Originally Posted by heather1972
but if I did I would have to sell it at prices the people I know would be able to afford.
I dont' think any business sets pricing that way.
Cost of raw materials plus labor plus overhead plus profit margin = selling price. "It is what it is."
My husband works at a cadillac dealership. Lots of folks spent $50,000 or more for a car there. The dealership doesn't set the price with the thought of "well, some people can't afford $50,000, so we'll just sell it for $30,000." They'd be out of business in no time. They have rent to pay, utilities, insurance, loan payments, payroll, benefits, etc etc to pay out of the profit of that car.
It costs what it costs.
The person who can't afford a $70 cake ... yeah, they may not be my customer anyway. But the person who CAN afford a $70 cake just might go elsewhere to buy the cake from the person who is undercutting the market and de-valueing the price of cakes.
It's like if you live in a $100,000 house neighborhood and one of your neighbors sells their house for $60,000. The comparables in your neighborhood just went down and when you try to sell your house, the buyer is going to tell you your house isn't worth $100,000 "....because the guy across the street sold his for $60,000."