Should I...offer A Lower-Price Cake Option??
Business By Chef_Stef Updated 16 May 2009 , 8:18am by 350BakerStreet
I need to ramble here, about an idea my DH keeps thinking I should try.
First, I'm usually the first to say that budget brides need to stick to their budget, and if they can't afford me, I'm not their baker. I'm not the most affordable option in town, and my selling point is that I use many organic and fresh ingredients, imported chocolate, all from scratch, homemade everything, etc etc., and I have a really good reputation for having really really good cakes (that not everyone can afford).
DH thinks that I'm losing too many of the budget brides due to my prices, so he's suggested that I stock up on bulk mix and offer 3 flavors (choc, white, yellow) and a limited design for a limited price. He's like, "You need to market a $149.99 cake." I'm resisting this idea, because my thought is--if they want a Walmart cake, they should call Walmart! He thinks I could sell to everyone who calls if I'd just offer a more affordable option (read: box mix). My argument is that ...if someone is at a wedding eating these 'affordable' cakes, and hears that it's from my shop, aren't they going to say, "Wow, this is from HER? I thought it'd be something really special. This tastes like every other cake in town."
(Memo: This is NOT to open up the box vs scratch debate--please, please--it's just to see if there's a viable way to do this and not basically be turning myself into ...every other bakery in town.)
Do you agree with me and I should stick to my guns (and let them walk, if they can't afford me)? Or is Dh right and I should market to a less-exclusive market? I don't see how I can do both...My usual argument is about Nordstrom vs Walmart. I don't see a corner in Nordstrom that says, "Hey, shoppers, if you can't afford our regular stuff, here's some walmart t-shirts for you." They're more like, "If you can't afford our regular stuff, why are you HERE in the first place?"
hmm
What d'ya think? (again, let me stress, if I see any box v. scratch debates start up, I will have to personally bop you on the head)
First of all Nordstrom does sell a range on items from their house brands like Calson which are medium affordable to Stuff like St. John and other "bridge" designers. You can spend $18 for a t-shirt at Nordstrom or you can spend $295 for a t shirt at Nordstrom.
The first thing you need to decide is whether or not you WANT to work more. I wouldn't go to a $149 or a $199 cake, but you could offer three flavor levels. with a white cake and buttercream icing being price level A, a chocolate cake with mousse or custard filling B, and a passion fruit chiffon with fresh homemade curd level C, based on the cost of the ingredients. The trick is to make the middle level what you would like to make on all you cakes, because a very high proportion of people always pick the "better" oprtion when presented with the ol' "good" "better" "best" like the old Sears catalog used to show.
We have " party cake " pricing and " wedding cake" pricing. Party cakes start at $38 and EVERYTHING is a la carte. Wedding cakes start at $350 and everything is included.
Just rambling along with you ......
A wedding chapel I work with sells time in the chapel for as little as 90 minutes for $200 then it goes up with larger packages. She tells me brides will call for the 90 minute package but end up buying a larger package. This might be what you get if you do a sampling with the "Ronco $19.95" cake and with your incredible gourmet cake.
I used to sell life insurance and before I went to a person's home, I'd prepare 3 quotes for them. It didn't matter what the premium ended up being, they usually picked the middle one. I could have $25/$50/$75 or I could have $75/$100/$150 and they'd pick the middle one. So I quickly learned to make more money, I just offered 2 small ones that were close in range, plus a really expensive one, if I wanted them to buy the middle one.
I have 3 buffet packages. 99% of my buffet sales are the middle one.
Have you considered setting up a separate company for the budget minded buyer? There's a very high-end, high-quality caterer in town who set up a separate catering company, under a separate name for "picnic basket" type of caterings. I'm working on the opposite ..... setting up a separate company for the very high-end menus (stuffed cornish game hens type of dishes). The logic here is that your regular high-end cakes are sold under "Expensive and Worth Every Penny Cake Company", but are not confused with the budget cakes that are sold under "Not Expensive But Still Good Cakes Company".
Deb --that's what DH is saying. I should start another whole company that sells the more middle-range cakes, very affordable, etc etc.
How on earth do I start a separate company? I'm just building my first shop, to open in the next 8 weeks, and it's very upscale. Would brides come there and get to sample both cake types at the same place? It seems too complicated to me...
I am happy with how busy I am, but of course busier is always better, and with a new shop will come new overhead, so we're being creative. (dh a little more than me...lol)
Just register a new name with the state. I actually opened my LLC as "Brim Management LLC" and all of my companies are under this umbrella as dba's.
I would suggest that when you have a sampling, you could tell the bride, "you are so fortunate. Today you get to kill two birds with one stone. You're going to sample cakes from both of our cake companies."
