reassuring myself that if she thought it was too expensive then she isn't my target clientele but I can't help but second guess myself since it would have been my first "full-price" order.

Any thoughts would be greatly appreciated.

Thanks :)

30 replies
auntginn Posted 8 Jul 2013 , 5:15am
post #2 of

No, you were not over priced.  Just the fact that you were going out of your way to deal with the "concerns for nut allergies"   I only say that I will not add any additional nuts but that some of my ingredients "may" have nuts , nut flavors, etc"  As you state, you place a lot of time in the detail.

 

Many people just don't want to pay for custom work.  They like what they see until reality hits them with the price.  Don't loose sleep over it.

jason_kraft Posted 8 Jul 2013 , 5:16am
post #3 of

AYes, you were off the mark...your quotes were too low. $55-65 may be OK for 18 basic cupcakes but once you factor in the labor involved in creating the other decorations you probably won't be making much money. Not to mention the fact that Lightning McQueen is copyrighted and you would need Disney's permission to recreate it.

I recommend reading the Pricing Formula and Copyright links in my signature below. Also make sure you are compliant with food safety laws in your area, some states require a license and/or an inspection before you can sell food to the public.

kaylawaylalayla Posted 8 Jul 2013 , 6:15am
post #4 of

AEven though you are second guessing yourself, her explanation seems like a likely one. Birthday parties can get out of hand quick lol. Maybe she was just telling you the truth and your prices are not a turn off. COGS

Brendabeeper Posted 8 Jul 2013 , 10:17am
post #5 of

It is very hard to price as they should be, or even price close to as should be.   However if you dont start to do this what will happen is you spend all your time baking and decorating to make someone's birthday party special  and in return you get no sleep, no profit, and no family time and then you even start to not enjoy the Hobby Baking.   I after 5 years and still learning this and have learned to stick to my guns.. ( most of the time ) lol.  It does take awhile because you either know the person or know their story and you get wrapped into ,, Yeah  I can do this...then we cringe because we know the cost of the cakes is alot and second guess ourselfs alot too.  However I have seen the store prices go up and if someone wants to pay the store prices.... then let them have the store cake.   I learned that I just cant do every event or friends cake for the best friend price and that sleep and family is important too. 

Best wishes

BrandisBaked Posted 8 Jul 2013 , 11:04pm
post #6 of

AIf you are new to decorating, I don't feel it's fair to charge as much as a seasoned decorator. I've been decorating for 22 years and that's probably close to what I would charge. So I guess I'm in the minority for thinking that price is too much.

Not having seen your work, I am only going by your post that you are fairly new to this. And when you're new, it takes more time, but I've never thought it fair to charge a customer more because it takes an inexperienced decorator longer to produce a cake.

jason_kraft Posted 8 Jul 2013 , 11:11pm
post #7 of

A

Original message sent by BrandisBaked

If you are new to decorating, I don't feel it's fair to charge as much as a seasoned decorator.

Assuming you can at least create a saleable product (if you can't, you shouldn't be in business at all yet) your price should be in line with the market value based on your location. If you are new and therefore less efficient, you will automatically be paying yourself less on a per hour basis since the cake will take you longer to make. As you become more seasoned and can make cakes faster, your wage will increase without having to change your price.

BrandisBaked Posted 8 Jul 2013 , 11:15pm
post #8 of

A

Original message sent by jason_kraft

. If you are new and therefore less efficient, you will automatically be paying yourself less on a per hour basis since the cake will take you longer to make. As you become more seasoned and can make cakes faster, your wage will increase without having to change your price.

Isn't that what I just said?

jason_kraft Posted 8 Jul 2013 , 11:21pm
post #9 of

A

Original message sent by BrandisBaked

Isn't that what I just said?

Not the way I read it, you mentioned that you thought the price was too much because you would charge that much as a seasoned veteran. My point was that a beginner with enough skill to produce a product suitable to their market should charge the same as a veteran making a similar product in the same market, the wage difference shows up in the labor cost component and is not visible to the customer.

