Beginning My Own Cake Business But...
Business By JaclynHonea Updated 15 Jul 2013 , 4:11pm by howsweet
ASo I've recently started doing cakes for other people but I've had some problems. For one thing I'm making them out of my home because I definitely don't have the money to open a shop. Another thing is that since my husband is military and we just moved to a new state I don't know how best to advertise and get new customers. I've made two in the last two weeks, one for a birthday party and one for a baby shower. In order to help get the word out I gave them a price cut and told them how much I would have normally charged. They loved them but I'm still not sure how to get anyone else since those were my only orders. Help?
AWho is your target audience? What is your competitive advantage? Are you compliant with local food safety laws (some states require a licensed and inspected commercial kitchen to sell food)?
Offering discounts is a great way to market to customers who can't afford your products.
AI've done cakes for a while, I try to work with people as much as i can when they have hard situations and I dont charge nearly as much as most places do around here are really my only advantages. And I dont target one specific audience. And I do comply with all of my local laws (first thing I checked when I got here actually).
I've done cakes for a while, I try to work with people as much as i can when they have hard situations and I dont charge nearly as much as most places do around here are really my only advantages. And I dont target one specific audience. And I do comply with all of my local laws (first thing I checked when I got here actually).
That's not an advantage.When you don't charge enough, you attract the worst kinds of customers who want a whole lot for very little. Undercharging never benefits you and when you do so, it negatively effects the market price of cake. No storefront business could survive undercharging, but ironically many who hope to one day have a storefront are shooting themselves in the foot by lowering prices in the area and effectively creating a situation where a storefront cakery is no longer a viable business. With the passage of cottage laws sweeping the nation, it's happening, especially in smaller towns. Bakers tend to have trouble believing that their one or two cakes per week effect market prices, but because there are so many out there undercharging, cumulatively it really does.
AIm not undercharging I just dont charge a 1000 percent mark up like the stores do around here
AI dont know what thats supposed to mean annabakescakes
It is repetitive to see the same subject over and over! But the only way pricing issues can get resolved in our industry is by educating one decorator at a time. Everyone has agreed over and over to the main points of not underpricing and learning your real overhead costs, regardless of the personality differences in how that is said.
We need a sticky note on top of this forum where someone explains how to price cakes and what points there are to consider when you don't price well. Just refer newbies to it and save the public debate.
I believe that if you ask for advise then you should not argue when it is given. Listen (or read) what is being relayed and decide if it will work for you. It is correct that if you sell for inexpensive prices then your clientele will come to expect lower prices no matter what kind of cake the request, even if it is labor intensive. These customers will tell their friends and you may gain more business but is it worth it to make 10 cake a week at 30.00 each or 5 at 60?
Just sayin.
AOkay. Just to clarify for everyone I dont undervalue. Im not arguing about advice in being given but telling how I dont need advice on that in the first place. I asked about advertising and getting the word out. When i price my cakes for people I take the price of supplies and double it and then add the amount of hours I will most likely work on it (usually adding about two for any problems that may occur) and I charge twelve dollars an hour. I know I could charge more but when I moved here I talked to local places about working with them and they explained their pricing system. I dont feel comfortable charging five times cost of supplies and forty or so an hour. Can anyone help me with advice on getting my business advertised now?
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Original message sent by JaclynHonea
I've done cakes for a while, I try to work with people as much as i can when they have hard situations and I dont charge nearly as much as most places do around here are really my only advantages.
While that's great for your customers, it often ends up as a disadvantage for you. $12/hour isn't bad, but do you also take into account your overhead costs? Why do you double the cost of supplies? What is your markup for profit? Are your customers willing to pay your non-discounted price?
And I dont target one specific audience.
You need to figure out who your target market is before you can even think about how you're going to target them. Be sure the market you identify is willing and able to pay for your products at a price that earns you a fair wage and profit, otherwise you will be running a zombie business.
AIt means that there are going to be dozens of people saying that you are undercutting them, and dozens more saying that the others are overcharging, and it is going to get real entertaining, real fast. I am getting the popcorn together right now.
BTW, I have a licensed, commercial kitchen, and I charge what the stores charge. That is to cover the $17,000 start up costs, pay my $400 a month electric bill, my $70 a month water bill, my $330 a year FOG permit, $520 a year business insurance, 4 time yearly grease interceptor inspections for $60 a pop. (that's a new one.)
I also lived in a rental when I wanted to start this venture, so I worked on my credit, my husband's credit, saved a $10,000 down payment by scrimping and saving while my husband and I and our 4 kids lived off $30,000 a year. I also bought used equipment every time I scraped a few hundred dollars together, and stored them in our rental's basement. It took 7 years, I had my 3 bowl sink for 6 years before it ever saw plumbing, and my commercial convection oven for 5 years before it ever saw electricity.
