AIn my area, people's perception of how much a cake should cost is way underestimated. They see beautiful cakes in magazines and on pinterest etc. but don't really realize what kind of time goes into them.

Here's my question : how much detail do you give a customer about costs? Is there a realistic guide with pictures somewhere as to how much a cake would cost? Maybe this has already been discussed on this forum. Could you please give me a link to the conversation?

I am opening a business and when I ask people how much they would be willing to pay, the price is a bit higher than the cost of ingredients. People really don't realize how much it costs to bake from scratch.

What are you defining as your area?

Don't be expecting to be selling cakes to your friends and family, unless you're one of those people who has friends with money. For the average person, a high end custom cake is an occasional splurge, if that.  Your customer is more like someone who has a closet full of $500 shoes. If they won't even pay $500 for a pair of shoes they can wear many times, they probably aren't going pay the same for something that's going to get eaten in one afternoon.

I'm not saying they have to be shoe lovers, just trying to put it in perspective.

To specifically answer your question, I tell customers nothing about my costs. And I don't base cake pricing on my costs. I charge instead the most I can get for my cake.

I assume you've asked friends and acquaintance what they might expect to pay? Not potential customers? Either way, this is probably not a worthwhile. Find out what cakes are actually selling for.

AMy question is, how well do you know your target market?

Think of it like this, Whole Foods won't move into an area without a thorough study of the local market to determine if the area has enough of their target demographics - double income, college grads, etc to make it worth their efforts. You need to know whether you are targeting, high end, mid end or even low end who want more than what the local cut rate bakery offers.

If you know that your target market isn't high end, perhaps [B]develop[/B] options that are cost effect, yet meet some of the dream cake work that you are bound to see with your clientele.

Not everyone has to be high end to build a successful business but you do need a plan to address the needs of the area.

It sounds like you don't' want to just slap cakes together with cheap ingredients.  Just give a price, don't even justify it.  If you are targeting the correct demographic there shouldn't be a problem.  On occasion you might find yourself turning down orders from people who are expecting cheap prices, but why put yourself through an explanation of cost when people still won't pay your prices?

I don't even bother letting people in my town know I bake, but just one town over is where I get all of my business.   Plus, there are 3 bakeries in my town.

I do not explain my prices.  The butcher has never told me why his steaks cost XX$.

AThank you for your answers, it's appreciated.