$1.50 A Serving? Shut The Front Door!

Lounge By SPCOhio Updated 23 Feb 2014 , 4:02am by nancylee61

SPCOhio Posted 14 Feb 2014 , 1:23am
post #1 of 25

AI've been doing market research for awhile now, trying to wrap my mind around building a business. I cannot for the life of me understand how a bakery is still in business charging only $1.50 per serving. Is the power of wholesale/bulk buying that great? Or is this just a case of people undercutting and not paying themselves enough? I will say that the average per serving price seems to be around $3.00 in my market so I know not everyone is this low. But $1.50? For reals?

24 replies
scrumdiddlycakes Posted 14 Feb 2014 , 1:33am
post #2 of 25

Do you mean it's a wholesale baker with those prices, or a regular storefront bakery? Around here those prices would put you out of business very quickly, if you aren't wholesaling.
 

SPCOhio Posted 14 Feb 2014 , 2:33am
post #3 of 25

AIt's a storefront bakery! I was thinking that maybe her profit margin could take that beating if she is able to buy in bulk. Of course, I don't know anything about the quality of her cakes yet. A taste test shall be happening soon...

liz at sugar Posted 14 Feb 2014 , 2:49am
post #4 of 25

If you are selling a high volume, you can get by with a smaller margin.  But even then, most of the food through the food purveyors isn't that much cheaper.  The few things I find cheaper in bulk from my vendors are cake flour, regular flour, white sugar, eggs, butter, heavy cream, sour cream.  Basically the commodities.  Anything that has a twinge of "special" to it, they are more expensive than a grocery store or buying it online.

 

I don't know how they would do it, without serving total cr*p.  Let us know how your taste test goes.

 

Liz

AivaCake Posted 14 Feb 2014 , 3:24am
post #5 of 25

AThere's a bakery here that advertises on their webpage that their wedding cakes start at 1.27/slice. There's obviously a reason for that. Blah!

Norasmom Posted 14 Feb 2014 , 3:48am
post #6 of 25

Quote:

Originally Posted by LaurenSadler 

There's a bakery here that advertises on their webpage that their wedding cakes start at 1.27/slice. There's obviously a reason for that. Blah!

Yes, and have you seen other items that "start at" a certain price…but it never ends up costing that.  Good example…cars.  It's very difficult to get a car without one option or another that adds to the price. So for $1.27 a slice you probably get flour.

BeesKnees578 Posted 14 Feb 2014 , 4:01am
post #7 of 25

Copy/Pasted from Mike McCarey's "Mike's Amazing Cakes" in Las Vegas....It's possible she is super up-charging on the decorations.

"Cake Pricing

Wedding Cakes

Wedding cakes start with a base price per person which includes a standard, smooth butter cream finish, appropriate borders and the first set of legs and a plate. Anything added beyond the standard finish, such as rolled fondant or handmade flowers, would add to the base price. Because the design possibilities are endless, please call or visit us for an accurate quote on your particular design.
 

Servings Per Serving 1 - 100 $2.95 101 - 300 $2.75 300 +

$2.55

BeesKnees578 Posted 14 Feb 2014 , 4:02am
post #8 of 25

Oh and please do tell....where in OH?

 

If it's close, I'm not above doing market research.

 

Just did it the other day at a new cupcakes shop in the town north of me where she is selling cupcakes for $10/doz!  Even gourmet ones...SAY WHAAAA??????

AivaCake Posted 14 Feb 2014 , 4:20am
post #9 of 25

AI think it goes without saying that it's not the best thing in the world to have the reputation as the cheapest bakery in town.

MimiFix Posted 14 Feb 2014 , 4:20am
post #10 of 25

Also possible that the owner has no idea how to price products.

Laurelj Posted 14 Feb 2014 , 7:35am
post #11 of 25

AUmm ok sorry i just gotta say it. "You get what you pay for" and sorry for $1.50 a seving it wouldn't even pay me to get out of bed and turn a light on never mind an oven. Power to those people who want to create at that price but it certainly is is NOT me. Hey and give me THAT ladies number, next time a perspective client says my cakes are too expensive I'll send them her way :D

MBalaska Posted 14 Feb 2014 , 9:19am
post #12 of 25

and is it still a statistic that 4 out of 5 businesses fail?  this one may go down with those prices.

