Does anyone have this problem and how do you deal with it?
I have several family members, and close family friends who I mostly get my business from. I give them such an enormous discount, which I'm not sure I should do anymore. I really don't think people realize what goes into making a cake, both monetary/time wise. I've had several family members/friends order a cake from me and I give them a discount. However, when it comes time to deliver, it's actually not for the family member/friend, it's for someone they know or someone that person knows, and so and so on. I really feel like people take advantage. It's really frustrating, I'm too the point that I'm not wanting to offer discounts anymore.
I would stick to discounting for family & close friends of your choosing but make it clear that it is only if the cake is for one of them. I don't sell yet but when I do my nephew will have free cakes forever and some other close people will have discounts or freebies where I see fit. They have to understand its a business and you are in it to make money.
I guess I should reiterate. I make free cakes only for nieces/nephews/sisters/brothers. These are cakes I give as gifts. I would only give discounts if say my sister, mother, mother in law ordered one for the future. I'm talking extended family like, aunts, uncles, cousins, and good friends. These are people that constantly want something for a person that they know, or whatever the case may be.
Do your family know you are giving them a discount? If so, and they order cakes for other people then I would stop giving them a discount, or give them less of a discount.
If they do not know you are giving them a discount they may not realise they are costing you money but not letting you know the cakes are for someone else. If this is the case I would make it clear to them how much of a discount you are giving.
I don't give my family (parent and brothers) a discount. They are my biggest supporters and frankly I know they can afford it as they make more money than I do. They also have an idea what goes into making cakes, and know it doesn't happen in an hour. They have witnessed many late or all nighters of me doing cakes.
I think if you do want to give a discount you need to limit it to certain people or limit the discounts to groups of people. Sis, mom and MIL getting XX% off and aunts/uncles, cousins YY% off and close friends ZZ%.
My rule is if you ask me for a cake, you pay for it. If I offer it, it is free. I will always do my nephew's birthday cake for free, but I have total freedom (as long as he agrees) on what I can do for it. I also do my friends son's and now her daughter's b-day for free. But they are always small cakes, I get to decide what to do and she does not take advantage of it. If I asked her to pay, she would.
When people start to take advantage of you, I think it is time to drop the discounts, or raise your prices to make up for it. If they want a cool custom made cake, then they should pay for it!
I make no secret about what I call my "happy family discount". It is 25% and I give it to my parents/siblings/best friends and close aunts/uncles. I typically give them a regular invoice which includes the full price and the amount of the discount, just so they see. I have an aunt whose company also orders from me. When she orders I ask who will be paying. If its her, discount, if not, none and shes fine with that. Its when you are shy about talking about it then it gets confusing and then ppl get their feelings hurt one way or the other sometimes.
Are you just a hobbyist? Or are you planning to go into business? I'm a hobbyist, just baking for family/friends/coworkers etc. I have broken down the costs of all my ingredients/supplies on a spreadsheet. I charge everyone the cost of ingredients plus an approximate $10 or so for gas/electric etc. No exceptions. I also do not make unsolicited cakes. This has been my policy since I started making and decorating last summer, and I have not had a problem with it.
Some words of wisdom from my mother, she used to tell me "Don't start something you can't finish" in other words if you don't want to be doing it (whatever "it" is) two years from now, then don't start; and "If you take advantage of me once, shame on you, if you take advantage of me twice, shame on me". Good luck!
I have the same problem. I just started making cakes in Feb. and had no idea what to charge for them so usually it is just $20 or $30. I did a cake for my sister's baby shower (pic in my photos) that I did for practice and part of my gift to her. Now that everyone has seen it, I'll probably get orders for cakes like that. I like to do them but where I am from people don't like to spend alot of money for cake so they will probably expect this cake for that same amount which I can't do! I am just so afraid to tell people that....I would probably charge around $75 for it (which is probably still too low). I just feel I am stuck! 
KoryAK - great idea! I'm going to do that now. I don't think my friends and family realize what my general price is, because they just know they're getting a discount. They don't know how much. I'm definitely going to start using your idea. Thanks!
I have been catering on and off for a few years ut recently shifted gears to focus solely on cakes and desserts. I was always hesitant and leary of pricing my goods at what is the "fair" market value. I was always afraid I would chase customers away. When I switched gears I realized that cake decorating is truly an art form that requires a great deal of time, energy and sacrifice (weekends, family, etc..) I just did a B-day cake this weekend for a friend. (in my pics "Brodys") It was a gift but if I were to charge it would have been about $375. It took me 12 hours and fed 120 people. At first I though maybe the price is high if someone were to ask me that question, but than I looked around and thought the DJ hired for the party will walk away making a few hundred for basically standing around a playing music for 4 hours. Not that I am knocking DJ's, but why should my 12 hours of effort be so undervalued.
I think you should stick to the same prices across the board and never feel bad or guilty.
Sorry so long. I gues I needed to vent!!!
...but why should my 12 hours of effort be so undervalued.
It's that difference between thinking oh I should charge 40 bucks or something for that cake, to actually sitting down and putting down on paper all your operating costs. Including a fair hourly wage for yourself, there's a formula it's not just random. You would expect so many dollars per hour working at someone else's place of business, the labour cost shouldn't be lower just because you work out of your home. You still have rent/mortgage, food, utilities, insurance, children to feed, car payments etc etc. A wage outside of the home is expected to cover all that, so should your home-based business.
Also, part of the hours put in is spending time going to the printers to make your business cards, shopping for supplies/ingredients, creating/ maintaining website, accounting, the list goes on. When you write down a list of all those things that go into what you do as a cake decorator, I'm sure you'll rethink how valuable your time is. Remember that whether you do this PT or FT that this is your livelihood, or part of it, and if you werent spending all those hours doing that, you would be working somewhere else to make ends meet.
(A bit more complicated you get into actually making a profit. Running any sort of business the point is to make a profit, that's above and beyond paying your own salary. You aren't in business to break even. So you have to work a profit margin in there too. Profits you can put into savings and have to show for). It all sounds overwhelming but when you go to work every day somewhere else you hope to work out a salary and a living budget to have money left over at the end of the month for emergencies and disposable income. Staying at home and cake decorating is no different! (sorry for the length, but I think it's important to break this all down so you see just how much goes into running a business above and beyond the actual cake assembly/creation part.
I have been catering on and off for a few years ut recently shifted gears to focus solely on cakes and desserts. I was always hesitant and leary of pricing my goods at what is the "fair" market value. I was always afraid I would chase customers away. When I switched gears I realized that cake decorating is truly an art form that requires a great deal of time, energy and sacrifice (weekends, family, etc..) I just did a B-day cake this weekend for a friend. (in my pics "Brodys") It was a gift but if I were to charge it would have been about $375. It took me 12 hours and fed 120 people. At first I though maybe the price is high if someone were to ask me that question, but than I looked around and thought the DJ hired for the party will walk away making a few hundred for basically standing around a playing music for 4 hours. Not that I am knocking DJ's, but why should my 12 hours of effort be so undervalued.
I think you should stick to the same prices across the board and never feel bad or guilty.
Sorry so long. I gues I needed to vent!!!
That cake was amazing!! You should not hesitate to charge wedding cake prices for a cake like that!
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