I have a customer who ordered 500 cupcakes, and for just buttercream with no decoration I usually charge $1 each. I was struggling with the decision to give some sort of discount since she is ordering so many, but with the cost of ingredients and time it will take me I wasn't sure. I find out she was thinking of only spending $250, based off what they are priced at a local superstore, meaning she would now only need 250 cupcakes.

I want to let her know why I charge what I do, I don't want her to feel like I'm ripping her off. I need some help wording the email, basically letting her know that it costs me more in ingredients and time than it does for a chain store to make them. I think I'm having so much trouble with this because I know her, I wouldn't feel as bad if I didn't!

Thank you!!

I don't think you need to explain yourself. Just a short email confirming the order and letting her know at $ xxx a cupcake, the total will be $ xxxxx.

I've recently been just where you're at. I had to go up on my prices bc everything has gotten so expensive. I just explain to people that I can't buy in bulk like the chain stores do, so my ingredients cost more. Also tell her she's paying for the quality of your product. I think $1 for BC cupcakes is very reasonable. She can go pay $7 for a doz cupcakes at the Supermarket, and maybe get rubbery cupcakes and aren't spectacular, or she can pay $1 each for your cupcakes and get something ppl will rave about.
This may not have helped you at all, but I hope everything works out for you!

I am not in the cake/cupcake business but I believe you may end up losing money by doing the 500 cupcakes for $250. You will end up cursing each cupcake you make. I don't think you should discount anything. If she orders from you in the future maybe a discount at that time, depending on the order. If she wants to pay 50 cents per cupcake send her back to the local supermarket.

My friend and I struggle with pricing all the time. We always want to make the customer happy, yet we don't want to feel like we are being taken advantage of. We are learning (the hard way) to stick to our guns.

Don't back down on the pricing. Give her the simple explanation that you cannot compete with chain stores and that your product quality will reflect the price difference.

If she can't afford your prices then she needs to order fewer cupcakes.

I was just asked to make 80 dozen. I quoted the price and they ended up going with the low bidder. I ended up lowering what I normally would have charged, but I know darn well if I did them for the cheaper I would be cursing those darn cupcakes. I am glad I stuck to my ground and I was bummed at first for not getting the order, but releived at the same time! LOL

Thank you all so much for your quick responses! When she told me she only wanted to spend $250, she did say she would need to decrease the order to 250 cupcakes. I am definitely NOT doing 500 for $250! As it is now, only doing 250, I will barely make any money from this order after the boxes and ingredients I have already purchased.

I will send her a short, simple email explaining I am not able to charge what the chain stores do, and will be happy to complete her order of 250 cupcakes for $250.

Hey flourgurlz i have that same problem with pricing.. but business is business. i think if u wanna give her a discount drop the most $25 or $50 bucks

For the record I get $2.75 for a standard sized, creme filled cupcake with a swirl of bc on top. It doesn't really cost me any less to make more, and I don't discount.

50% discount is quite high unless you will be happy with yourself afterwards. Maybe you can give her a 10% discount and a coupon for another 10% at a later date but make sure you make her aware she is getting a discount.

I am soooooooooo pleased I made the decision NOT to go into the cup cake field because I see so many posts on here and other mediums where people are getting 'screwed' on pricing for these pesky little blighters. The majority of people just do not get that the product you are creating tastes a million times better than anything they will purchase in supermarkets and do not appreciate the cost of ingredients when you can not buy in bulk and certainly have no idea of the time, effort and creativity you put into them.

Don't drop your price and don't give a discount. You deserve to be rewarded for your talent and at the price you are charging I think you will be lucky to break even!!!!

CP xxx

I agree with everyone telling you not to reduce your pricing so low in order to get the business. I have done this with a customer and from then on she wanted a deal again with waaay too much money off. It isn't worht all the work on cupcakes to cut the price in half.
evelyn

I let her know I would be happy to do 250 cupcakes for $250 to stay within her budget, and she was fine with that. I checked other custom bakers in my area and they all start at $2-$3 per cupcake for buttercream only, so I thought the $1 each I quoted was a pretty decent deal in the first place! JohnnyCakes, you are absolutely right! Thank you everyone for your help!

JohnnyCakes - great points!

Well to start off I am not trying to be mean but you are undercutting the local bakeries etc who do charge $2.00-$3.00 a cupcake.That is not going to help anyone...Also like Leah_s posted..I charge $3.00 each for my BC iced cupcakes ..more if there is more detail...There is no way on God's green earth I am doing 500 cupcakes let alone 250 for $1.00 each.You need to rethink your pricing.JMO

I agree with Kiddiekakes. If you're charging less than your competitors, YOU are losing money! You might get the job, but...I think that's one of the biggest reasons people get burned out....they charge so little in order to get the job or because they don't want someone to challenge them on their pricing, but then they're working their butts off and not even making enough money to keep the oven on.

such great advice from all of you!

Pricing wher there is no profit gets you the job, but severely undercutting the competition is hurting everyone. Have you subtracted what the IRS will take, the state tax dept, insurance, the price of your electricity for those hours? Liners, boxes, transportation? This is why we charge $3.00. If you are not planning to pay those things, that is very unfair to those of us who do and price our products accordingly. I can't see how you can break even, or even come anywhere close.

I think you're selling yourself short @ $1 per cupcake!

Ok... first day economics 101...

Contrary to popular belief on this site, you DO NOT take your ingredients, overhead (less for home), WHAT YOU WANT TO MAKE PER HOUR (pulled out of your hat as a nice number), and add for profit. This would mean that you could overpay for your supplies, make a great hourly rate, give yourself a nice profit, and everyone who has ever been in business could not fail.