Please clarify if my inference was incorrect.

howsweet Posted 8 Jul 2013 , 11:43pm

I had a woman literally scream at me on the phone for charging what I charge. She was an ignoramus. Not everyone can afford fancy cakes. Most people I meet can't afford fancy cakes. I can't afford my own cakes. Don't feel bad when someone can't afford your cake.  I imagine it's no coincidence that there are so many cakes made of $700 Jimmy Choo's. I can't afford Jimmy Choo's, either.
 

newbe86 Posted 9 Jul 2013 , 12:06am

A

Original message sent by BrandisBaked

If you are new to decorating, I don't feel it's fair to charge as much as a seasoned decorator. I've been decorating for 22 years and that's probably close to what I would charge. So I guess I'm in the minority for thinking that price is too much.

Not having seen your work, I am only going by your post that you are fairly new to this. And when you're new, it takes more time, but I've never thought it fair to charge a customer more because it takes an inexperienced decorator longer to produce a cake.

This is the double edged sword for us new business bakers. If we price our cakes similar to other bakers in our area, we are accused of charging too much, if we charge less because we don't have 22 years in the business then we are accused of under-cutting. Everyone has to start somewhere. If people are willing to pay for my cakes, even though I've only got a couple years in, then I see nothing wrong with that. I will charge them properly for my time, ingredients, etc.

Norasmom Posted 9 Jul 2013 , 12:20am

Your quote was fine and quite reasonable.  Actually,  it was not enough considering how detail-oriented you say you are, as they sound time consuming to make.  Maybe next time you can have another less expensive option, as in just cupcakes with VERY simple decorations on top.  I had a customer request cupcakes I knew she would think were too expensive, so I told her how time consuming they would be and presented her with a more simple, less expensive option.  You don't want to burn out not making any money, so don't second guess yourself!  It is very true that not everyone can afford custom baked goods.  She could not, but someone else will.

jason_kraft Posted 9 Jul 2013 , 12:28am

A

Original message sent by newbe86

If we price our cakes similar to other bakers in our area, we are accused of charging too much.

There's nothing wrong with people accusing you of charging too much as long as you realize that they are not your target customers. Your marketing strategy should be centered on customers who shop primarily based on quality instead of price, and the kind of people you get inquiries from will be a good indicator of how well your strategy is working.

howsweet Posted 9 Jul 2013 , 12:59am
Quote:
Originally Posted by jason_kraft 


Not the way I read it, you mentioned that you thought the price was too much because you would charge that much as a seasoned veteran. My point was that a beginner with enough skill to produce a product suitable to their market should charge the same as a veteran making a similar product in the same market, the wage difference shows up in the labor cost component and is not visible to the customer.

Please clarify if my inference was incorrect.

That's the way I read it, too.

Quote:
Originally Posted by newbe86 


This is the double edged sword for us new business bakers. If we price our cakes similar to other bakers in our area, we are accused of charging too much, if we charge less because we don't have 22 years in the business then we are accused of under-cutting. Everyone has to start somewhere. If people are willing to pay for my cakes, even though I've only got a couple years in, then I see nothing wrong with that. I will charge them properly for my time, ingredients, etc.

Who cares what you're accused of? What can that possibly have to do with anything?  This is business and what the average person you run into thinks about your pricing is irrelevant. If you're making high end cakes, your target market is people who can afford them.  If the quality of your work isn't quite there, then of course you can charge less if people want that, but then you're not building a clientele who will be able to buy your cakes when you improve. If you don't place a high value on your work, no one else will either.

 

And I would have charged $65 just for the generic mermaid figure, not including the rock she's sitting on...or starfish or cake.

howsweet Posted 9 Jul 2013 , 1:02am

I'll add that I don't have the luxury of undercharging because the sole source of income for my household is my cakes. I'm forced to charge a price that's fair to me. It's beyond me why so many people don't want to charge a price that's fair to themselves.

smittyditty Posted 9 Jul 2013 , 2:07am

Jason maybe you could put some input into this?

