A Serious & Rational Discussion About Pricing

Business By DeliciousDesserts Updated 10 Oct 2013 , 11:30pm by SystemMod1

jason_kraft Posted 10 Oct 2013 , 7:11pm
post #91 of 115

A

Original message sent by morganchampagne

I think you should charge whatever number [B]makes you money. [/B]I may be misunderstanding...are you trying to get what some people on here get for cakes? Or are you just simply trying to charge what it would take to make you money? I feel like your original question is getting lost in the sauce. 

A good place to start when putting together a marketing strategy is to look at the four Ps: product, price, place, and promotion, all four of these components need to be up to par in order for your business to succeed. IMO Stitches has no problem with her products (she does excellent work) or her price structure. The development areas are place (for custom order businesses this would normally be a web site which might benefit from some improvement) and promotion (advertising, currently none).

More info: http://en.wikipedia.org/wiki/Marketing_mix

ellavanilla Posted 10 Oct 2013 , 7:25pm
post #92 of 115

Quote:

Originally Posted by jason_kraft 


A good place to start when putting together a marketing strategy is to look at the four Ps: product, price, place, and promotion, all four of these components need to be up to par in order for your business to succeed. IMO Stitches has no problem with her products (she does excellent work) or her price structure. The development areas are place (for custom order businesses this would normally be a web site which might benefit from some improvement) and promotion (advertising, currently none).

More info: http://en.wikipedia.org/wiki/Marketing_mix

 

THIS^^^ and the OP are the hard work that is necessary to getting the price one should charge

 

inlammation aside---one of the reasons it gets so heated are all these little details that make each biz costs different. People come to the site, post "HOW MUCH" threads because they think therein lie the answers to their questions, when it, in no why answers the question of how much an individual should charge. 

 

Someone pointed out that their first cake cost almost double what she had estimated to produce. 

 

Its nice to know what other people charge, and perhaps I might tweak a price now and again after seeing another baker's cake, but its largely irrelevant to what I'm going to charge. If it takes me 6 hours to make a sugar flower and it takes Sylvia Weinstock's team six hours to cover an entire cake, how can one compare? Both groups need to be paid. 

 

The message is right in the OP,  "Here's the list, do the math!"

ddaigle Posted 10 Oct 2013 , 7:40pm
post #93 of 115

Coffee Break time....................Here's my submission...Fairly simply deco (except the topper)

 

My 6/10 butter cream cakes start at $115 (you don't get much extra for that...borders, scrollwork)

Monkey is RKT..(legs & arms are fondant): $50

Colored Icing & dots on 6: $5

Argyle pattern on 10:$15

Fondant ball border (PITA): $25

Standard filling: $0

 

Total: $210

 

I have a chart that breaks out everything..dots, stripes, colored icing, etc.   for all sizes of cakes.   I am always consistent in my pricing.  It's the 3D stuff that stumps me. 

Stitches Posted 10 Oct 2013 , 7:45pm
post #94 of 115

Quote:

Originally Posted by DeliciousDesserts 
 

 

Really?  Just had someone drive over an hour to come visit me.

 

Sometimes it's by phone & I deliver.

There's always an exception to the norm.......seriously..........

-K8memphis Posted 10 Oct 2013 , 7:49pm
post #95 of 115

Quote:

Originally Posted by ddaigle 
 

Coffee Break time....................Here's my submission...Fairly simply deco (except the topper)

 

My 6/10 butter cream cakes start at $115 (you don't get much extra for that...borders, scrollwork)

Monkey is RKT..(legs & arms are fondant): $50

Colored Icing & dots on 6: $5

Argyle pattern on 10:$15

Fondant ball border (PITA): $25

Standard filling: $0

 

Total: $210

 

I have a chart that breaks out everything..dots, stripes, colored icing, etc.   for all sizes of cakes.   I am always consistent in my pricing.  It's the 3D stuff that stumps me. 

 

do you deliver to memphis? chocolate please ;)

 

cutest cake ever!!!

