How Much Do People Think A Cake Costs To Make???
Business By TPACakeGirl Updated 23 Jun 2016 , 1:30pm by indydebi
The biggest problem we seem to have with undercharging comes from people who say they're doing it as a hobby, when in fact they are trying to sell their cakes, but not doing it in a professional manner. That doesn't make it a hobby. That makes it a very poorly thought out and possibly illegal business. Your business can be a hobby, but you still have to run it like a business. That means charging prices that make good business sense.
YES. This.
Who buys a cake off of a Craigslist posting??? That is just crazy. Go to Walmart already.
Liz
The biggest problem we seem to have with undercharging comes from people who say they're doing it as a hobby, when in fact they are trying to sell their cakes, but not doing it in a professional manner. That doesn't make it a hobby. That makes it a very poorly thought out and possibly illegal business. Your business can be a hobby, but you still have to run it like a business. That means charging prices that make good business sense.
Wanna make cakes for fun and not charge for your time? Go ahead, but don't do it for strangers.
Wanna make cakes to make a few extra bucks on the side? Charging a price that will actually make you a few bucks instead of leaving you in the hole would be a good place to start. One cake that pays you $25 an hour for 8 hours pays more than 10 cakes that pay $1 an hour and take you all weekend. You don't need to find 10 people that are willing to pay a fair price, you have to find 1.
This really helps me! I raised my prices but then looked at craigslist in Cincinnati and searched "cake" and see people.advertising cakes for $1.25 a serving. One girl has cakes with just sloppy stars all over them and thinks they're saleable.
Quote:
Who buys a cake off of a Craigslist posting??? That is just crazy. Go to Walmart already.
Liz
I get a lot of cake pans and such off craigslist, and see these adds all the time. I saw the ones with the stars, they are horrible! I don't want anyone to see my email or phone number with caller id, but I would love to know what they are charging. It is really just sad. I would sooner go to Walmart, and not because I am scared of it being off Craigslist, but because they are UGLY!
The biggest problem we seem to have with undercharging comes from people who say they're doing it as a hobby, when in fact they are trying to sell their cakes, but not doing it in a professional manner. That doesn't make it a hobby. That makes it a very poorly thought out and possibly illegal business. Your business can be a hobby, but you still have to run it like a business. That means charging prices that make good business sense.
Wanna make cakes for fun and not charge for your time? Go ahead, but don't do it for strangers.
Wanna make cakes to make a few extra bucks on the side? Charging a price that will actually make you a few bucks instead of leaving you in the hole would be a good place to start. One cake that pays you $25 an hour for 8 hours pays more than 10 cakes that pay $1 an hour and take you all weekend. You don't need to find 10 people that are willing to pay a fair price, you have to find 1.
Holy mother of God you win an Oscar with this. Yep--NAILED it. NAILED it. I'm spreading this everywhere I can, like peanut butter!
The biggest problem we seem to have with undercharging comes from people who say they're doing it as a hobby, when in fact they are trying to sell their cakes, but not doing it in a professional manner. That doesn't make it a hobby. That makes it a very poorly thought out and possibly illegal business. Your business can be a hobby, but you still have to run it like a business. That means charging prices that make good business sense.
Wanna make cakes for fun and not charge for your time? Go ahead, but don't do it for strangers.
Wanna make cakes to make a few extra bucks on the side? Charging a price that will actually make you a few bucks instead of leaving you in the hole would be a good place to start. One cake that pays you $25 an hour for 8 hours pays more than 10 cakes that pay $1 an hour and take you all weekend. You don't need to find 10 people that are willing to pay a fair price, you have to find 1.
Brilliant. You need to embroider that on pillows or something :)
Placing the question of poor pricing aside for the moment, if you get huffy about undercutting practices one has to question why you are in business. In every sector of the economy businesses undercut each other routinely--it is part of doing business. I am in the market for a new a car and have 3 Ford dealers in the area all purporting to offer the best possible deal on a new car--fact is consumers benefit from this practice. I am sure everyone here has at one time or another gone to a different business for a product because a competitor is engaged in a pricing strategy to garner more customers.
Second simply because a customer found a cheaper option does not mean that you were undercut. Your business alone does not get to set "market prices." Because you feel your labor warrants x level of compensation, your ingredients cost you y, your utilities cost you z does not mean you get to set what market price is in your area. Indeed rarely will two businesses who sell the "same" product set the same price. That customers found a cheaper alternative could simply mean they have lower costs and can afford to charge less. Which means they did not undercut you, as undercutting is a deliberate pricing strategy in which a competitor is aware of the prices set by the competition and deliberately sets them lower.