THE MARKET DETERMINES YOUR PRICE, you do not. You can price wherever you want, bt if it is not in line with market price, you will not do well.

Supply and demand... People will compare you based on taste, talent, and price. They will do what you should have done to determine your price. Then they will compare you to your competitors. If you are the best, you should be the highest price. If you are mediocre, in the middle, just ok, at the bottom of the price scale. There are buyers at all of these levels, but if you are at the wrong level and price too high for your skill, you will lose to your competitors. This is how the market determines your price, by not buying your product, eventually forcing you to lower your price or go out of business. Likewise, if you price toolow and your offerings are some f the best, you will be too busy. Raising your price to where it should be will increase your profit and lower your work load.

If you are like me, and work from your home commercial kitchen, you still charge market price (buy all competitors' products, taste them, look at them, and price yours accordingly), but you keep the profit. This is not the best scenario, just one scenario. A storefront will buy in bulk and bake in bulk, and can potentially make more profit than I can on a smaller scale. My kitchen is big, but I don't want a bunch of employees. If you work out of your home, it is usually with the intention to keep a business small.

The problem with any business where many people are suppliers who have little business experience, are unlicensed providers, and the big one... have the opportunity to charge without the intent to pay taxe... the supply is higher. This hurts everyone. This is why the debate over what to do about unlicensed bakers gets so heated. It isn't about just getting better and ignoring them, as many believe. It is what it does to the market, especially when the price is so low that there is no room for paying taxes. When I had my construction company, if someone told me that my bid was too high becuse someone came in far below me, I would say, "That is because that person is not paying taxes". We, as business peope, know where that bottom line is, and we know when there is no room for taxes, insurance, and cost to be licensed.

So, yes, you can undercut your competitors if your costs are lower by being at home. If it is a balance between more business and higher total profit, the good fo you. But a severe undercut that does not provide a level playing field because of no room to pay taxes, etc., is damaging to the entire market.

Not trying to start a war, but these are economic facts. It doesn't mean we can change it. It's just how it is.

Thanks for the 101. I wish it could be a simple "yes or no" kind of thing, or that there is some handbook for pricing that I could get.
I ask because I don't want to tick other local bakers off simply because I don't know.

Seaching how to price a cake, be it wedding, specialty, or cupcakes has been the most frustrating part of the cake world for me. Not many home bakers post their prices on their web pages/bloggs.

Yes I can call the local bakery, buy a few cupcakes from my local cupcakery, but when I come across another local home baker, things get sticky when you even act like you're gonna ask.

Is it taboo to ask another fellow home baker what they charge? I get the feeling like it was so difficult for them to get to that place, that it shouldn't be that easy for me to just ask. That I should have to go through the same right of passage.

Why "pricing 101" isn't included in say "WILTON 101" is beyond me. (well I kind of know why, but sure would have been helpful!) I just want to be fair & competitive. Not even sure if that is possible.
I thank you for your post though-very helpful!

I know that I price lower than a lot of places, but it is not to undercut them or myself, it is because I am not able to do cakes all the time and therefore stay in practice and be able to do a superb job. I also like to give people who I know are in financial straights an opportunity to have a better product then they could normally afford. I do give a lot of cakes away and I give some away that are my practice cakes and occasionally I make a little on a cake, but I do it more for the fun, learning experience and to bless people who I know do not have the money to pay. If I was to seriously consider going into business and doing it full time as more than a hobby than I would go the legal route, I would have a kitchen built, and go the whole nine yards and I know that my prices would have to reflect my new overhead costs. I think that you have to consider a lot of facts before you price something.

However, I can tell you this: there is no way that I would do 500 cupcakes for 250.00. That is highway robbery of myself. You would have a lot of cake mixes to buy or a lot of supplies and that alone would run you over what you are getting. If you were doing the cupcakes from scratch you would definitely be running over what you would make You would be paying them to make them cupcakes.

Have a relative order a small cake or cupcakes and you pay for it. This is completely legit and no one should get mad at you for soliciting their business and being a customer. This really is the only way to know where you truly stand in the market. My family has eaten their share of baked goods that they have spit in the trash and others that they have fought over. I still get our favorites from other bakeries. I don't make doughnuts and one bakery makes a cinnamon one that is great. Our local Pennsylvania Dutch Market has some of my favorites. I haven't ordered from them all, but I don't deal with the illegal bakers. There are too many, and none of them do enough volume to worry about it. I can see where this would be expensive if you live in a cottage industry state. But do your best to get around to at least all that are your direct competition. Like I said, my family loves my research. Sometimes we get some really great stuff from other bakers.

You just need to be honest about where you are in the market. Once you have the taste and prices of other bakers, your spot will be clear. So just start eating!!!

I'm guessing that after all the time and space it takes to mix up the batter and icing, bake, frost and store 250 cupcakes and then clean-up you are going to be kicking yourself for charging so little.

I agree with Cakesbycathy. She will be kicking herself for pricing these so low. Unless like the rest of us she has so much time to kill that she has to look for someway to kill it. I am hoping that, that is not the case and she will just learn from this experience. I would not have anywhere to put this many cupcakes even. Every square inch of flat space would be taken and then some. her boxes are going to cost more than she is getting from it. Now, I get little flat boxes from my local Aldi's stores when they have them sitting on the counter tops and I use them to put things like that in, but you still have to use plastic wrap and foil at the least to keep the freshness in and that is going to cost for that much even if your boxes are free.