 

♥ this

Stitches Posted 10 Oct 2013 , 7:49pm
post #96 of 115

Quote:

Originally Posted by -K8memphis 
 

 

 

my son is a former fine dining chef--oh yes the newly arrived here will gladly work for very low wages--whatever the nationality --thee finest restaurants in the world employ not the brightest students from culinary school but the cheapest labor they can get -- it's economics --it's a$$ breaking work--long hot hours -- and he has worked all over the country -- think about it--why would an owner hire someone for $12.00 an hour and give them  raises and perks and srtokes and benefits when  they have a host of people to choose from happy to get $10/hr and do a great job or there's ten peeps ready to step in and take their job--not that the owners are mean or anything--it's just business--

 

i'm sure stitches didn't mean for it to sound anything but true 'cause it is

Thank-you for re-affirming what I wrote.

Stitches Posted 10 Oct 2013 , 8:13pm
post #97 of 115

Quote:

Originally Posted by ellavanilla 
 

People come to the site, post "HOW MUCH" threads because they think therein lie the answers to their questions, when it, in no way answers the question of how much an individual should charge.

 

BINGO!

 

How can this work? I have been messing around today playing devils advocate........it just doesn't seem logical to me that a thread like this can or does work. Too much info. goes into correct pricing and none of that really gets broken down in "price the cake" conversation.

 

 Everyone gets their underwear bunched up over the smallest insignificant details.

jason_kraft Posted 10 Oct 2013 , 8:46pm
post #98 of 115

A

Original message sent by Stitches

How can this work? I have been messing around today playing devils advocate........it just doesn't seem logical to me that a thread like this can or does work. Too much info. goes into correct pricing and none of that really gets broken down in "price the cake" conversation.

Agreed. A general discussion of pricing methods, economics, and marketing can add a lot of value. A demonstration of how those methods are applied (via "price this cake") is useful to a point, but after a few examples people won't really get that much out of it -- assuming posters explain their pricing methods in the first place.

howsweet Posted 10 Oct 2013 , 8:53pm
post #99 of 115
Quote:
Originally Posted by morganchampagne 

Ok I have a question. I have never experienced any pushback or realized any destroying of the market from home bakers. I'm a baker under the cottage food law, and the laws in my state are probably the least restrictive in the country.

There are 2 custom cake places in my area about 10 minutes are apart both have been open a while. I know of a few home bakers in my area. Maybe 5. We all seem to be getting business.

My question is how does people underpricing affect what you are doing? It would stand to reason that those people would just go out of business. Just wait them out....am I missing something?

I know that's not exactly what this thread intended to discuss but I've had that question for a while

I hope someone else answered this, in a bit of a hurry. Mainly here to apologize about my math error (see below).

 

A simple way to put is that even if baker's don't act in their own best interest, cake buyers will.  And if someone is selling the same cake for half the price, where do you think they are going to go?  You've no doubt heard of the term,  spouse subsidized cake business?  That's as in people who can't afford or who refuse to a pay fair price for a cake find someone who offers it for cheap. The discount is paid by the primary household provider. The gap - the subsidized amount, is the difference between what the person would have to charge to not starve if cakes were the primary source of income for the household.

 

In other words, the prices that subsidy type business is selling cakes for could not possibly be enough to live off off if they did it full time. In more other words, it means it's not really a legitimate business and is unfair competition.

 

This effects me - I can definitely see it. But if I weren't sure I was right,  I also have people saying things to me like, "I'd really rather use you, but so-and-so will sell me this cake for half your quote."

 

Quote:
Originally Posted by jason_kraft 

FYI, the mortgage payment on an $800K home would be about $3000 at today's rates with 20% down. A payment of $670 would buy you about $180K of house (again with 20% down).

I really messed up on that - no other way to say it . Plugged in the wrong numbers. What's worse is I used to own a real estate company! :oops:

 

But  there was nothing wrong with the point I was making.

 

Quote:
Originally Posted by DeliciousDesserts 
 

 

I do also wish people knew just how much a profitable bakery makes.  Sure there are some people who do very, very well.  This is NOT a get rich industry.  Really it's not.  