This is the problem with Jason's "Magic Pricing Formula." His advice to mark up your product to market price presumes to create an economic situation that never exists--firms charging the exact same price for the same product. For example it does not account for the fact that the cakes produced will never be the same--put another way there is product differentiation between cake businesses--and it does not account for branding. The thread in this forum on using scratch baking and quality ingredients as a way of countering an established business in an area illustrates why even cakes are not the same. Add in skill of the decorator, artistry, etc and there are more than enough factors to ensure that no two products will be the same. Thus aside from basic market competition it is simply unreasonable to expect equivalent pricing structures among competitors. You do not think that there are bakeries charging less for wedding cakes than what Buddy charges in the area he serves in NY/NJ? Is he being undercut? No--there are cheaper alternatives because you are not buying his name and reputation.
How many of you shop at big box stores like Wal-Mart, Home Depot, Lowes, etc? You think when Home Depot opens a store in a new market which as only been serviced by local nurseries, local hardware stores, and kitchen and bath business that they raise their prices to match the prices of those local businesses? Of course they don't, nor should they. They are using the competitive advantage of bulk purchasing to provide the same products cheaper than the local businesses can. Nor are they leaving money on the table. If Home Depot set its prices to match those of the local businesses what incentive would consumers have to start shopping at the newly opened Home Depot? Oh sure they might have a bigger selection, then again I have yet to see a local establishment that has not promised to get me what I want if I need something they do not stock.
How about shopping online from establishments that do not operate out of brick and mortar shops? I am sure everyone goes to their local cake supply store right to buy their supplies--right? No one goes online to find cheaper prices set by competitors who use their lack of overhead to charge lower prices for cake supplies? Unless you shop entirely at local businesses anxieties about damaging the economy are rather uncompelling. Each big box store and online retailer that offer lower prices highlights how undercutting is part and parcel of a competitive market place.
I am not saying that people do not lose business to people who price their products poorly, however, simply because someone decides to go with a cheaper alternative does not mean you have been undercut (remember undercutting a deliberate pricing strategy). Nor does it mean that a business is leaving money on the table because they opt for a smaller profit margin to counter the competitive advantages of clients like branding, artistic skill, etc. And frankly undercutting is part and parcel of a competitive market place. The only place it does not happen is when businesses are colluding to keep prices at a set point and frankly there is no reason why the custom cake industry should be excluded from competitive forces that benefit consumers---as I am sure those in that industry have benefited from this practice in other industries.
Those analogies don't apply. People who either have a regular job or are supported by a spouse who undercharge for cakes are setting up unnatural market conditions by charging way less than the real value of the product. They set up a lopsided playing field and create an unfair competition situation. There's no way to compete with someone who runs a husband subsidized cake program. And no way for things to naturally swing back to equilibrium. It's irresponsible and especially annoying because they seem to be in their own little bubble of happy without a clue of the effect they're having. I'd have more respect for them if they even understood what they were doing to people trying to make a living in this business.
A
Original message sent by Novel-T Cakes
I'd buy one!
.....with the money I make from charging correctly....well said!
Don't forget to take market prices into account when setting the price for your pillows.
Don't forget to take market prices into account when setting the price for your pillows.
Just so newbies can see that pricing rules apply in every industry, I'll price that pillow for you. Base price is $2/inch for the measurement of the longest side. Add $10 for a zipper closure. Add $25 for a feather insert instead of poly. Add for custom embroidery on the pillow face - $25.00. Price for one 18" x 18" embroidered pillow: $96.00. That was my previous career, and the extras add up the same on a pillow as they do on cake. :)
Liz
Those analogies don't apply. People who either have a regular job or are supported by a spouse who undercharge for cakes are setting up unnatural market conditions by charging way less than the real value of the product. They set up a lopsided playing field and create an unfair competition situation. There's no way to compete with someone who runs a husband subsidized cake program. And no way for things to naturally swing back to equilibrium. It's irresponsible and especially annoying because they seem to be in their own little bubble of happy without a clue of the effect they're having. I'd have more respect for them if they even understood what they were doing to people trying to make a living in this business.
Thank you, this is spot on as well.
Those analogies don't apply. People who either have a regular job or are supported by a spouse who undercharge for cakes are setting up unnatural market conditions by charging way less than the real value of the product. They set up a lopsided playing field and create an unfair competition situation. There's no way to compete with someone who runs a husband subsidized cake program. And no way for things to naturally swing back to equilibrium. It's irresponsible and especially annoying because they seem to be in their own little bubble of happy without a clue of the effect they're having. I'd have more respect for them if they even understood what they were doing to people trying to make a living in this business.