 

Which reminds me:  I saw a box of cake mix on a cake site today for ($9 something) it makes 1 two layer 9" cake.  how can anyone sell at that price, when a cakemix at the grocery store is $1 to $2 ?

What kind of unicorn glitter does that box of mix contain??:o

BeesKnees578 Posted 14 Feb 2014 , 1:06pm
post #13 of 25
Quote:
Originally Posted by BeesKnees578 
 

Oh and please do tell....where in OH?

 

If it's close, I'm not above doing market research.

 

Just did it the other day at a new cupcakes shop in the town north of me where she is selling cupcakes for $10/doz!  Even gourmet ones...SAY WHAAAA??????

There is a SOLID REASON why every.other cupcake biz with a storefront around here sells for around $30/doz.  Her old (when she was a home-based baker) website said $1.00/doz for gourmet icing.  Really....where are you buying cream cheese for $1.00?  Her gourmet flavors were like $15/doz.

 

I could be wrong, and will have to double check, that the pricing wasn't for a 1/2 doz.  EITHER WAY, she can't survive on that.  

AivaCake Posted 14 Feb 2014 , 1:33pm
post #14 of 25

AHa! When I was a young cake lad baking off of the back of a pillsbury box, I was selling cupcakes for $10/dozen thinking I was making BANK since the mix was 99 cents each!

BeesKnees578 Posted 14 Feb 2014 , 2:15pm
post #15 of 25

Quote:

Originally Posted by BeesKnees578 
 

There is a SOLID REASON why every.other cupcake biz with a storefront around here sells for around $30/doz.  Her old (when she was a home-based baker) website said $1.00/doz for gourmet icing.  Really....where are you buying cream cheese for $1.00?  Her gourmet flavors were like $15/doz.

 

I could be wrong, and will have to double check, that the pricing wasn't for a 1/2 doz.  EITHER WAY, she can't survive on that.  


I stand corrected...as a home-based business, she was charging $12.50 for classic flavors, $16.00 for gourmet, $1.00 for specialty icing (cream cheese, ganache, etc).

 

When I bought at her new store front, it was $10 for a half-doz.  So now $20/doz...no matter the flavor (reg or gourmet).

 

I introduced myself...I don't view it as competition since I normally only do cupcakes as a supplement to a cake.  But I so wanted to tell her that she won't be able to survive on those prices.  I am guessing that once she gets more situated she will realize this and raise, but you never know!

SPCOhio Posted 16 Feb 2014 , 8:40pm
post #16 of 25

AThe business in question is actually in Northern Kentucky, which is within the Cincinnati metropolitan market. It's my understanding she has been in business for awhile, so there must be some recovering of profits with anything beyond a simple buttercream iced cake. Upon viewing her gallery though, I see there isn't much going on but for very simple buttercream cakes that are in no way unique. I don't see a lot of fondant work or any handmade flowers, so I don't know how she is making that work. More power to her if she is selling enough volume to survive! We clearly will not be serving the same clients when I flip the switch, and I recall someone's wise tag line here was something along the lines of preferring to make one cake for $150 than three for $50. I lean more that way. :)

liz at sugar Posted 16 Feb 2014 , 9:40pm
post #17 of 25

This pricing conundrum had me thinking today.  I was on FB, and I follow a pretty amazing cookie artist.  A post came up from them in my newsfeed, and I happened to go to their page, and read their pricing page.  Was amazed at the pricing listed, and this artist has THOUSANDS of followers.  Included in the pricing were cupcakes - 12 for $12!  Amazing how you can get such a huge following and still not grasp how to price your products.

 

Liz

810whitechoc Posted 17 Feb 2014 , 12:39pm
post #18 of 25

Quote:

Originally Posted by MBalaska 
 

and is it still a statistic that 4 out of 5 businesses fail?  this one may go down with those prices.

 

Which reminds me:  I saw a box of cake mix on a cake site today for ($9 something) it makes 1 two layer 9" cake.  how can anyone sell at that price, when a cakemix at the grocery store is $1 to $2 ?