If you offer a cheaper price detailed cake would a customer automatically get that because they want to save $$ then be disappointed because they

took the offer so fast? You know with the idea of the cake they wanted but agreeing to the cheaper price? I like this idea but feel if I offered it with sales I'd be

undercutting sales I could make merely because the customer wanted to save a buck. Where as if they had originally gone with the first price and gotten the wow

factor they would be happier. Am I making sense?

jason_kraft Posted 9 Jul 2013 , 2:34am

A

Original message sent by smittyditty

Jason maybe you could put some input into this? If you offer a cheaper price detailed cake would a customer automatically get that because they want to save $$ then be disappointed because they took the offer so fast? You know with the idea of the cake they wanted but agreeing to the cheaper price? I like this idea but feel if I offered it with sales I'd be undercutting sales I could make merely because the customer wanted to save a buck. Where as if they had originally gone with the first price and gotten the wow factor they would be happier. Am I making sense?

I'm not sure I fully understand your point, could you clarify?

If you are referring to offering a cheaper, less detailed cake as an alternative, that is definitely a viable option, but it is only necessary when the customer's budget does not match their initial expectations. The less detailed cake will make you less income, but if you structure your prices correctly your profit margin and hourly wage should be the same.

In fact you could even build in a larger profit margin to your smaller and less detailed cakes to help compensate for the lower sales price.

newbe86 Posted 9 Jul 2013 , 12:20pm

A

Original message sent by jason_kraft

There's nothing wrong with people accusing you of charging too much as long as you realize that they are not your target customers. Your marketing strategy should be centered on customers who shop primarily based on quality instead of price, and the kind of people you get inquiries from will be a good indicator of how well your strategy is working.

I was referring to other bakers accusing new/hobby bakers for charging too much due to lack of experience. I agree that 20+ years in the business one is quite skilled, but they, as everyone else, had to start somewhere. Am I making sense?

marizol01 Posted 9 Jul 2013 , 1:08pm

DO NOT UNDERESTIMATE THE VALUE OF YOUR WORK. This is a mistake that we make more often than not, specially when we are new to this market.

 

Lets break down your work based on time, not including labor. Just humor me on this one:

-sketching: 2 hrs

-procuring materials for:

  -baking: 1 hr

  -packaging: 1 hr

  -cake boards :1 hr

-baking cupcakes: from the time you break the first egg until the time the kitchen is cleaned: 2 hrs

-making figurines: 4-6 hrs

-decorating cake boards: 1 hr

-delivery:?

 

Added all up:14 + hours

 

What you are charging/hr:

Divided by the price you are charging: 120/14 = $8.86/ hour

 

What you are doing from free: From a business perspective this is totally unacceptable

-labor

-overhead expenses (electricity, location, etc.) you are still incurring in overhead expenses even if you are baking at home. You still need to pay the electrical bill....  You need to figure this out and substract that from price per hour above.

 

Now you tell me if what you are charging is too much.... 

 

Good luck! :)

howsweet Posted 9 Jul 2013 , 4:49pm
Quote:
Originally Posted by newbe86 


I was referring to other bakers accusing new/hobby bakers for charging too much due to lack of experience. I agree that 20+ years in the business one is quite skilled, but they, as everyone else, had to start somewhere. Am I making sense?


Where on this planet can you find a hobby baker who is overcharging?

jason_kraft Posted 9 Jul 2013 , 5:22pm

A

Original message sent by howsweet

Where on this planet can you find a hobby baker who is overcharging?

From the perspective of a baker who sets prices based on a profit margin of zero, no overhead allocation, and a wage of $1/hour, anyone who sets prices appropriately would be considered "overcharging".

jason_kraft Posted 9 Jul 2013 , 5:23pm

A

Original message sent by newbe86

I was referring to other bakers accusing new/hobby bakers for charging too much due to lack of experience. I agree that 20+ years in the business one is quite skilled, but they, as everyone else, had to start somewhere. Am I making sense?