We started with a bare cement floor (covered in old cat piss) garage, with a single bare bulb, a single electric receptacle, and not a single scrap of insulation. We now have 27 outlets, 3 florescent lights and a chandelier, and the attic and walls are insulated and painted and gorgeous. Just for the floor, I spent $300 on professional cat piss cleaning, another $100 and 10 hours leveling it, then 30 hours and $500 crawling on the floor on my hands and knees tiling the floor, with rheumatoid arthritis in my knees, and shoulder, and degenerative arthritis in my back and hips. I feel like I should charge whatever the hell I want after just that torture alone, and people who run to the grocery store real quick and bake a cake out of their house with no special requirements need to mind their own business about my prices.
AThe starting point for your advertising should be identifying a real competitive advantage that is not tied to a low price (since grocery stores and discount stores will beat you every time there).
Fill in the blank: Customers will want to buy a cake from my business because _____________.
Once you know what your advantage is (and it is usually tied to specific sub-sections of the market), you can build your marketing strategy around it.
This is a topic that has been beaten to death in the forums. There's a search box at the top of your screen to help you search for previous threads for whatever ails you. Then if you don't get your answer or if the threads are all old and dead by all means...ask away.
I believe that if you ask for advise then you should not argue when it is given. Listen (or read) what is being relayed and decide if it will work for you. It is correct that if you sell for inexpensive prices then your clientele will come to expect lower prices no matter what kind of cake the request, even if it is labor intensive. These customers will tell their friends and you may gain more business but is it worth it to make 10 cake a week at 30.00 each or 5 at 60?
Just sayin.
Ditto ^^
Been there. I started as a military housewife. Do not undercharge or charge considerably less than your competition. That's a great disservice to them and yourself. If you're not working to put food on your table and it's just a hobby, you're taking from someone who is. Not to mention, when your business gets very busy. You will find yourself overwhelmed and no longer excited about the hobby you once loved. Those so called customers will careless that you've missed family time, been up 72 hours straight working on their "discounted" 4 tier, all fondant, intricate lace, $150(should be at least $850) cake. Trust me, ask me how I know. You tell them to tell their friends that it cost $850 but they don't. You will hate yourself and maybe even give up.
In order to compete, you need to have the better product and a COMPETIVE price. Not just cheap. Then you get the quality customers from your competitors who tell their friends, who tell all their spouses, who ask you for the office cakes for their annual so and so. Next thing you know, your doing the USAFE Change of Command cakes in Germany. Ask me how I know. You will be much happier in the end if you start out right. I learned the wrong way and had to learn a hard lesson.
As for advertising. My hubby was my main advertisement. I did cakes for the office. When there was a special occasion at home, I made him a cake to take and share. I volunteered a lot of cakes. However, when there was an event at the office, they called me. I only took cakes when there was nothing special going on. You can use your friends the same way. My best friend loved to take a cake to her hubby's job as well. Networking is the best, especially when you're military. Eventually your product will speak for itself. If you have a flea market on base, you can ask for the rules about food and possibly sell and advertise. GL
AI didn't say it was wrong. I just said i didn't feel right doing it so I wouldnt. And as for having all the overhead costs, no I dont have them but i would love to be able to do the same thing you did if it meant I would have my own store but i probably wont get that chance. I want to bake cakes and enjoy making people happy while making a little money on the side while I still have the chance. Its a way for me to be a stay at home mom in my last few years.
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Original message sent by MimiFix
[SIZE=14px]In order to advertise successfully, you must know who your customers are and direct your advertising to them. Hence the phrase: target your market. [/SIZE]
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Original message sent by JaclynHonea
And as for having all the overhead costs, no I dont have them
Yes, you do have overhead costs. Even for a home-based business, you still have additional utility costs, accounting costs, tax preparation costs, advertising costs, depreciation for expensive supplies, business license costs, insurance costs, and so on.
However, the biggest item you didn't mention is your profit. In the US economic system, legitimate businesses will add an additional percentage over their cost that generally accrues to the business. In the cake decorating world this is usually in the 15-45% range.
It was an attempt at getting the help, not sarcasm. And I dont know how to get to just one group of people since ive just always done all kinds of cakes
Do you live on base, or off? Are you mainly selling to other military families, or anyone? it would help if you were more specific about who you think are the people who buy your cakes. If you're selling mostly kids' birthday cakes you could see if there are daycare centers or preschools near you who would let you post a flyer or something. Do you have a website? If not, get one and get some business cards printed to hand those out.
as far as the pricing goes, just make sure that you're charging enough to make it worth your time. If you've figured it out and you're still at half the price of local bakeries I'd suggest that you revisit your formula and raise your pricing a little. You can still give people a discount if you want to.
degenerative arthritis in my back and hips. I feel like I should charge whatever the hell I want after just that torture alone, and people who run to the grocery store real quick and bake a cake out of their house with no special requirements need to mind their own business about my prices.
