[quote="indydebi"]
So maybe the thing to do would be to set a scale. Something like, take what your local Walmart/Costco charges and add 2.50 a serving or more if you have overhead. What do you think?
I think that even suggesting something like that could be construed as price fixing, which has some pretty severe federal penalties. quote]
Again, I'm new to this so I don't understand the business end. 
How is that considered price fixing? And if that's considered price fixing, wouldn't a flat fee also be considered price fixing?
Mama, price fixing doesn't refer to how you set or "fix" your individual pricing. The term "price fixing" refers to a conspiracy among a group of people to determine what the price will be for a certain product group. OPEC does price fixing. They all get together to decide what price they are going to set a barrel of oil at. It's considered unfair to the consumer and is illegal in America.
When I worked in corporate america, I was the resident expert on the Robinson Patman Act, which deals with fair pricing. I was not even allowed to be at a social business gathering and even HINT at any pricing discussions with other manufacturers. If anyone brought up pricing, I had to walk away. Period.
I had a boss who didn't understand Robinson Patman and asked me to do something illegal. I told him it was illegal. He didn't care. I went to my immediate boss and told him I would not do it. I loved my job but was not willing to do 10 years in jail and pay a $500,000 fine for them.
I still have the email from the attorney who advised me not to do it.
When I said
"Band together and form equality in the pricing structure for your products. "
I didn't even think of price fixing or mean it. There is nothing wrong with telling your fellow cake decorators their prices are too low if you do it tactfully. Something like "Your work is so nice you should be charging more for it, you are worth a lot more."
I don't know if this is the way to go but welcome ideas on this part of my rant. I too have a couple of people in the area that almost give their work away.
There is nothing wrong with telling your fellow cake decorators their prices are too low if you do it tactfully. Something like "Your work is so nice you should be charging more for it, you are worth a lot more."
Agree. It's a fine line and I know many people have no idea what the implications of pricing discussions can be or turn into. Recently, there was another thread in which an attorney warned us of this very issue, as the discussions were getting dangerously close to crossing this line.
Just be careful about conversations that imply setting "standards" and minimum price guidelines across the industry as a whole, or even with others in your area.
I let people know every chance I get that I use real butter, real cream, special fillings, again made with real products, which is something most grocery stores don't do. I make my own cakes and don't use commercial mixes which again almost all grocery stores do.
I told someone this today and their response was priceless!!!
"use cheaper ingredients..." 
"Yeah, I'm going to stop using organic and quality ingedients just to keep my prices down. I'll get brand "xxx" flour and just steal my sugar from resturants (small packets). If I save enough, I might even be able to make you a nice 4" cake... although if you want powdered sugar icing, I'll have to stop at IHOP too..."
Here are my two cents for whatever its worth. I too, live in a small town, we have Wal-Mart, Kroger and Dairy Queen, for retail cakes. My prices are alot higher than Wal-mart and the others, but I feel I offer alot more than they do. Having said that, my prices are low compared to what alot of you charge. In fact, I recently did a wedding cake that was a Colette Peters design and a grooms cake, and I got alot of flack about what I was charging. My price was really high for my area, and my client didn't have a problem with it, however, alot of CCers thought I was hurting the industry by charging as little as I did. I feel you have to take your economic area and talent into consideration. I couldn't charge the $15 dollars a serving like Colette Peters could, obviously I don't have the skill level she does. In comparison, I have a home daycare, I have been in business for 23 years, and I cannot charge the same as someone in St. Louis, the area just does not allow it. My rates are probably higher than some but they can't be so extreme that I price myself out of business. I have the highest respect for cake decorators and I KNOW what goes into making a beautiful cake, but I still have to be realistic.
Out of curiosity, I called around to see what the average rates of bakeries was around here and was shocked that it's only around $2.00/serving, which was what I was charging. After reading so many posts about this, I think this is WAY too low. I do a lot of specialty/sculptural work that takes time and skill. I'm the only one in my area that does the cakes (and uses the ingredients) that I do...
All the other bakeries do mostly buttercream cakes with the heavy piping, and they are good at it. I don't charge for tastings/consults like others do.
I'm a bit scared to have increased my price, but I'm going to see what happens. 
I had a lady scoff at paying 40 for a cake that fed 25 people. She said "i'm paying for this out of pocket and I think that is too much to ask" I'm sorry lady you would rather that money came out of my pocket. Of course I'll go cheaper so you don't have to pay for my work out of YOUR pocket.
One of my corporate friends just gave me this advise on pricing.
"I know several coaches from a leadership coaching program - and they were great coaches, but had a hard time making people pay for the coaching they did. They felt it was just something they do. It was a hurdle they had to go over. Literally, when they doubled their prices - they valued themselves, their time and their service more - and so did their clients. They got more business by charging more."
Interesting that it's not just a problem for people who make cakes.
You have to decide what your niche is going to be in your cake market. The "mom's club" may never be able or willing to pay what your cakes are worth. Often, more affluent people are the ones who value a higher quality product and are willing and able to purchase it. I think this is really more about marketing than pricing.