The trick here, is to sample them the gourmet cakes first. This becomes their baseline taste that everything will be compared to. Trust me ... the 'cheap' food will taste even cheaper once the pallet is coated with the gourmet taste of fine chocolate and high quality ingredients.
I AGREE WITH SNARKYBAKER THAT YOU CAN SELL BOTH YOUR FABULOUS EXPENSIVE CAKES AND YOU MODEST CHEAPER ONES. IM SURE THEY WOULD BE JUST AS TASTY AND LOVELY, I ALSO AGREE WITH ANOTHER RESPONDER WHO SAID YOU WILL ALWAYS GET A BRIDE TO ADD MORE ON WHEN SHE SEES YOUR HIGHER END SELECTION. DONT ALSO FORGET ABOUT BRINGING IN A LOT MORE BUSINESS WHICH WILL LEAD TO MANY OTHER TYPES OF CAKES. YOU COULD BE THE NEW BAKER WHO DOES HIGTH END CAKES BUT ALSO IS WILLING TO MAKE A BEAUTIFUL CAKE FOR THE BRIDE WITH A TIGHT BUDGET. SOUNDS FANTASTIC TO ME. HTH
MARY
That is a really good idea. Gives you a chance to upsale. I have not even opened a shop, and that is good idea. And having two names under one company? Debi, does it really work well for you?
I'm planning on doing this too. Like Indy said, I have my corporation and I have three DBA's one for custom cakes, one for naughty cakes, and one for "budget bride" cakes.
For the budget cakes, I've made dummies for a portfolio and they can pick a cake, choose the color, flavors: chocolate or white cake only and their choice of a sleeved filling raspberry or strawberry. These cakes aren't torted just two layers and they are buttercream only. And there is no tasting. Either they order it or they don't. I don't think Walmart gives tastings so neither am I for the budget cakes. I'm hoping to get them into the shop and they take a look at the other cakes I offer and not want the budget cake.
I think you should try it out and see how it works for you. Even if you didn't advertise it, you mention it if someone says they can't afford the custom work.
That is a really good idea. Gives you a chance to upsale. I have not even opened a shop, and that is good idea. And having two names under one company? Debi, does it really work well for you?
I actually have three.....so far! 
The high-end is still a work in progress. Pretty much the Cater It Simple is the buffet catering. And the high-end company is the gloved waiters passing appetizers and plated dinners. The difference in food quality is immense. My cost for the main entrees for the high-end is three times my cost for the main entrees for the buffet side.
I say don't offer any cakes that you would not be proud to say you made. I agree with you that if someone wants a cheap cake than go to safeway or walmart. I also have had to struggle with this idea and I came to the thought that if I start offering cakes that don't challenge me, intrigue me and that I want to show off than I'm not going to enjoy making cakes. Of course we need sales especially in this tuff market, but we need to maintain our reputations, the economy will have an upturn and sales will increase.
leahs, I've seen some country club menus that have a "Chef's Choice" buffet. Bride/client picks the main entree and the price that goes with it, and the chef decides on everything else ... the potato or rice, the veggies, the salad ... everything. Bride/client has no idea what they are eating until it's served to them.
My business partner and I go round and round on this. I feel the more business you generate the more money we will make. She believes quality suffers. All of our cakes are a bit special, she puts her heart and soul into everything she makes. I just eat them-kidding. But I do believe she is right-dont tell her.
People will perceive you as you represent yourself. If you are going to have a wide range of cakes, the lower end cakes made with lower end products, then that is the market you are going to attract. I would rather do one $1000 cake than four $250 cakes, and have that one cake be the best damn cake they have ever tasted than a half hearted cake that taste ok. I/we dont want to be associated with anything but the best. You can bury yourself in lower end cakes and not have time for the ones that deserve your time. Bottom line-you dont go to a VW dealer for a Porsche.
I offer a wide range of prices. I feel this works well for me, since I am very small, and just started out not too long ago. But my base price is what draws some of the budget brides in. The last one that ordered, ended up going about $150 above what she said she wanted once she realized I also do made from scratch anything you want with any filling combo. So it could work very well for you offering a little wider variety. Maybe attracting more clients who before may not have thought they could have afforded to get you. And trust me, your mix cake would taste much better than walmart.
My business partner and I go round and round on this. I feel the more business you generate the more money we will make. She believes quality suffers. All of our cakes are a bit special, she puts her heart and soul into everything she makes. I just eat them-kidding. But I do believe she is right-dont tell her.
