10% Kick Back - Really??

Business By 61999 Updated 29 Apr 2014 , 2:34am by howsweet

61999 Posted 24 Apr 2014 , 4:45am
post #1 of 31

So this local banquet facility wants me to be their preferred vendor.  However, they want 10% of whatever I sell the cake for.  How common is this?

 

I am a preferred vendor for a well known hotel and they don't ask me for such thing.

 

This banquet facility is privately owned and my gut is telling me these people are money hungry.  I am actually put off by the fact that they ask this knowing that as artisans we don't make huge profits and work very hard for what we do make,   I actually find this insulting....please let me know what you think.

30 replies
cakesbycathy Posted 24 Apr 2014 , 1:25pm
post #2 of 31

Go with your gut.

A  reputable facility or wedding planner would not ask for a kick back.  They will refer you because your work is good.  I would tell them you are not interested.

howsweet Posted 24 Apr 2014 , 2:40pm
post #3 of 31

AI don't know what's customary where you live. While it doesn't seem ethical that they only refer brides to bakers who will give them a referral fee. It does seem ethical that if they are going to throw you a lot of business that they could ask for a referral fee. Do you see what I mean?

You can either boycott this practice or mark up the cakes 5-10%. If the cake is $1000 and you mark it up 5%, that's only $50 and then you've split the difference with the customer. (Of course if the cake is marked up to $1050, then the kickback then becomes $105.)

FioreCakes Posted 24 Apr 2014 , 5:10pm
post #4 of 31

I would say that if I was unaware how most vendors handle this thing I would have assumed they get a kickback, that just sounds like basic business to me. The same way people sell their product to the store and the store marks it up to make a profit because that storefront led the customer to the product If you will become angry over this, and you don't need the customers, then walk away. But if the venue is helping your business, then they should rightfully get a cut. 

FioreCakes Posted 24 Apr 2014 , 5:11pm
post #5 of 31

and of course they are money hungry! They are business! You know how we all get frustrated everyone thinks cake ladies are money hungry because of our prices? The same could be applied to many many other businesses…for all you know, they are just trying to stay afloat. 

howsweet Posted 24 Apr 2014 , 5:18pm
post #6 of 31

ADefinitely! That sentence caught my attention, too. The whole point of being in business is to make money.

cupadeecakes Posted 24 Apr 2014 , 5:42pm
post #7 of 31

Kickbacks are not unheard of for venues.  In my area, there are 3 types of venues:

 

1)  The ones that recommend you for free because they like you and/or know you do great work

 

2)  The ones that recommend you because you pay an annual fee to be on their "preferred vendors" list.  This is sometimes hidden as an advertisement fee for some type of bridal book.

 

3)  The ones that recommend you for a percentage kickback.

 

I tried the percentage kickback with one venue, but they wanted exclusive access to the bride, so they would come to me with some crazy cake and then say "Oh yeah, her budget is only $200".  I quickly dissolved that relationship.

 

I was getting a ton of business from one venue and they approached me about paying for an ad in their bridal book and to be listed on their preferred vendor listing.  At the time, the price (~$1000) seemed like a no-brainer, since I was there almost every weekend.  The venue manager left and I haven't been back but maybe once since.  The other advertisers have complained too, and the venue extended the bridal book to give us more time and until they could get a venue manager that could get more bridal business.  Either way I probably won't pay to be on their list again.

 

Now I would rather be on the "we refer you because you're a great vendor" list any day, but if business is tight, you might give the others some consideration.  At least with the percentage deal, if you get no business, you owe no money.

costumeczar Posted 24 Apr 2014 , 10:38pm
post #8 of 31

It's not cool, IMO, but some venues do it. I don't deal with anyone who wants a kickback, but it's not totally unheard of. People who are reputable generally don't feel the need to do it, though. The only people I've heard who do this are brand-new to the wedding business.

AZCouture Posted 24 Apr 2014 , 10:47pm
post #9 of 31

Quote:

Originally Posted by costumeczar 
 

It's not cool, IMO, but some venues do it. I don't deal with anyone who wants a kickback, but it's not totally unheard of. People who are reputable generally don't feel the need to do it, though. The only people I've heard who do this are brand-new to the wedding business.

Yup!