Figure out who your customers need to be and market the heck out of them. You can't be all things to all people. I think we try to sell to the people we interact with because it's easier and more comfortable, but they just may never be your market.
Ok, I'll be blunt, I don't get the 'pricing issue'. When I figure what my ingredients cost, mark them up 1.25 (if ingreds cost me $100, I'm charging the customer $125 for them), figure my time and what I need to get paid for it (and this shouldn't be minimum wage!), it's easy for me to figure pricing. As a result, I charge a minimum $4.00/sv for BC, and I'm definitely at the high end for price in my market. I think there's only one locally that charges as much or more, but I have had 3 brides in 2 weeks come to me from them with reports of really poor service and boring cake. I'm not a walk-in place, and I'm not as busy as Costco's bakery, but I'm not lowering my prices (or my ingredients quality) to take on more and cheaper work, for the sake of being "busier". Needless to say, I'm not selling many 8" birthday cakes, lol, but that's not my target market.
I cater to people who want to know they got the best and most organic ingredients, that the preserves in their cake came from berries in my own garden that were preserved fresh BY ME, that I MADE their lemon curd from scratch with organic lemons, (think of Martha Stewart's appeal--everything fresh and hand made, by yours truly, lol), and so my customers love what I make them and don't even blink at my prices. I've never had a single complaint or heard even a whiff of dissatisfaction from anyone, before, during, or after their cakes were delivered. I love making them happy, and there's a market out there who will pay top dollar for a great product with great service.
New shoppers who DO blink on price...well, they usually go somewhere else, and that's fine. There are lots of choices at lower prices, though they don't get rave reviews. I shop my competition, but I don't try to compare to them, in quality or price, and I certainly can't compete with their $1.95/sv prices, or tell you how they make any profit at those prices. I just know what my P&L needs to show, so I decided to stick to my guns and offer something better in terms of customer service, quality, and taste. If you haven't done a P&L statement for your business, I HIGHLY recommend doing one.
Cakes are fun and creative and all that, but you have to have a business attitude toward pricing and profit. We can bet Nordstrom doesn't wish they could compete with Walmart's t-shirt pricing. They both just realize they serve different markets. Nordstrom shoppers probably wouldn't be caught dead in WM, and WM customers would never dream of paying $49 for a t-shirt. Apples and oranges, baby.
Sorry to ramble, but I feel strongly about profit margins--if you're not making a profit, why be in business?
I had a lady scoff at paying 40 for a cake that fed 25 people. She said "i'm paying for this out of pocket and I think that is too much to ask" I'm sorry lady you would rather that money came out of my pocket. Of course I'll go cheaper so you don't have to pay for my work out of YOUR pocket.
Um, yeah. Did you tell her that when someone purchases something the money usually comes out of their pocket? Where'd she expect it to come from LOL?
I've only been doing cakes for about 6 months after attending the very prestigious school of le'YouTube. So I'm at the point where I'm thrilled anyones willing to pay me to cover the cost of the materials and new cooking toys. Don't get me wrong I charge enough to have some play money, but to me the whole idea that people want to pay me to do something I love ROCKS!!! (still want to smack the people who whine about my ridiculously low prices - not thinking that feeling will go away any time soon)
On the bright side I had to turn away my first customer because I was overbooked *triumphant laugh followed by eighties fist pump in the air*. (oh and because I live on a military instillation we don't pay for gas, power, or water so that kind of cuts down on cost)
[/quote]Um, yeah. Did you tell her that when someone purchases something the money usually comes out of their pocket? Where'd she expect it to come from LOL?[/quote]
The money tree out back. duh.
Chef_Stef, I so agree with you. If decorators figure out how much they make on a cake by charging a good rate they probably will find that they do half the work as those who accept low rates for their cakes but make the same money. Being busier is not necessarily making more profit.
Yes, I know that different areas dictate to a point, just don't undersell yourselves and comparing ourselves to Costco or Walmart is a big mistake. Their cakes all look the same and you have to choose your design from a set of their designs. No personal service there and a definite lack of quality.
Out of curiosity, I called around to see what the average rates of bakeries was around here and was shocked that it's only around $2.00/serving, which was what I was charging. After reading so many posts about this, I think this is WAY too low.
Many times, that per-serving is just a starting point. As I tell my brides, "Never ask 'how much does it cost?' ... ALWAYS ask, 'how much do I have to write the check for?'"
Meaning .....
A bride shared with me what she learned during her comparison shopping. One bakery was way cheaper than me on the 'per serving' figure, but this place was going to charge her $15 per tier for different flavors, $10 per tier for different fillings, $65 to wrap a ribbon around the cake (and the bride provides the ribbon), an add'l $0.50/person to put swiss dots on the side of the cake ".....because the decorator has to put each one on there individually" (duh!), delivery fee, stand rental fee. when it was all added up, the other place ....that was originally way cheaper than me ..... ended up being way more expensive than me.
So I honestly dont' care what they say the per-serving price is. Tell me all the other costs they're going to add in and THEN we'll talk comparison pricing.
I'd much rather make one cake for $200 than ten cakes for $20 each.