 

I'm sure when people see that I charged $1300 for a cake they think I am rich.  Not.  This is my second year and I just started finally making a profit.  That is why so many of the celebrity artists also offer classes or tools.

Sad, but true.

 

Quote:
Originally Posted by DeliciousDesserts 
 

 

My only issue is when they severally undercharge & leave other people thinking that I am severely overcharging.  Someone calls craigslist caker & is quoted $50 then calls me & I quote $200.  They are left thinking I am price gouging.

I definitely get snarky emails letting me know they found a cheaper cake opening also implying I was trying to take advantage of them. And there's not a group of people more concerned about being priced gouged than my target market - rich people, and understandably so. It happens to them a lot when nasty types see the coming.

howsweet Posted 10 Oct 2013 , 8:57pm
post #100 of 115

This is to Stitches, if you really wanted to help the discussion and play devils advocate, maybe you could have dealt with one thing at a time instead of be so all over the place with statements that inflame more than anything else. This thread was about helping people understand.

 

And here we are back to the business of no one can tell anyone what a cake should cost. Maybe not, but they can help -- and a LOT of help is needed. Saying its completely individual and just based on costs is incorrect and misleading. 

-K8memphis Posted 10 Oct 2013 , 9:06pm
post #101 of 115

y'know some peeps just surprised themselves and made a cake that turned out better than they ever thought possible and they just frankly wanna know how much something like that would cost for bragging rights--done--

 

some peeps wanna know because they are hobbyists doing their thing for family and friends and maybe one of them wants to 'really pay' for a cake so xyz hobbyist can buy a new mixer or get paid back better for what all they have given--

 

not everybody wants all this detail--believe it or not--as brick wall relevant and treasured as some of us want to present it--

 

some peeps just want an answer --how much would you charge--answer is in dollars or euros or rubles or whatever--

 

i think we might have the potential to do a disservice to some who just want an answer and did not intend to get their toe jam inspected/sniffed by us--

 

and some cried wheee wheee whee all the way home  :lol:

 

but of course some actually want to understand the process of pricing--that is your clue all you very good, wonderfully detailed type a's out there for which the world might not go 'round as efficiently if it wasn't for you----let 'er rip!

 

pricing cakes is a viable part of a cake board--

howsweet Posted 10 Oct 2013 , 9:14pm
post #102 of 115

Quote:

Originally Posted by morganchampagne 
 

Stitches, 

 

 

I think you should charge whatever number makes you money. I may be misunderstanding...are you trying to get what some people on here get for cakes? Or are you just simply trying to charge what it would take to make you money? I feel like your original question is getting lost in the sauce. 

Maybe define  makes you money? I'm not sure what you're saying. One can work really hard all week, sell 4 custom cakes and just make enough money to pay for the movies.

 

The only way to know how much to mark up a cake is to know what the market will bear. Why anyone would charge less than they can is beyond my comprehension. If they don't,  they are shortchanging themselves and putting people out of business because a real business doesn't have the luxury of undercharging.

 

Those of you who think some of use are lazy fat cats (which is absurd, btw), none of us is charging more than the market will bear - by definition, it's not possible.

Stitches Posted 10 Oct 2013 , 9:23pm
post #103 of 115
Quote:
Originally Posted by howsweet 
 

This is to Stitches, if you really wanted to help the discussion and play devils advocate, maybe you could have dealt with one thing at a time instead of be so all over the place with statements that inflame more than anything else. This thread was about helping people understand.

 

 

I wasn't all over the place, I responded to points as they came up. So often there's multiple conversations with-in one thread.......I went with what came to mind at the time.

 

"statements that inflame more than anything else" I usually try to be the voice of reason and that's just what I was trying to point out here. What can be written that doesn't inflame someone else? Around here.........nothing.