Ditto and Let the church say Amen
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Original message sent by jason_kraft
Yes, you do have overhead costs. Even for a home-based business, you still have additional utility costs, accounting costs, tax preparation costs, advertising costs, depreciation for expensive supplies, business license costs, insurance costs, and so on.
However, the biggest item you didn't mention is your profit. In the US economic system, legitimate businesses will add an additional percentage over their cost that generally accrues to the business. In the cake decorating world this is usually in the 15-45% range.
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Original message sent by JaclynHonea
It was an attempt at getting the help, not sarcasm. And I dont know how to get to just one group of people since ive just always done all kinds of cakes
Are you targeting customers in a specific geographic area? Do you specialize in elaborate wedding cakes? Simple cakes for birthday parties? Cupcakes? Cupcake cakes? Mostly fondant? Mostly buttercream? Dessert tables? Specific ethnic groups? Only people who want the lowest possible price? People who are looking for amazing designs? People who are mostly concerned with taste? People with allergies? Geeks? Left-handed people?
AOne thing is to have a well done website with good quality photos, ordering and contact info, flavors, pricing etc. That way you can focus people there to get info more info about you and your products. A Facebook page is not a substitute for a good website.
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Original message sent by costumeczar
Do you live on base, or off? Are you mainly selling to other military families, or anyone? it would help if you were more specific about who you think are the people who buy your cakes. If you're selling mostly kids' birthday cakes you could see if there are daycare centers or preschools near you who would let you post a flyer or something. Do you have a website? If not, get one and get some business cards printed to hand those out.
as far as the pricing goes, just make sure that you're charging enough to make it worth your time. If you've figured it out and you're still at half the price of local bakeries I'd suggest that you revisit your formula and raise your pricing a little. You can still give people a discount if you want to.
I didn't say it was wrong. I just said i didn't feel right doing it so I wouldnt. And as for having all the overhead costs, no I dont have them but i would love to be able to do the same thing you did if it meant I would have my own store but i probably wont get that chance. I want to bake cakes and enjoy making people happy while making a little money on the side while I still have the chance. Its a way for me to be a stay at home mom in my last few years.
This is going to make you a very unhappy person eventually. The little money on the side is going to lure the wrong types. Change your thinking to making money to one day opening your shop (whether you do or not), then you will be in the mindset to charge appropriately. If they want a cheap cake, let them go to Walmart.
Hence the problem. Find your niche and then you can find your target.
AJaclyn, Hang in there! I'm just getting started as well. Most of my jobs come from word of mouth and people being able to taste for themselves.
Volunteer to bake for any/every occasion; have a price list and business cards with you at all times; give samples to those you think might be a target audience. Good luck!
A[B]This is going to make you a very unhappy person eventually. The little money on the side is going to lure the wrong types. Change your thinking to making money to one day opening your shop (whether you do or not), then you will be in the mindset to charge appropriately. If they want a cheap cake, let them go to Walmart.[/B] Ill be honest that I want to open the shop but I wont be able to. I wont have the time to save enough to open one
Network at playgrounds. If you have a Facebook page, get someone on there who knows a lot of people to get friends to "like" your page. Charge what you want to charge. It's best to formulate your costs and create a mark-up, but you can also price a cake at what you feel it's worth.
Im not undercharging I just dont charge a 1000 percent mark up like the stores do around here
How do you know the places around you charge a huge mark up? Do you know their monthly costs?
We have a storefront, and I'm sure a lot of people that inquire about our cake prices think we are just rakin' in the cash and living large, but that's definitely not true. We have pretty high overhead costs that we have to cover just to stay in business, so whether people realize it or not, we charge what we do because we have to.
Most storefronts are in the same situation, which is why others have said that storefronts can't survive charging less than what they do.
If we're touchy about this subject, it's because many of us have dealt with the glut of new cake businesses starting since cottage food law has passed in our state, and we have felt it. When you say that your competitive advantage is that you don't charge a "1000 percent mark up" like other bakeries in your area, you are essentially saying that you are willing to do what we do for a significantly cheaper price, AND that you feel we overcharge.
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Original message sent by JaclynHonea
Ill be honest that I want to open the shop but I wont be able to. I wont have the time to save enough to open one
If only you were running a business where the apparent market value of similar products is high enough to allow for a markup that would help you save toward opening a shop...
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