61999 Posted 24 Apr 2014 , 11:04pm
post #10 of 31

I hear you all.  Personally when I refer a fellow vendor I wouldn't even dream of asking for a cent or even a favor back.  I refer people because I believe in them, because I believe it's a way to support each other as professionals, and because if my bride is happy - I'm happy.

 

Well, not sure if I'll try this or not.  It an open agreement which can be terminated at any time by either party.  So I am considering maybe trying it out to see if it is even worth it.  Maybe up my price 5% like someone suggested to cover 50%.

 

I spoke today with another fellow cake vendor and she told me a catering facility actually had the nerve to require 25%!!!  They settled for 20%.  That's nuts.

 

Yes, business is business and therefore it is about money.  HOWEVER, it is also about being ethical, supporting/building each other in the industry and being compensated for our value.  

 

A wedding cake can easily take 50 hours by the time you design, shop, set up, execute, clean, deliver, etc.  And if you charge $700 for that cake and say $150 went to ingredients, materials, electricity, marketing, advertising, etc. you have $550 left.  Divide that by the 50 hours and you earned a whopping $11/hour but if you give 10% away you earned a generous $9.60/hour.

 

Depending on your years of experience, training, skill level, and professional heights achieved that is plain ridiculous.  And that is what folks don't understand.

costumeczar Posted 24 Apr 2014 , 11:45pm
post #11 of 31

Quote:

Originally Posted by 61999 
 

I hear you all.  Personally when I refer a fellow vendor I wouldn't even dream of asking for a cent or even a favor back.  I refer people because I believe in them, because I believe it's a way to support each other as professionals, and because if my bride is happy - I'm happy.

 

 

 

A wedding cake can easily take 50 hours by the time you design, shop, set up, execute, clean, deliver, etc.  And if you charge $700 for that cake and say $150 went to ingredients, materials, electricity, marketing, advertising, etc. you have $550 left.  Divide that by the 50 hours and you earned a whopping $11/hour but if you give 10% away you earned a generous $9.60/hour.

 

 

I want to see the cake that takes 50 hours...I'd be charging a heck of a lot more for that one than $700!

61999 Posted 25 Apr 2014 , 1:10am
post #12 of 31

Not the cake itself taking 50 hours, but what I constantly see people allow for is the pre-planning, the shopping for the cake, and the clean-up.  If you "punched a card" from the minute you even begin to start an order you would be surprised!  Of the 50 hours maybe 40 is spent on "hard-core baking & decorating", but you need to look beyond that.  How about the time it took following up back and forth to just get the consultation, the time on the phone, and so many other facets.  That is my point.  It is so easy to say - that cake took me 30 hours or X hours to make - but as a business person you need to wrap the cost of doing business as well.  Does that make sense?

costumeczar Posted 25 Apr 2014 , 2:57am
post #13 of 31

Quote:

Originally Posted by 61999 
 

Not the cake itself taking 50 hours, but what I constantly see people allow for is the pre-planning, the shopping for the cake, and the clean-up.  If you "punched a card" from the minute you even begin to start an order you would be surprised!  Of the 50 hours maybe 40 is spent on "hard-core baking & decorating", but you need to look beyond that.  How about the time it took following up back and forth to just get the consultation, the time on the phone, and so many other facets.  That is my point.  It is so easy to say - that cake took me 30 hours or X hours to make - but as a business person you need to wrap the cost of doing business as well.  Does that make sense?

Considering I've been harping on that for years, yeah. But 50 hours for one cake is overestimating it unless you do a lot of paperwork.

 

http://acaketorememberva.blogspot.com/2014/04/how-long-does-it-take-to-make-cakehow.html

 

http://acaketorememberva.blogspot.com/2012/06/clients-dont-care-how-long-it-takes-you.html

AZCouture Posted 25 Apr 2014 , 3:09am
post #14 of 31

AYeah, costumeczar knows at least one or two things about pricing. ;-)

costumeczar Posted 25 Apr 2014 , 3:11am
post #15 of 31

Quote:

Originally Posted by AZCouture 

Yeah, costumeczar knows at least one or two things about pricing. icon_wink.gif

heh heh heh

AZCouture Posted 25 Apr 2014 , 3:14am
post #16 of 31

AAnd I agree, there is much more time involved with a cake than just making and delivering. It would be interesting to set up a challenge of sorts, where people would learn the true amount of time involved with one order. One of those clip on timers would be ideal to track time. Pick one of the most recent emails or messages you have, and as soon as you start typing the first reply, start that timer! Looking something up online for an order? Clickity click. Calling a venue to find out about which entrance to use? Clickity click.