 

There are some basic things everyone needs to learn to price their products. "This thread was about helping people understand", BUT to compare what I do in Chicago and what someone in Australia charges is pointless. Posting a photo and everyone throwing out prices isn't educational...... and not really fun because someone gets hurts over something. And aren't there already enough of those threads here?

 

The topic was getting serious & rational about pricing and if we keep throwing out photos with cakes in all different skill groups and from all different regions of the world what good is it? It's confusing and misleading in soooo many ways. I don't enjoy hearing so and so tell me how underpriced my cakes are, do you? Nor do I enjoy reading someone brag about what they are getting for their work, when I really don't believe them. So I've played devils advocate to try and make someone, anyone see how that gets us no where.

 

 

 

 

Now this IS a really great worthwhile post for this topic, I think. It's something everyone can learn from. It was daring for morganchampagne to be brave to admit they didn't really understand something. I challenge myself to post openly on subjects I don't understand, I know I might looks stupid to some people......but I freely admit I don't know everything. We really could get some place as a group if we posted this honestly.

 

Originally Posted by morganchampagne View Post

Ok I have a question. I have never experienced any pushback or realized any destroying of the market from home bakers. I'm a baker under the cottage food law, and the laws in my state are probably the least restrictive in the country.

There are 2 custom cake places in my area about 10 minutes are apart both have been open a while. I know of a few home bakers in my area. Maybe 5. We all seem to be getting business.

My question is how does people underpricing affect what you are doing? It would stand to reason that those people would just go out of business. Just wait them out....am I missing something?

I know that's not exactly what this thread intended to discuss but I've had that question for a while

Norasmom Posted 10 Oct 2013 , 9:46pm
post #104 of 115

Some, or many, say this is not a get rich industry.  There is NO SUCH THING as a get rich industry, until you have the know-how, the experience, the expertise, the numbers crunched properly, and the reputation.   Not to mention the ability to cry and become so stressed out you feel like you will die and also the feeling you are so tired you can't even talk. 

Unless, of course, you are in the industry of inheriting/marrying/being a fool on reality TV money  :-D 

 

Becoming rich takes long hours, sweat equity, tears, connections and the awesome ability to market.  It's entirely possible to become rich in the cake industry...I'm not rich from cakes, but I don't have the qualities listed above.   Fortunately, and happily, I know a lot of people who do and they order cakes from me.

howsweet Posted 10 Oct 2013 , 9:46pm
post #105 of 115

Quote:

Originally Posted by Stitches 
 

I wasn't all over the place, I responded to points as they came up. So often there's multiple conversations with-in one thread.......I went with what came to mind at the time.

 

"statements that inflame more than anything else" I usually try to be the voice of reason and that's just what I was trying to point out here. What can be written that doesn't inflame someone else? Around here.........nothing.

 

There are some basic things everyone needs to learn to price their products. "This thread was about helping people understand", BUT to compare what I do in Chicago and what someone in Australia charges is pointless. Posting a photo and everyone throwing out prices isn't educational...... and not really fun because someone gets hurts over something. And aren't there already enough of those threads here?

 

The topic was getting serious & rational about pricing and if we keep throwing out photos with cakes in all different skill groups and from all different regions of the world what good is it? It's confusing and misleading in soooo many ways. I don't enjoy hearing so and so tell me how underpriced my cakes are, do you? Nor do I enjoy reading someone brag about what they are getting for their work, when I really don't believe them. So I've played devils advocate to try and make someone, anyone see how that gets us no where.

 

 

 

 

Now this IS a really great worthwhile post for this topic, I think. It's something everyone can learn from. It was daring for morganchampagne to be brave to admit they didn't really understand something. I challenge myself to post openly on subjects I don't understand, I know I might looks stupid to some people......but I freely admit I don't know everything. We really could get some place as a group if we posted this honestly.

 

Originally Posted by morganchampagne View Post

Ok I have a question. I have never experienced any pushback or realized any destroying of the market from home bakers. I'm a baker under the cottage food law, and the laws in my state are probably the least restrictive in the country.