What kind of unicorn glitter does that box of mix contain??:o


Cool, I want me some of that unicorn glitter ;-D 

gatorcake Posted 17 Feb 2014 , 2:31pm
post #19 of 25

Quote:

Originally Posted by MBalaska 
 

and is it still a statistic that 4 out of 5 businesses fail?  this one may go down with those prices.

 

 

 

Do you mean is it a statistic that is often repeated? Yes. Is it a legitimate statistic? No and there is nothing to show that it was ever 80%. Data measures closures, not failures. That difference is critical as many businesses close even when profitable due to any number of reasons. We know nothing about how long this place has been in business. If it has been a while there are any number of others reasons that could explain why it closed, if it did close one day. 

costumeczar Posted 18 Feb 2014 , 1:16am
post #20 of 25

Quote:

Originally Posted by gatorcake 
 

 

Do you mean is it a statistic that is often repeated? Yes. Is it a legitimate statistic? No and there is nothing to show that it was ever 80%. Data measures closures, not failures. That difference is critical as many businesses close even when profitable due to any number of reasons. We know nothing about how long this place has been in business. If it has been a while there are any number of others reasons that could explain why it closed, if it did close one day.

Isn't that statistic also for businesses that fold within ten years of opening? I looked that up at one point for my wedding association and it was something a lot less dramatic than the 4 out of 5 if you really looked at the real numbers.

AnnieCahill Posted 20 Feb 2014 , 8:42pm
post #21 of 25

There is a bakery (the only one) in my town which has been open for 30 years.  They charge dirt cheap for their cakes.  I picked up some of their pricing info from a bridal show a few years ago just out of curiosity.  They charge something like $1.35 per serving.  Know why?  Because they use straight up DH mixes (not even doctored).  The owner makes no issue about coming in the front door of the bakery in the middle of the day with 5 Wal Mart bags full of mixes.  They also use straight up Wesson shortening for their "buttercream," and heinous clear artificial vanilla which stinks up your clothes when you leave the bakery.  Oh yeah, their cakes look like they were decorated by a kindergartner.  I saw an 8" on display today when I went to pick up a cake drum.  It was Cakewrecks worthy.  They have a huge customer base though!  Amazing...

costumeczar Posted 20 Feb 2014 , 8:45pm
post #22 of 25

Quote:

Originally Posted by AnnieCahill 
 

There is a bakery (the only one) in my town which has been open for 30 years.  They charge dirt cheap for their cakes.  I picked up some of their pricing info from a bridal show a few years ago just out of curiosity.  They charge something like $1.35 per serving.  Know why?  Because they use straight up DH mixes (not even doctored).  The owner makes no issue about coming in the front door of the bakery in the middle of the day with 5 Wal Mart bags full of mixes.  They also use straight up Wesson shortening for their "buttercream," and heinous clear artificial vanilla which stinks up your clothes when you leave the bakery.  Oh yeah, their cakes look like they were decorated by a kindergartner.  I saw an 8" on display today when I went to pick up a cake drum.  It was Cakewrecks worthy.  They have a huge customer base though!  Amazing...

There was a bakery in Boston up the street from me, right near the train stop. They did a booming business even though their products were HORRIBLE. It was all location and the fact that they'd been there for so long they were a "tradition." People don't just shop based on quality, or Payless shoes wouldn't exist.

AnnieCahill Posted 20 Feb 2014 , 9:03pm
post #23 of 25

Quote:

People don't just shop based on quality, or Payless shoes wouldn't exist. 

 

Testify!  LOL

nancylee61 Posted 23 Feb 2014 , 4:01am
post #24 of 25

Our local bakery does the same - Duncan Hines mixes and Criscocreme. They admit to the Criscocreme, but lie and say they make scratch cakes. I know because one of my students works for them and told me. At least be honest!

Nancy

nancylee61 Posted 23 Feb 2014 , 4:02am
post #25 of 25

I live in the NY/NJ area, and heard that the baked goods at Cake Boss's bakery are terrible. Truly,

Nancy

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