Hi ladies

I am after some advice....
I've recently started selling cakes in my broher in law's cafe. There is a bakery 2 stores away and they sell cakes damn cheap. I recently made a 9" sponge cake with cream frosting and fruits on top with a personalised message on top. To undercut competition, my bil quoted £20 to the customer. (competitor was selling for £22) I agreed to do it, but isn't this price ridiculously low? What should I do? Should I set a price and tell bil to refuse orders for less than the quoted price? How much would you have priced it at? how do you price your cakes? Prior to this, I made a 14" cake same as above for £35 each and told myself never again!

My other question is, what would be a reasonable commision to bil? 30% of the profit (including my labour charge in costs)

sorry for asking so many questions, but I could really do with some advice.

Many thanks!

Hi,
So this bakery that is a couple of doors away from you is it a bakery like gregs (like a place that mass produce cakes) or is it a bakery that home make things like you?
To work out the prices of cakes needs a bit of research, you need to consider a few things,
1. Cost of your ingredients,
2. Cost of energy used, ie gas/electricity,
3. Cost or your labour.

You cut the price of a cake to £20, to compete with the other baker, but did you sell the cake at a loss? you HAVE to make a profit.
For the other baker to be able to sell their cakes cheap and still make a profit they have to be doing something you're not, they probably use cheaper ingredients.

You don't always have to have "set" prices, if the customer wants less on a cake or more on a cake the price is going to differ.
If you are going to be constantly in competition with another baker, you want to make sure your cake is the best! What do you think people would rather? a cheaper cake thats not up to scratch or a cake thats a bit more and really nice tasting. Either than or don't sell the same cakes as the other shop! Perfect your own ideas and recipes, and then you won't be in such fierce competition.

I'd say a 30% commision to your brother in law is fair, after all it his cafe.

Just out of interest where do you buy your ingredients? Are they supermarket bought? Because I know which supermarkets have the better ingredients and better prices!

Hope to hear from you!

Hi,

Thank you so much for replying to me. The costs excluding labour came up to about £9. If I include labour as well, there wouldn't be much profit. I do buy all my ingredients from the supermarket (usually Asda), but buy the best quality items there. Do you recommend another one?

I'll take up all your advice and try and be different and unique. New to this industry but not new to cake making!

The bakery is not a franchise, but they do mass produce and sell plenty.

Thanks again for taking the time to reply back

The £9 includes kitchen roll, baking paper, etc etc? Just dont forget those too but you may already have them in there. Think about how long a cake takes to make and remember you deserve minimum wage at the very least.

I can't help with buying supplies because I'm just a (very) small scale hobby baker but if volumes would allow, buying in bulk is probably cheaper but other people here would be able to give advice on that.

If you are using the best quality supermarket products it is likely you are using free range eggs and possibly organic products already, so you can make that a selling point which people are prepared to pay more for. It's a quick win if you are already using them!

Are there any local suppliers you could get products from eg eggs, jams or dairy? If your fruit is from a grower down the road and people know the chickens laying the eggs are running around a field they pass regularly it would help make your product stand out.

Can you also incorporate that you are not mass producing into your advertising to seperate you more?

Just a few things to think of while you are already thinking of recipes etc!

Hi dhara,
I sent you a PM, hope the info in it helps!

Please also see:

http://cakecentral.com/cake-decorating-ftopicp-7205044.html#7205044

HTH

I don't really think cheaper than 2 doors down should be a major selling point. If your cakes are better than theirs, charge more! You will ge the people looking for quality and they will get the people looking for cheap. Simple as that.