You are making sense, but a veteran baker complaining that newbies are overcharging makes no sense whatsoever.

kaylawaylalayla Posted 9 Jul 2013 , 5:33pm

AI get that some people have more experience as in years. But that doesnt matter because some people have natural talent and better starting off points. I can tell this just by looking at the first cake last cake thread. Like my first cake for example is awful, when I looked at other people's first cakes I was very impressed. Clearly they can charge more than me with less experience.

newbe86 Posted 9 Jul 2013 , 5:41pm

A

Original message sent by BrandisBaked

If you are new to decorating, I don't feel it's fair to charge as much as a seasoned decorator. I've been decorating for 22 years and that's probably close to what I would charge. So I guess I'm in the minority for thinking that price is too much.

Not having seen your work, I am only going by your post that you are fairly new to this. And when you're new, it takes more time, but I've never thought it fair to charge a customer more because it takes an inexperienced decorator longer to produce a cake.

This post says that it's not fair for someone who is "new to decorating" to charge what BrandisBaked would charge because of the difference in experience. So should a newer decorator charge less regardless of skill?

BrandisBaked Posted 9 Jul 2013 , 7:36pm

A

Original message sent by newbe86

This post says that it's not fair for someone who is "new to decorating" to charge what BrandisBaked would charge because of the difference in experience. So should a newer decorator charge less regardless of skill?

For the vast majority starting out, it takes years to perfect their skills and improve their speed. So yes, when the cake NewbieJane makes looks far less polished than mine, I believe she should be charging less. I charge as much as I do because I am experienced enough to make a cake at a certain level, whereas Jane's may look nice, but years of practice do make a decorator better. I used to BE NewbieJane, so I am in no way bashing anyone.

Heck, I would like to charge as much as Sylvia Weinstock or Ron ben Isreal, but I am not at that skill level.

jason_kraft Posted 9 Jul 2013 , 8:05pm

A

Original message sent by BrandisBaked

For the vast majority starting out, it takes years to perfect their skills and improve their speed. So yes, when the cake NewbieJane makes looks far less polished than mine, I believe she should be charging less..

By the same token, if NewbieJane makes a product that is at a similar "polish" level as a veteran baker and is targeted at the same market, she should not be charging less. If you're talking about the mainstream market the appropriate quality level has a pretty wide range due to the subjective nature of customer perception and diminishing returns.

If someone is upset at an inferior baker for charging the same prices they charge, perhaps they have misjudged the market and should be charging more.

BrandisBaked Posted 9 Jul 2013 , 9:09pm

AUh, that's what I said - WHEN the cakes quality is less , they should charge less. So of course the opposite would be true.

Wasn't your first response that she undercharged? Period? Where was price for skill level anywhere in your answer?

I feel like someone is trying to ride piggyback on my wisdom. LOL!

jason_kraft Posted 9 Jul 2013 , 9:22pm

A

Original message sent by BrandisBaked

Uh, that's what I said - WHEN the cakes quality is less , they should charge less. So of course the opposite would be true.

The question was if a newer decorator should charge less regardless of skill. Your original answer was "yes". The clarification in your most recent post makes more sense in that skill has more relevance than experience. My point was that skill has an impact but only up to a point, and a more skilled baker may not necessarily be able to command a higher price. Let me know if you need me to simplify this for you.

Wasn't your first response that she undercharged? Period? Where was price for skill level anywhere in your answer?

Check out the Pricing Formula link in my signature below if you want to know why I said she undercharged, period.

howsweet Posted 9 Jul 2013 , 11:51pm
Quote:
Originally Posted by jason_kraft 


From the perspective of a baker who sets prices based on a profit margin of zero, no overhead allocation, and a wage of $1/hour, anyone who sets prices appropriately would be considered "overcharging".


I have to admit I hadn't considered that :)

rrratch Posted 18 Jul 2013 , 3:28am

AI'm so sorry that I did not post sooner to thank everyone for replying. I totally appreciate ALL of the feedback and I have taken notes and even secured another booking! I'm replying from my phone and will write a proper response when I'm on my laptop (not sure when that will be though, as the keys are all messed up) but just wanted to say a quick, late, thank you.

Sorry again for taking so long to do this.

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