Hahaha, Love it!
wow ............and i thought the problem was here alone..people like nice cakes but they don't want to pay for it simple. Some people just don't understand that the craft takes time. They put it in their minds that we mix some concoction in a bowl and a magic wand does the rest. I say if you loose 2 clients make two more that will appreciate you work..I carry my business cards with me everywhere. I just gave one to my doctor..This is business people...think like Entrepreneurs
People who either have a regular job or are supported by a spouse who undercharge for cakes are setting up unnatural market conditions by charging way less than the real value of the product. They set up a lopsided playing field and create an unfair competition situation.
From Wikipedia: In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly.
I got bumped out from editing my last post. My point is when anyone (small business or large businesses) sells product below their costs to produce that product, you can't honestly call that competition!
Here's an article worth the minute it takes to read it: http://www.fastcompany.com/47593/wal-mart-you-dont-know
Trader Joes and Wholefoods both have been killing their competition. At first they sell the competitors products and then they begin producing those exact products themselves with very similar packaging....squeezing out the original company. Wholefoods did that with Swirls Cupcakes here in Chicago....it was a real bait and switch they did with the customers in my opinion. It made me think Swirls lost their ability to turn out a good product. Then I realized it was no longer a "Swirls" product, it was produced by WF and packaged to look just like the Swirls looked In their store.
AWhile the end result might be the same as predatory pricing, the missing piece of the equation here is the intent. IMO the culprit is usually either not realizing the impact severe underpricing has on the market or just ignorance of basic business tenets themselves.
The example of store brands or generics undercutting name brand products is a different story. Since the manufacturers of store brands and generics do not have to pay as much for advertising and marketing, they simply pass the savings on to the consumer while still making a profit for themselves. This type of undercutting is based on lowering your costs and is completely legit. If the store brands and generics are successful, it means your product has become commoditized (at least in that channel) and it's on you to either rebuild your product differentiation or abandon the channel.
From Wikipedia: In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly.
Haha - exactly. Except these are non businesses and they are doing it mindlessly. As I said, I'd have more respect for them if they knew what they were doing. But instead, at least from what I've seen, they deny it and claim their little "business" doesn't have an effect on the market. That would be true if it were just one person's little cake business, but it's a whole lot of little businesses that collectively have a big impact.
While the end result might be the same as predatory pricing, the missing piece of the equation here is the intent. IMO the culprit is usually either not realizing the impact severe underpricing has on the market or just ignorance of basic business tenets themselves.
The example of store brands or generics undercutting name brand products is a different story. Since the manufacturers of store brands and generics do not have to pay as much for advertising and marketing, they simply pass the savings on to the consumer while still making a profit for themselves. This type of undercutting is based on lowering your costs and is completely legit. If the store brands and generics are successful, it means your product has become commoditized (at least in that channel) and it's on you to either rebuild your product differentiation or abandon the channel
The "intent"/ culprit of not realizing the impact is no longer an excuse when you come to this website and everyone explains to the people whom under price what the effect is on the whole market. When they continue their practices it's no longer ignorance, it selfishness.
My example of two store brands (Whole Foods & Trader Joes) undercutting name brand products was not the conclusion I meant you to reach. Wholefoods doesn't really undercut the prices of the name brand products.........it's a bait and switch in a way the customer doesn't even realize they aren't buying the name brand anymore. Similar packaging in the same shelf placement of the name brand. They break your loyalty to the name brand product. Which is fine until you discover that it's an inferior product and the consumer thinks the name brand product isn't so good anymore. Not so fair to the name brand product. They'd have been better served to have never done business with that retailer and protected their product quality and customers loyalty.
A
Original message sent by scrumdiddlycakes
Brilliant. You need to embroider that on pillows or something :)
Since I only sew as a hobby, I'll probably only charge for materials. Got to keep it affordable and all that. And I do enjoy it.
*ducks to avoid all objects being thrown my way*
AI just downloaded the Cakeulator app and realized I had only been making a $20 profit on a two tiered fondant covered (with fondant decorations) cake that I would spend hours on. It also helped me decide on a price for a three tiered wedding cake I'm doing next week. I was afraid to send the quote to the lady, but she was fine with it thank goodness!
I am thinking that if the cake shows, would actually show the cost most people would be shocked, I would also like to see a clock running in the back ground on a cake they are making so that people could see how long it really takes to make a cake,they couldn't, wouldn't have to show each step, no show would do that, but they could have the clock start when the work on the cake began, with the actual making of the cake, time in the oven, then the time it takes to set it up, dirty frost, frost, and then the decorations. I would bet that most people have no idea of how long it takes to make a gum paste rose, and other flowers or decorations, the time for each step. The cake shows have many people working on different parts of a cake where as the home baker, does each step his or her self, and they all take time, some a lot of time.
I would hope they would appreciate it a lot more the time their favorite baker spends on their cakes if they actually knew the time it takes
I just downloaded the Cakeulator app and realized I had only been making a $20 profit on a two tiered fondant covered (with fondant decorations) cake that I would spend hours on. It also helped me decide on a price for a three tiered wedding cake I'm doing next week. I was afraid to send the quote to the lady, but she was fine with it thank goodness!
