Advise In Cake Price Adjustment

Business By cleofleo Updated 15 Oct 2013 , 6:56am by cleofleo

cleofleo Posted 14 Oct 2013 , 10:50am
post #1 of 11

Hi all, 

I've just started my cake home-business half a year ago. Things have been going on great. But now I realized that I am charging my creation pretty low. Though I had fun making all those cakes, I notice that I am not making any profit. So, I decided to make some price adjustment. 

Now, an old customer has come back to me to order a cake. I gave her my new price list and an addition of 10% discount to old customer. 

The problem is now that she complained and said that she doesn't understand why my price is different than the last time. The 10% discount doesn't console her at all. 
My question is: How do you deal with this kind of problem? I think some of you have made some price adjustment in your business before, right? 

How do you put the words nicely and tell her that you won't make it in the business with cheap price cake?

I personally don't want to go back to my old pricing. 

 

Thank you 

Noni

10 replies
Cakechick123 Posted 14 Oct 2013 , 11:19am
post #2 of 11

unfortunately that is the problem with under charging. When I started out I did exactly the same. I way undercharged and then after a couple of months I started charging realistic amounts. I lost most of my customers as they couldn't understand an almost 50% increase!! I just stuck to my guns and basically had to  start my business from scratch with new customers.

cakesbycathy Posted 14 Oct 2013 , 2:37pm
post #3 of 11

Don't go into a big long explanation.  Just state that your food costs and expenses have increased and thus your prices are slightly higher now.  You can even use the example that just like she has to pay more for gas or milk or eggs (or whatever has gone up in your area) than she did 6 months ago, so do you.  Tell her you appreciate her repeat business which is why you are giving her the 10% discount.

 

Maybe she thinks if she complains or threatens to get a cake somewhere else you will go back to the original price.  DON'T do it!!  She can either take it or leave it.  If she really wants your cake she will pony up the extra cash. ;-D

KasandraG Posted 14 Oct 2013 , 2:53pm
post #4 of 11

I am going through the SAME thing right now. Thank you all for the advice!

 

:)

Paperfishies Posted 14 Oct 2013 , 5:33pm
post #5 of 11

Just tell her that the price of sugar, butter (ingredients and supplies in general) have risen and you need to raise your prices accordingly.  EVERY business does this, doesn't matter what field you're in, most businesses actually review their pricing quarterly.

 

would she go to the grocery store and argue with the store manager because the price of milk went up?

Cara-mel Posted 14 Oct 2013 , 5:54pm
post #6 of 11

AI haven't started my business yet, I am working on a business plan and trying to get things in order. Knowing what to do to avoid or smooth over these situations ahead of time makes things a little easier. Thanks!

Cakechick123 Posted 14 Oct 2013 , 6:49pm
post #7 of 11

Quote:

Originally Posted by Paperfishies 
 

Just tell her that the price of sugar, butter (ingredients and supplies in general) have risen and you need to raise your prices accordingly.  EVERY business does this, doesn't matter what field you're in, most businesses actually review their pricing quarterly.

 

would she go to the grocery store and argue with the store manager because the price of milk went up?

that will work if you have a price increase that is in line with inflation, however most people that's trying to correct their pricing because of undercharging, will increase by more than cost of inflation.

BatterUpCake Posted 14 Oct 2013 , 7:45pm
post #8 of 11

Quote:

Originally Posted by Cakechick123 
 

that will work if you have a price increase that is in line with inflation, however most people that's trying to correct their pricing because of undercharging, will increase by more than cost of inflation.

Right. I just explained that my original prices were a temporary "deal" for my new business. But I emailed my regular customers and explained up front. SOme left, some said they were wondering when my prices were going to go up.

IAmPamCakes Posted 14 Oct 2013 , 10:45pm
post #9 of 11

AYou could always just tell your customers that when you ran your numbers, you realized that you were losing money, and now your pices are higher. Frankly, you should've never sold anything without making a proper profit in the first place. You'll probably have to start all over with new clients moving forward.

AZCouture Posted 14 Oct 2013 , 11:51pm
post #10 of 11

A

Original message sent by IAmPamCakes

You could always just tell your customers that when you ran your numbers, you realized that you were losing money, and now your pices are higher. Frankly, you should've never sold anything without making a proper profit in the first place. You'll probably have to start all over with new clients moving forward.

That's the kicker right there.

cleofleo Posted 15 Oct 2013 , 6:56am
post #11 of 11

Thank you so much everyone for the reply. Lesson learned.

I think this is a valuable lesson for those who is planning to start a business in this field, and as for me, I will prepare myself to get some angry comments or even loose some old customers. 

 

The last update is, that the lady didn't cancel her order, but choose for a very simple design instead and took her 10% discount. So win-win solution for everybody. 

 

Thanks again. 

N

Quote by @%username% on %date%

%body%