Cottage Baking Laws And Pricing

Business By costumeczar Updated 9 Feb 2016 , 2:20pm by Webake2gether

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costumeczar Posted 4 Feb 2016 , 12:44pm
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The thread that @JeniC ‍ started about pricing made me curious...I know what's happened in my area, but if you're a cottage law baker, or if you were an established business before your area got cottage baking laws, what have you seen happening to the prices for cakes etc, in your area? Without getting into a big discussion of why, have they gone up, down, or stayed about the same? Have you had more or fewer customers arguing with you about your prices being too high since the cottage laws were passed? A blog article is forthcoming and I want to get some perspectives from places other than my area.

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Jinkies Posted 5 Feb 2016 , 11:40pm
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I have my base price listed on my website so I've never had anyone actually question my quote.  I start at $4/serving and anyone who contacts me has no issues with my prices.

However, I do not get a ton of orders and the few people like me in the area don't seem to get any more than I do (from what I see on their fb/web pages).

The ones that seem to be super busy are not only much cheaper but their cakes are cheaper looking as well.  There is one in my town who is booked for months but her cakes are 1 & 2 layers, look to be about 2" high and are not really "clean" looking, if you know what I mean.  

Soooo, it seems to me, that if you want to be super busy around here- you have to be cheap and the look of the cake is not a huge factor.  There, luckily, are people who want higher end cakes and are willing to pay for it- but they are not in abundance.  I'm not doing wedding cakes right now, so I don't know how that corner of the market is doing.  I've thought about doing them but not sure if I have the patience to deal with a bridzilla :)

Probably should note that I don't advertise because I really don't want to be busier right now.  Once my baby heads off to college this fall, I'll probably look into getting more orders.  Any orders I get now are referrals by other clients or they found me on google.

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MimiFix Posted 6 Feb 2016 , 4:57pm
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Cake prices within the home-based baking industry have fallen drastically, along with the quality. My former students who have been in business for several years, have complained about this. Their customers are now cancelling orders because they've found cheaper priced cakes. A couple of home processors are no longer in business, while others have branched out to baking different dessert items. But business for retail shops doesn't appear to have changed.

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Webake2gether Posted 6 Feb 2016 , 5:50pm
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I don't know personally if it's necessarily cottage food laws that have changed things but here storefronts close almost as fast as they open. I'm inclined to say it's less of a cottage food issue and more of an every one makes "custom" cakes. I've not experienced any cancellations due to cheaper cakes but then again they'd lose their deposit so I imagine that would be a big deterrent if they had consider it. We raised our prices and the lookie lous and price shoppers have went away. For a business that operates out of a separate commercial kitchen in my home I can say that our prices are likely not competitive as we are priced at a higher point for several reasons but every order has to be worth our time and $40-$50 cakes just don't cut it for us. I don't know if that was an answer to your question. Oh...There was one baker at the farmers market last year and I hadn't ever heard of them so they aren't really making a mark I don't think and all they do is cupcakes. They also have a commercial kitchen so they can operate however they want as well. I think they are priced accordingly for cupcakes. 

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810whitechoc Posted 7 Feb 2016 , 10:44am
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I have just had this conversation with a fellow caker I know.  We have what I believe is the equivalent of your cottage law here and she and another girl we both know worked under this.  I have a commercial kitchen, factory and separate shop front. They have both closed down in the past year because it just became too hard to make a living, both were charging realistic prices, but our area has become flooded with "backyard" businesses in the last couple of years, they are operating illegally and pop up and disappear regularly.  As soon as one closes down another two take their place.  They both said that they were having to drop their prices to compete and both eventually decided it wasn't worth it.

Like Webaketogether we are going through some major changes right now and have just announced we are no longer making novelty cakes, anything under $80- $100 is not worth our while to bake, especially as there are so many people out there doing them at ridiculously cheap prices.  As we all know prices are relative to what your costs are, our wages etc are higher than a lot of other countries, so $80-$100 might seem like a lot to some people but I suspect it is the same as Webaketogether's $40-$50 cakes.

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Snowflakebunny23 Posted 8 Feb 2016 , 9:12am
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I have seen prices (and quality) drop significantly in recent months/years but i choose to ignore it and maintain my pricing structure (I have actually increased my prices quite significantly over the past 2 years).  I'm fortunate in that I don't make cakes for my sole source of income, I run a premium-end cake 'cottage' business as an extra business for myself and have just implemented a minimum order of £100 for anything.  It's like the cheap have gone cheaper but the 'good ones' have stayed steady.  I recently saw a local woman was charging £30 for a 6" sculpted cake of something which looked like the little alien thing from Lilo and Stitch...£30!!!!  You couldn't make it for that much and it would have probably taken me about 8 hours!

But, I see it everywhere - businesses are opening and closing very quickly with storefronts and I think it is partly because the market is saturated and partly because (I hate to say this and sound mean) but a lot of people who make cakes don't know anything at all about running a business properly.  There was one lovely lady who set up in a commercial space in a local shopping centre.  She had a pretty big cafe area and was doing mostly cupcakes/slices to eat in/takeaway as well as orders for larger tiered cakes (which looked dreadful).  The problem was that she started too big, her cakes were too cheap and put her retail space in a place where very few people walked past!  So the drop in trade was minimal.  We did a rouch calculation in our heads and, best case, at the cost she was selling her cakes for - she would need to clear about 1000 a day to break even.  We were there at lunchtime and it was dead.  You had to WANT to go and see her to know she was there and, while her branding was cool, her marketing was pants.  I had a chat with the lady in the next store along and she said that she simply burned out (up at 3am baking every day for the day ahead) and couldn't make ends meet with the investment she had made in brand new branding, equipment etc.  It's really sad but it's happening everywhere.

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Webake2gether Posted 9 Feb 2016 , 2:20pm
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i agree it's not a problem exclusive to cakes. It's everywhere and no business is really left unscathed by it. A huge problem here is a lack of solid consistent pricing. If more people charged for their time there would be a better balance in the market. But like stated before when people don't have any real substantial investment in something they can lower their prices bc they don't have a bottom line to meet. Well we do and I'm not ashamed to say it. We invested money into a business with the expectations of seeing a return in a few years of course it's called realistic expectations haha. That's what people running a business are supposed to do and yet so many operate their backyard business (love that by the way lol) as a little extra cash. And I'm not talking just cakes here. I think so many operators fail to educate themselves properly before starting a "business"  so they get the cart in front of the horse then wonder why it doesn't work. Cottage laws were designed here to let people get a foot in the door and it requires them to meet certain requirements and register as a business so in that respect I think it has been a good tool to show people there are steps to running a business but there are too few that actually follow the rules I don't know that it's actually as effective as it should be. 

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