Could be eye opening for some

snarkybaker Posted 25 Apr 2014 , 1:50pm
post #17 of 31

Mmmmm...We have a couple of venues who give us an exclusive, and so we give them a $1.50 per serving discount. We quote the bride our regular price, and then send the wholesale invoice directly to the venue at the discounted rate. I consider us to be a supplier to the hotel, and they can sell the cake to the bride for whatever they want.  It's called a commission and it's pretty standard business practice. 

costumeczar Posted 25 Apr 2014 , 2:01pm
post #18 of 31

Quote:

Originally Posted by snarkybaker 
 

Mmmmm...We have a couple of venues who give us an exclusive, and so we give them a $1.50 per serving discount. We quote the bride our regular price, and then send the wholesale invoice directly to the venue at the discounted rate. I consider us to be a supplier to the hotel, and they can sell the cake to the bride for whatever they want.  It's called a commission and it's pretty standard business practice.

Not around here...For me doing that would cut into my profits so much I wouldn't be able to do it for more than one venue, and since I work from home it would be more aggravation than anything else since it would cut into the time I had to do cakes that I was charging full price for. Nobody around here does exclusives, etither. They'll add you to a package that they offer brides, but if the bride wants to pick the package apart they let them do that and bring their own vendors in, then they pull that part of the package out. If you have a shop where you can afford to do wholesale that's one thing, but if you're doing a limited number of cakes per week it doesn't make sense.

-K8memphis Posted 25 Apr 2014 , 2:19pm
post #19 of 31

clearly it's not for everyone, but one way it could work for a home caker is if the venue limited the bride to certain established popular designs--y'know change up the colors or whatever easy random little detail--certain flavors--because if the cakes are just 1-2-3 pop 'em out without hardly thinking about it-- that would be one way for it to be mutually successful -- a trade off of lower prices for 'quantity' --

 

then in scheduling--you schedule by number of weekly servings 500 intricate custom servings and 1000 'popular' (rote) servings or whatever -- it could work but not for everybody

61999 Posted 25 Apr 2014 , 2:25pm
post #20 of 31

I read the 2 blogs - costumeczar - excellent! 

Thank you for sharing.

costumeczar Posted 25 Apr 2014 , 3:02pm
post #21 of 31

Quote:

Originally Posted by -K8memphis 
 

clearly it's not for everyone, but one way it could work for a home caker is if the venue limited the bride to certain established popular designs--y'know change up the colors or whatever easy random little detail--certain flavors--because if the cakes are just 1-2-3 pop 'em out without hardly thinking about it-- that would be one way for it to be mutually successful -- a trade off of lower prices for 'quantity' --

 

then in scheduling--you schedule by number of weekly servings 500 intricate custom servings and 1000 'popular' (rote) servings or whatever -- it could work but not for everybody

Brides wouldn't go for this, remember the trend a few years back of the low-priced "basic" cake for no tastings, no choice of flavors, no choice of designs? That lasted for about ten minutes...Brides want their personalized cake with all the service that they think goes with it.  And if you're working by yourself at home that many cake servings in one week would be too much unless you don't enjoy sleeping. That's a "never again" weekend right there...I did nine large-to-medium-sized wedding cakes one weekend and it just about killed me.

 

I had an agreement with one venue at one time to do something that was similar to a package, but for someone working on their own the benefits are generally outweighed by the negatives. You really have to think about getting into an arrangement like that. If you're their exclusive provider, can you ever go on vacation? Do the couples still get a tasting appointment if they're booking at a discounted rate? Do you get charged a flat fee by the venue or do they pay you a per-guest payment? There's a lot to consider.

-K8memphis Posted 25 Apr 2014 , 3:33pm
post #22 of 31

i was just giving an example--probably too much--needs to be scaled back if no helpers are available--and not all but a lot of my brides were clueless as to style--i could just suggest anything--so that rote thing has potential in some situations--a wedding chapel or something--

 

my background is in my own custom cakes, bread baker, boarding school baker, neighborhood bakeries as well as for a busy caterer so i've worn so many hats they all run together in one big bartholomew cubbins topsy turvy tier cake of the ages--everything worked at one time or another -- did 20+ weddings a week in june -- stuff like that-- plus a cake or two from home -- plus hundreds of 'regular' cakes all on top of each other--i've worked 15 hour shifts rarely but it happened then 10-12 hour shifts were normal on weekends--so i'm pulling from an ocean of cake batter swirled with meringue...