There are 2 custom cake places in my area about 10 minutes are apart both have been open a while. I know of a few home bakers in my area. Maybe 5. We all seem to be getting business.

My question is how does people underpricing affect what you are doing? It would stand to reason that those people would just go out of business. Just wait them out....am I missing something?

I know that's not exactly what this thread intended to discuss but I've had that question for a while


In my opinion you weren't posting in a helpful way regardless of how it's characterized. I agree with Delicious Desserts comments regarding this.

-K8memphis Posted 10 Oct 2013 , 9:51pm
post #106 of 115

Quote:

Originally Posted by Stitches 
 

...Now this IS a really great worthwhile post for this topic, I think. It's something everyone can learn from. It was daring for morganchampagne to be brave to admit they didn't really understand something. I challenge myself to post openly on subjects I don't understand, I know I might looks stupid to some people......but I freely admit I don't know everything. We really could get some place as a group if we posted this honestly.

 

Originally Posted by morganchampagne View Post

Ok I have a question. I have never experienced any pushback or realized any destroying of the market from home bakers. I'm a baker under the cottage food law, and the laws in my state are probably the least restrictive in the country.

There are 2 custom cake places in my area about 10 minutes are apart both have been open a while. I know of a few home bakers in my area. Maybe 5. We all seem to be getting business.

My question is how does people underpricing affect what you are doing? It would stand to reason that those people would just go out of business. Just wait them out....am I missing something?

I know that's not exactly what this thread intended to discuss but I've had that question for a while

 

morgan--

 

many moons ago--wilton went from being a wholesale only to swooping up--catering to--the homemakers because it was a brilliant economic move that thoroughly pissed off all the bakeries in the land--this is just the natural progression of that

 

then add in the internet--kaboom!

 

which is why it is ironic that so many are so hyper about everybody pricing correctly -- the writing on the wall said that the mom & pop bakery is going extinct and this generation is just more proof--that's why it's so hard to support a brick & mortar business -- it's perfect if you can work from your residence or your own land somehow--

 

i am constantly amazed at the products available at my local grocery store that enable the least likely baker to produce an incredibly awesome baked creation--much less hobby lobby and wal mart and etc.-- i mean things that took me time to master --just go the the store and buy it--buy something to make it in--diy style

 

so this enabling of everyone rather than the protection of the craft is what it is--opened pandora's box

Norasmom Posted 10 Oct 2013 , 9:51pm
post #107 of 115

Quote:

Originally Posted by ddaigle 
 

Coffee Break time....................Here's my submission...Fairly simply deco (except the topper)

 

My 6/10 butter cream cakes start at $115 (you don't get much extra for that...borders, scrollwork)

Monkey is RKT..(legs & arms are fondant): $50

Colored Icing & dots on 6: $5

Argyle pattern on 10:$15

Fondant ball border (PITA): $25

Standard filling: $0

 

Total: $210

 

I have a chart that breaks out everything..dots, stripes, colored icing, etc.   for all sizes of cakes.   I am always consistent in my pricing.  It's the 3D stuff that stumps me. 

 

 

 

OMG...I love that!  That is so clever.

 

Quote:

Originally Posted by -K8memphis 
 

 

do you deliver to memphis? chocolate please ;)

 

cutest cake ever!!!

 

♥ this

Stitches Posted 10 Oct 2013 , 9:58pm
post #108 of 115

Well, that's the beauty of this site. Howsweet siding with DD doesn't surprise me, you always side with DD and Annasomethingoranother.

 

 

How is this thread any different than the countless other similar threads. Doesn't one or two get started everyday.......... I thought this was supposed to be serious and rational.