I love this app, but I will tell you that when you set up the "Profit %" under options, you are actually entering a "markup", not calculating "profit margin". If you want a 50% profit margin, you need to enter 100 in the Profit % area. I think the developers are from the UK, and they use different terms than we do in the US. But I love the app - you can add in your time, with different amounts for different tasks, plus all your ingredients, down to salt and vanilla, and get an optimal selling price based on what you enter in the profit option.
Liz
OH, well as long as you enjoy it, it's all good! ADude, sell yourself! My minimum is $150 and that gets you a 2-tiered cake that serves 30 MAX! So, an average 3-tiered cake (6-9-12) is about $500. Ain't no way in hades am I doing a 3-tiered cake for $175! I'm not the cheapest, but I'm not the most expensive. Sell yourself!
Thank you , i am looking into the cake boss software... looks AWESOME! Yes people think i charge to little & I should charge more... I quit my job of 15 years to do cakes...& Most of the time people think a 3 tier cake with fondant work for $100.-$150 is to expensive, but they dont see the time you have into that . Most companies , grocery stores, & big companies, all have frozen cakes & not fresh baked & their icing is out of a bucket thats been which is been sitting there how long...You want Good quality you pay.. you want frozen dried out greasy icing... you get it cheap. I love making people happy, but I cant eat the cost!
AWhat I notice in many of these threads is people saying "well I am just starting out so I don't charge as much"
Either your product is good enough to sell or it isn't!
Would you let the Dr do your surgery for $65 because he is just starting out?
Would you take your car to get the brakes fixed to the guy that doesn't charge much because he just isn't as good ?
What other business does this. either charge a decent price or don't sell your services..
Just my 2 cents worth as a new guy to the forum
A
Original message sent by Okiecowboy
What I notice in many of these threads is people saying "well I am just starting out so I don't charge as much"
Either your product is good enough to sell or it isn't!
Would you let the Dr do your surgery for $65 because he is just starting out?
Would you take your car to get the brakes fixed to the guy that doesn't charge much because he just isn't as good ?
What other business does this.
This attitude is actually pretty common in many industries, provided you aren't taking your life into your hands by cutting corners on the price.
Especially when barriers to entry are lower: you have more people entering the marketplace without doing their due diligence on the business side (not just pricing). Cottage food laws can contribute to this because they don't require any kind of business training.
What I notice in many of these threads is people saying "well I am just starting out so I don't charge as much"
Either your product is good enough to sell or it isn't!
Would you let the Dr do your surgery for $65 because he is just starting out?
Would you take your car to get the brakes fixed to the guy that doesn't charge much because he just isn't as good ?
What other business does this.
either charge a decent price or don't sell your services..
Just my 2 cents worth as a new guy to the forum
Welcome!!! I like you already!
What I notice in many of these threads is people saying "well I am just starting out so I don't charge as much"
Either your product is good enough to sell or it isn't!
Would you let the Dr do your surgery for $65 because he is just starting out?
Would you take your car to get the brakes fixed to the guy that doesn't charge much because he just isn't as good ?
What other business does this.
either charge a decent price or don't sell your services..
Just my 2 cents worth as a new guy to the forum
Well, everyone has to start somewhere, and the fact of the matter is, I'm just not as good or experienced as many on this website. Seriously, I drool with envy at most of the cakes I see. I will be excellent eventually, though, and people still order my cakes and love them, even knowing I'm new. I'm not cheap, but I'm not expensive either. Why give away $$ just because you are learning? Also, not charging as much is not the same as completely undercutting.
The mechanic in my hometown, (also where most of my cake business is to be had), started out in someone else's garage charging very little. He fixed cars, worked hard, was honest. He was new and didn't have experience, but he was less expensive than the other mechanics. Now, he's a multi-millionaire and still works on every car in town that's out of warranty...still doesn't charge nearly as much as the dealerships for service, yet is, like I said, a multi-millionaire. Oh well...maybe he would be a multi-billionaire if he rooked people...LOL
A:-(Yikes! I am just now taking my love for baking into baking for friends and family for cost. I have done a lot of research on pricing and am aware of the local costs where I live. Before ever selling a cake, I plan to make certain that I am not cutting myself or the cake baking/decorating business short. I realize even if I only do this as a hobby, I have to treat it like a business, because if I'm getting paid, it is.
A
Original message sent by bobwonderbuns
I just had that yesterday, I quoted my normal price, then gave her a bit of a discount and suddenly I'm alone listening to the crickets... [IMG]/img/vbsmilies/smilies/icon_rolleyes.gif[/IMG]
I hate the crickets! I get them all the time :)
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