Okay, I've been approached by a local business to provide one cake a month to celebrate the staff birthdays. There are 25 people on staff. The owner wanted a "basic cake to feed 25 people, mix it up each month for flavor and style". She asked for a quote. I let her know that my most basic cake would be $2.50 a serving for a total of $62.50. She wants the cake delivered each month - it's not very far, and since I know her I said I would not charge for delivery. Now, she came back to me saying that she and her partners have discussed it and would like me to provide a $50 cake each month. . .

So, as I said, my most basic cake is $2.50 a serving . . . do I do it and let her know it will not feed 25 people - it will be 20 servings of cake. Or do I say no, as I am concerned it won't do wonders for my reputation to be providing too little cake each month to satisfy the staff!! I know I could gain exposure this way, but perhaps it's not the right kind of exposure? What do you all think?

I think it depends on a couple of things. 1) Do you want to sell the "Basic" type of cake you will be providing? If not, then it's not necessarily good exposure b/c the people there will want to order that same type of cake.
2) Do you "need" that monthly business as the discounted rate?

Personally i would say that I could do the $50 price, which is a discount IF they sign a year contract. That way you know that you have the cake order and they can't cancel one month. I personally am a little more willing to give a discount if they're gaurenteed business (the contract) Plus if they aren't specifying the design and you can do a really basic cake then it won't take much time either so you can put less hours into it.

If you don't want to do the discount then tell her what you CAN offer for that price, it's up to her if she want to order a cake that doesn't have enough servings.

If this was a single order, would you discount it? If not, why discount it just cause it is a monthly order?

My opinion is your price is your price for a reason. I understand businesses have budgets, but why should you take a $12.50 hit on your profit, because they don't want to pay over $50?

That adds up to $150 that you will lose on this order in a year period, not even factoring in your delievery time every month.

Thanks ladies! That helps reassure me. I need to firm up my backbone - I'm not doing myself any favors by giving deals for no real reason. I thought it was generous enough to deliver them for free each month . . .