 

So have at that.....instead of choosing sides.

sixinarow Posted 10 Oct 2013 , 10:05pm
post #109 of 115

I think it's really sad that DD went to the time and trouble to start this thread with thoughtful analysis and it has degraded into the same bitter arguing. Some of you wonder why we started our own group??? Because we can have thoughtful discussions without reverting to calling people "spouse-supported hobbist" and the ever back-handed compliment "housewives". Many businesses have financiers, just because you happen to be married to someone who puts money into your business at the start doesn't make it dirty or unfair. For me, like many home based bakeries, this is my second job --  nights, early mornings and weekends..no one can tell me I don't work just as hard as a brick and mortar shop because I don't have the added overhead. I have added responsibilities of taking care of my household and children during the day, and those hours aren't 8-5 with lunch breaks, coffee breaks, bathroom breaks or time off. Let's get this thread back to the original point without the "devil's advocates" or home baker bashing.

 

Price the stinkin' cake. If you want to break it down, awesome. If not, great. If you don't want to participate, don't.

jason_kraft Posted 10 Oct 2013 , 10:14pm
post #110 of 115

A

Original message sent by sixinarow

Many businesses have financiers, just because you happen to be married to someone who puts money into your business at the start doesn't make it dirty or unfair.

There's nothing wrong with getting seed money to start up, whether it's from an outside investor or a spouse. The issue is when the business is not capable of supporting itself on an ongoing operational basis and relies on money from the investor or spouse to keep it afloat. This business model can work for a startup company that invests heavily in R&D to eventually produce a highly profitable product, but it doesn't work for a bakery.

Personally I think there has been some interesting discussion in this thread, I'm not sure where the "bitter arguments" are.

sixinarow Posted 10 Oct 2013 , 10:22pm
post #111 of 115

Quote:

Originally Posted by jason_kraft 


I'm not sure where the "bitter arguments" are.

Jason, I know you like a good "discussion" so maybe you don't see it as arguing. When snide remarks, picking apart people's answers for the heck of it and accusing people of taking sides comes into play-- that to me, loses all sense of discussion and goes into the arguing category. 

-K8memphis Posted 10 Oct 2013 , 10:33pm
post #112 of 115

sixinarow--if you meant me by quoting 'housewives' as being 'a back handed complement'-- i did say 'homemakers' for the group wilton marketed to when they switched from wholesale to retail because they did--i really don't know how that could be perceived the way you said--i'm sorry you got that meaning.

 

the sock monkey cake wins hands down

 

:-D

 

over and out

jason_kraft Posted 10 Oct 2013 , 10:33pm
post #113 of 115

A

Original message sent by sixinarow

Jason, I know you like a good "discussion" so maybe you don't see it as arguing. When snide remarks, picking apart people's answers for the heck of it and accusing people of taking sides comes into play-- that to me, loses all sense of discussion and goes into the arguing category. 

I'm with you on the "taking sides" comment (we could have done without that whole plot line, I'm not even clear about what the different sides are) but aside from that I think you're reading too much into things, as the main topic of this thread is still being discussed.

The comment about "picking apart people's answers" is especially puzzling. I thought that was the entire point of a discussion: someone makes a comment, another person responds with one or more points, someone else adds their take on one or more of said points, etc. If everyone always agreed with everyone else the community would devolve into groupthink, which won't ruffle anyone's feathers but also won't really provide any value.

Stitches Posted 10 Oct 2013 , 10:38pm
post #114 of 115

I'm sorry that you see things that way Sixinarow. If I made snide remarks I didn't mean to, and I do apologize. I am trying to participate in a serious discussion.

 

Picking apart peoples answers is what makes the discussion worthy of having one. To say and do the same thing over and over is just a repeat.

SystemMod1 Posted 10 Oct 2013 , 11:30pm
post #115 of 115

Thread has gone off topic and I feel has gone in an unintended and unproductive direction. 

 

In regards to pricing, Heath has just posted formal guidelines that we Moderators will be following regarding pricing threads.  If you haven't read it, please do so now as it is a pretty big policy change and will effect several of you:

 

http://cakecentral.com/t/764720/policies-for-posting-the-cake-decorating-business-forum

 

Many of you on this thread participate in pricing threads daily, so please stick to the new guidelines and FLAG any post that you feel violates these new guidelines so we can remove the thread ASAP.  Please do NOT post in the thread that violates the rules because it's very unproductive.

 

Thank you.

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