 

edited to say--so i like to try & toss out possibilities of how maybe something could work

-K8memphis Posted 25 Apr 2014 , 4:07pm
post #23 of 31

in other words there is a market out there for brides who don't give a flip about the details of their cake--not your typical custom cake customer--but one can make some money on 'em--package deals with venues can be a source of this--

 

out of two nieces--one gave exact details--the other could care less--

snarkybaker Posted 25 Apr 2014 , 4:39pm
post #24 of 31

I guess it depends on how you run your business. We have a marketing budget of 11% of gross revenue. That's the money I spend looking for business. So, if I get a guaranteed number of weddings that had none of that marketing cost, the discount is about a toss up. One of the places we have an exclusive is about 800 yards out the back door of our shop, so I don't any delivery costs either. The other builds in $8 per serving for cake, no matter what the bride picks, and most of them pick a pretty basic buttercream and swirls and/or dots number, so I make an extra $2/serving there. 

 

My two exclusives made me about 70 thousand last year. Does not seems like a big deal to me. We also have promotions for planners that refer us a lot of business. We work it like airline miles. The biggest planner in our metro area has referred us 40 weddings this year, so I'm on the " If it ain't broke don't fix it" model.

costumeczar Posted 25 Apr 2014 , 5:37pm
post #25 of 31

Quote:

Originally Posted by snarkybaker 
 

I guess it depends on how you run your business. We have a marketing budget of 11% of gross revenue. That's the money I spend looking for business. So, if I get a guaranteed number of weddings that had none of that marketing cost, the discount is about a toss up. One of the places we have an exclusive is about 800 yards out the back door of our shop, so I don't any delivery costs either. The other builds in $8 per serving for cake, no matter what the bride picks, and most of them pick a pretty basic buttercream and swirls and/or dots number, so I make an extra $2/serving there.

 

My two exclusives made me about 70 thousand last year. Does not seems like a big deal to me. We also have promotions for planners that refer us a lot of business. We work it like airline miles. The biggest planner in our metro area has referred us 40 weddings this year, so I'm on the " If it ain't broke don't fix it" model.

If you're making an extra $2 a serving and only giving them $1.50 of course that's a good deal. The people here who wanted to put me in their package wanted to pay me $3.50 a serving. Woo hoo.

 

At this point I don't do any paid advertising in wedding guides or anything other than my website, and I get pretty much all of my business through venue referrals and preferred vendor lists (that I don't pay for). Going exclusive with someone who wants to pay me $3.50 a serving would make no sense. The only reason I would do it would be to cake-block another baker who I hate here in town :mischeivous:

FioreCakes Posted 25 Apr 2014 , 5:47pm
post #26 of 31

Just wanted to say I have enjoyed this thread very much! It's given me a lot to consider! 

ugcjill Posted 25 Apr 2014 , 5:57pm
post #27 of 31

Quote:

Originally Posted by AZCouture 

And I agree, there is much more time involved with a cake than just making and delivering. It would be interesting to set up a challenge of sorts, where people would learn the true amount of time involved with one order. One of those clip on timers would be ideal to track time. Pick one of the most recent emails or messages you have, and as soon as you start typing the first reply, start that timer! Looking something up online for an order? Clickity click. Calling a venue to find out about which entrance to use? Clickity click.

Could be eye opening for some

Just received an email... I'm doing this. Stay tuned.

61999 Posted 27 Apr 2014 , 3:26pm
post #28 of 31

Quote:

Originally Posted by ugcjill 
 

Just received an email... I'm doing this. Stay tuned.

Great!  Let us know....should be interesting!

ugcjill Posted 27 Apr 2014 , 4:31pm
post #29 of 31

A17 minutes reading and composing emails. Sticker shock, no sale.

ugcjill Posted 28 Apr 2014 , 11:55pm
post #30 of 31

AOk, next request from today. Hopefully I'll have better luck. 4 minutes in.

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