Amen. comparing this year to last year, I have booked 28.7% of the total number of bookings that I had last year ... but I've booked 68.6% of the dollars that I booked last year. Less work ... more money .... I'm into that concept! 
Exactly.
I told my mom (about opening my shop, in about 6 weeks)---"I need to do four really good weddings a month...OR ... 50,000 bagels."
I'd rather do one great wedding a weekend, instead of 50, 8" birthday cakes.
I think it all just really comes down to us needing to really (really) figure out what our costs are and what we *need* to charge, and go with that, no matter where we are, or what everyone else is doing.
, I know that different areas dictate to a point, just don't undersell yourselves and comparing ourselves to Costco or Walmart is a big mistake. Their cakes all look the same and you have to choose your design from a set of their designs. No personal service there and a definite lack of quality.
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I am so not compering myself to walmart or costco. I know how much hard work and time goes into my cakes but how do you get people who don't make cakes and are used to buying 30.00 doller caks understand that? I wish i could make everyone that i make a cake for come watch me so they would know how hard it is but that would be silly..
Shelly,
The trick is not to really think you NEED to make them understand the different between a $30 costco cake and yours. Nordstrom doesn't try to convince us why they're better than WM. They just...are. There will always be sticker-shock people; just let them roll on by.
I don't sell my cakes or cookies either. But this past weekend I made 60 cookies (Wizard of Oz) for a friend. It cost me about $60 to make them and I just had her buy the stuff I needed. There was a lady at the party that said "WOW, $60 is a lot for cookies". I just looked at my DH and asked her how much do you think they are worth. She said she would pay $30 for something like that. Everyone else at the party said they were great and that they would've paid $4 a cookie anywhere else. It's funny how some people think (=
It also cracks me up how people think they're doing me a favor by ordering a cake from me....like I should be happy with someone wanting to haggle prices and see how cheap then can get something from me. Like they have the mentality that in "these times" of financial uncertainty I should jump on any business that I can. Hello - no, I don't want to do a cake for 10ppl. Not worth the $ to turn on the stove.....I guess some people just don't get it and never will. I love love love my people that just say what's the price and hand over the money! I'm not always excited when someone comes to me and says ummm, that's too much, what about if I asked for this instead....I think I may go with setting a minimum price that I read a lot of people doing. Say $35 starting and going up from there. Even that seems low. I don't mind doing bday and special occasion cakes but I don't want to be 8" and 9" caked to death. And these same people that want something from nothing are the same ones who like to ask me last minute too - - - I need to change my ways and make everyone aware that just because I sit across the hall from them at work doesn't mean extra special attention and an emergency on me for lack of planning on their part. Yes, every customer like that should have to spend a week with me doing all the things I have to do to prepare a cake for Saturday! It's a week long event, not just an hour or two to decorate!
Thanks - just needed to speak my piece to!
I just decided to make cakes to sell. I didn't want to because of the same problem. People want to compare you with Walmart or Sam's. I tell them I'm not the same and mine are homemade and special. I put too much work in to the cakes to charge just a little. Some of my firends bring the cakes from Mexico and they are a lot cheaper. I don't know why. I will stick with my prices and go from there. If people don't appreciate is too bad. I think my prices are cheap. I charge only few dollars more than Walmart for the same cake. I don't know if I should go up in the prices because I spent hours. I work slow maybe b/c I don't have a lot of experience but the time I spend is a lot.
Cakes have different meanings to different people. Some people simply don't think the cake is that important at their parties so the local grocery store is fine. Others think of it as the main focal point. Those are the people that call me and don't mind paying my price ($1.75 per serving plus extra for extras)...which is still less than the local bakeries..but then I don't have to worry about paying $5,000 in monthly in rent alone either!!
Since I work alone out of my home I enjoy the amount of clientele (and it is growing!) I have, so far this year I've had at least two-three cakes every weekend and I already have cakes lined up into June. I think about opening my own bakery and my cake supplier says DON'T DO IT...or that will be the end of your life!
I'm happy where I'm at and I can say no when I want which is even nicer
I mainly decorate for fun. I refuse to eat a cake from Walmart or etc. I have my own laying hens, I wanted to do crafty laying boxes. A friend of ours works at a chain grocery store and brought me their buckets from the bakery. YIKES!! What are those ingredients listed? I couldnt beleive it. So no matter how good those items look, I will always go to homemade.
I use to bake cookies for Christmas and sell them like crazy, until I couldnt enjoy Christmas anymore. So I stopped. This pass fall a lady called for cookies for a wedding. Ok. Anything she said and will you make me cookies for Christmas? I charged her $5 a dozen. She got the cookies that look like peaches, not chococlate chips! Do you know she about fell over when I told her how much and she never did show up for Christmas.
My conclusion: It does matter where you live. But DO NOT short change yourself for your area. Let them go to Walmart and pay x amount, but everyone can go there. Only the chosen few can display your cakes/cookies proudly.
Amen. comparing this year to last year, I have booked 28.7% of the total number of bookings that I had last year ... but I've booked 68.6% of the dollars that I booked last year. Less work ... more money .... I'm into that concept!
I just love all your %s... it's impressive.
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