Why do bakers undercharge? I wonder about it, but mostly come up empty handed.  But it occurred to me that one factor might be that most of us can't afford our own cakes. I don't picture myself paying, say, $240 for a 32 serving birthday cake. And there's just no way I'd consider spending $500-600 on 3d cake.  And for the most part when I show up with my cakes, it's clear that my customer can afford a lot of other stuff I can't afford :)  Maybe since it seems like so much money for cake to many of us, we just can't wrap our brains around asking for that much for a cake. Could this be a factor?

And does anyone else have any thoughts on the why of undercharging?

AI agree that we, cakers, are not our target market. While I would pay for an expensive cake, I cannot afford one now. In my town, there is a girl charging ONE DOLLAR a serving for cake! She is a recent culinary school graduate, but I guess they don't teach any kind of business information in school. She must think that it only costs that much to make a cake. No overhead, no extra supplies, no insurance, permits, etc. And especially no labor. I just don't think some people know exactly what it costs. It sucks for us who try to charge correctly.

AI talked about this in my most recent blog post (Pricing, Market Value, and Economic Damage), I think it's a combination of customers having a low perception of value and business owners who may not have the confidence and/or business acumen to set reasonable prices and stand behind them.

AJust because you finished a Wilton decorating class, you need to sell your cake. Just because somebody said you make a business out of it, doesn't mean you should. If you can't even figure out what your costs are, don't put a price on it. If you don't have recipes for something, don't sell it. If you have a question (pricing, recipe, etc.), Google it first before asking. If you want an opinion or advice, listen and thank the person.

I'm not referring to anyone in particular. Most people undercharge because of lack of information and a sense of ME! ME! ME!

Just remember you need to charge enough to make a profit so you CAN afford your own cakes.    

AThat's exactly it, we see a lot of people that say they want to charge a reasonable price, and that it's not right to charge extortionate prices but this is a custom business, nobody else selling luxury goods and services thinks they need to worry about the common man affording their product.

If you want to make cakes that the average Walmart customer can afford, go work at the Walmart bakery. Try finding someone that will custom make you drapes for the same price that you can buy them off the rack at Target. Not gonna happen.

With me, I'm currently in the research phase of starting my business. I'm actually going to be starting it in a different state, so the research is mostly via the internet. I have seen a business charge $1.75 per slice...and that at the high end of the servings. I have to fight with myself as well...as mush as I want an order, I cannot budge on a price, and I think that my personality wants to be a people pleaser so I tend to cave a bit...I'm going to have to whip myself into shape...LOL