People will perceive you as you represent yourself. If you are going to have a wide range of cakes, the lower end cakes made with lower end products, then that is the market you are going to attract. I would rather do one $1000 cake than four $250 cakes, and have that one cake be the best damn cake they have ever tasted than a half hearted cake that taste ok. I/we dont want to be associated with anything but the best. You can bury yourself in lower end cakes and not have time for the ones that deserve your time. Bottom line-you dont go to a VW dealer for a Porsche.
My thoughts exactly. I do like Leah's suggestion though.
Oh I this is what I was just wondering and thinking. To have to separate cake business but under one umbrella. While building a high end but have something for the budget bride. I love you guys. This way you can make a distinction between the two. But I also was concern would I be pushing it trying to do both but big corporation do it all the time so why not us.
shoot, when I worked for the casket mfg'r company, they opened a new company everytime someone needed to fart! 
There was one parent company and 7 companies under that umbrella. And I worked for the parent company, which meant I did work for all 7 companies. Its the job where I mastered multi-tasking! 
As the parent company, who was the landlord, I had to put on the landlord hat and issued an invoice for the rent. Then I had to put on my tenant hat and become accts payable to write myself a rent check. Then switch hats back to the parent company's accounts receivable person to receive and deposit the rent check.
I actually DID meet myself coming and going!
I agree with indyebi multitasking. You also can control how much you will do. You can have income coming in both sides. During this times let's face it people are really look how they spend. As much as I like high end I also know there is also a market for lower end. The high end are also targeting those who can not afford there prices.
Just to clarify, all my cakes are made from scratch using the same ingredients. It's just that if I get to pick the flavors and design for a "Chef bring me a Cake" special, there's no extra mixing of one special flavor. Whatever's getting baked that week is what that cake gets. If I want to do swirls or dots or whatever that's how I decorate. It really makes it easy for me, and quality does NOT suffer.
I like that idea, leahs. Maybe I could offer my scratch white cake only, (Sylvia Weinstock's white recipe) and limited design (or Chef's choice, I like that), but I do my scratch white cake for $4.00 a serving, so what would there be to discount? Unless I did one layer of filling, instead of 3. Or standard bc instead of IMBC, which actually isn't that much cheaper, but still...
Hmm. There are a few ways to look at it. I'm going to keep working on some operating numbers and my personal feelings about all this, and see what I decide.
And thanks to everyone--I LOVE how you guys have come in with so much great insight and input, without any debating.
Businesswomen ROCK, don't we? 
Just to clarify, all my cakes are made from scratch using the same ingredients. It's just that if I get to pick the flavors and design for a "Chef bring me a Cake" special, there's no extra mixing of one special flavor. Whatever's getting baked that week is what that cake gets. If I want to do swirls or dots or whatever that's how I decorate. It really makes it easy for me, and quality does NOT suffer.
I'd go with this approach, rather than changing the quality of the cake itself just for the sake of selling it cheaper. It sounds like the quality of your cakes is one of your selling points, so why would you want to devalue that? If someone's at a reception with a "lesser" of your two cakes, they're going to judge the cake on that, and the bride certainly isn't going to tell people that she went with a cheaper option. I'd stick to using the same ingredients but putting limits on the choices that the bride can have in terms of design, tastings, etc. You can always upsell on the design and extra flavor options.
I really like your idea Leahs. I am thinking that I will try to incorporate this into my plan. Thanks so much for sharing.
Indy, thanks for the other great idea, a second company under your "parent company". This is something worth looking into as well. 
Now my brain is hurting, and it is still early in the am.
Steph... You could easily discount it because you are not having a consult or a tasting or having to deal with the bride's wants. This cake option makes it infinitely easier on you. I am really liking this idea Leah and thank you for sharing it.
Leah does it matter how many servings is there a limit?
I really like what leahs has set up - no sacrificing quality, no confusing your customers (especially with a brand new business).
And really the majority of your costs are the same (supports, boards, overhead, advertising), the only thing that changes with making from a mix is your ingredient cost. I would bet that once you sit down and calculate everything out by switching for bulk mixes you are not saving the bride enough money to make her switch (and I bake from scratch too so I know how much more it actually costs)
YOU are what makes your business. Your talent. Your 'wage' should be the most expensive part of the cake. The reason I like leahs's idea is that you are reducing your TIME spent. And perhaps capitalizing on a little extra batter here and there that is left over when you make a scratch recipe. And the 'bake me a cake' idea will probably bring in more of those weekday orders, where maybe you're not quite busy enough.
Leahs - do you find that a lot of men go for this option? I'm sure quite a few would be thrilled not to have to make any decisions! Do you allow them to make any specific requests - like if they really hate one flavor, not to make it all that flavor? Is your profit margin still the same? Do you limit the number of these you do in a week, or is it first come first serve?
Leahs, if this were to be done for a wedding, do you allow the customer to pick a color that will be used on the cake?
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