I'm just starting out as a home-based business in Houston, Texas. I have several questions but since they're all over the place, I thought I'd post as different subjects: Okay, here's my first question... I've figured out my pricing matrix and have arrived at, what I believe to be, a fair price list. In essence, I'm charging $10 an hour for my time in addition to other costs. For example, a 9*13 one layer sheet cake with buttercream icing is $40 while tiered cakes start at $2/ serving. More intricate detail/ fondant and gumpaste work will increase the price. Yes, my prices are higher than a grocery store but the quality it better (IMO ). Right now, I'm averaging 2 - 3 orders per week.

I have two kinds of customers/ potential customers. On one hand, I have the people who say I want to spend no more than xxx dollars and are ecstatic with the quality of my work. On the other hand, I have people (some very good friends) who say "if you'd charge less, you'd have more business." I know I'm not the only one to encounter this dilemma but how do I tactfully (or maybe not so much) handle this? I don't want to lower my prices as $10/ hour is a pretty cheap labor rate already (isn't it?). At the same time, I don't want to lose any friends/ potential customers by asking if they'd like to work for free. Does anyone have any cute or nice comebacks?

Thanks

"I'm very comfortable with my pricing. I understand my custom cakes aren't going to fit every budget and that's okay."

Your cakes are beautiful! So far I haven't had any comments like that. But I wonder how many people out there would work for $10 hr? Just the cost of ingrediants has gone up so much in cost.
Wish I was witty enough to have a good comeback...can't wait to hear what others have to say! I'm sure it will come up at some point. I love what cakesbycathy said...that's a good one.

I think starting tiered cakes at $2 is pretty low! I doubt a customer is going to find a better price on a beautiful and yummy cake. Doing 2-3 cakes a week should be enough to start spreading word of mouth and your business will grow. I don't know how I would respond to price comments like that, but I think cakesbycathy put it very well. Politely let them know that people get what they pay for!

"I believe in quality over quantity, and by pricing my cakes as I have, it allows me to take on as many cakes as I feel comfortable with. I don't want to take too many orders and end up not being able to produce a CENTERPIECE that I'm not happy with."

Notice how I called the cake a centerpiece. It's because custom cakes are not just some generic sheet cake that gets pumped out of a big box store. It's a personalized dessert item that's made with love. It's something to look at, not just cut up and eat.

Thanks everyone. I thought $2/ serving was on the low end too but then I've had a couple of people tell me it's too high. While I "know" I'm not nuts, I was beginning to doubt myself. Both responses so far are great. Any others out there? Keep 'em coming. I'll take as many as I can get. Maybe I'll start a rotation of great comebacks. That way I'm not using the same one over and over.

The comments by the other cc people are great and a good way of saying it more politely than what I am about to say. I might say something such as "I would not want to work for below minimum wage, would you? You can always say it with a smile on your face.

"You're right, I would have more customers, and I'd also be very crabby! Its amazing the amount of time and energy going into these cakes and I understand when people are surprised at the final cost. I'm comfortable with the prices I have, but I do understand my prices don't work for everyone."

These people are probably just trying to be nice and helpful, but I get my fill of people trying to tell me how to run my business. Some people just need to be told where to go in a way that they will enjoy the ride.....

I think people need to stop this sheetcake nonsense. The sooner custom caker decorators stop offering cakes even remotely similar to a $10 hunk of "goodness" from Walmart, the sooner the general public will stop associating the two.

"But if I charged less, I wouldn't have lights in my kitchen."

"I'd like to charge less, but the electric company insists on being paid every month."

When people ask me if I limit myself to one wedding cake a weekend, I always laugh and say, "Heck no. I can't pay my bills doing one cake a week."

People who think $2 per serving for tiered cake is too high have not priced tiered cakes anywhere. That's way too low. Your regular layer cakes need to be more than $2 per serving and tiered closer to $3 and up. And that should be for buttercream only, not fondant covered. Ask them what a slice of cake at a restaurant costs? That's just a piece of cake on a plate!

Your answer to people who say if you charged less you'd have more business...say 'I may have less business...but I'll have more money!'
not to mention the time to be able to do the job right!

Calmly reply that you couldn't produce the quality of cake you wanted and needed to produce if you charged any less than you are now. Let them understand that supermarket bakery customers are not your clients...your clients won't mind paying more because they will understand that they are getting more. More attention, more quality, more creativity, more say in the cake art they will then place as a centerpiece for their event. Notice how I say you have "CLIENTS" not customers. If you are doing custom cakes then you are a cake artist, not just a baker. Artists don't have customers, they have clients. Customers are people who go into a store and shop for something off a shelf. Clients are met one on one with the artist and their final purchase is of a product made specifically for them. Huge difference. Wait for your clients, they will find you. I do advertise online, I do have a blog, but most of my clients are word of mouth...apparently very happy mouths!LOL!

Cat

If they are friends I would straight up ask them if they can hire an exceptional plumber for 10 dollars an hour.

Never ask friends and family for business advice. They're always going to be your worst customers. They'll expect freebies and "family discounts."

If someone asks for a discount, and they will, I'd ask them what percentage of the work they don't want you to do, because you know that they're such a good friends they'd never expect you to work for free.

I've had people ask about getting a sheet cake, and I tell them that I charge the same as regular cakes, which would be XX amount. One girl said "wow, I was thinking of Walmart prices" and I said "I don't make Walmart cakes!"

Simply say, "You get what you pay for."

Any professional will charge what they are worth. Have you been to any Specialist Dr that charge the same price as a General Dr. They are paying you for your talent plain and simple. Heck, anyone would love to buy a pricy painting for the price of beginning artist painting.

I totally understand where you are coming from. I recently moved from Texas and from experience you could get way more than $2 per serving for a tiered cake. I started at $2.75 and still should have been more than that. For my sheet cakes I started at $2 per serving for buttercream.
For me know I am going through a pricing crisis...lower income area among other factors but my ingredients cost didn't go lower, they are more expensive and as well as I don't have access to supplies like I used to.
But back to the issue at hand. Don't worry about your friends they aren't the ones in business, tell them that they should have insight to the work that goes into cakes because they are your "friends" they get the opportunity to see what others don't... They can get over it and that is why they aren't your clients. OOh it iritates me when family and friends are the most critical of your prices.

Now here's the odd thing for me...I DO discount for friends and family. Not half off or anything but I do give them a break. However, there are many family members who have never ever asked me to do a cake tho they oooo and ahhhh over everything I do. I heard thru the grapevine recently that one cousin, who has a daughter near our son's age and they play often, hasn't ever asked me to do her daughters b'day cake because she knows I'm way out of her price range. I found out she paid $50 for a nasty sheet cake for her party. I would have been very happy to create something for her daughter, part payment, part gift, so she could have something great for her party but her Mom never even considered it. I guess that's better than having her always expect a free cake but I do wish she would ask. I feel funny telling her that I would be happy to do a cake for the same price she normally spends and then still ask for money from her but can't afford to be giving cakes away to any but my own kids. There are a couple of others in the family that are the same way. It's just weird to me.

Cat

I just say that there is a market at every price.

If I explain more, I just state that my ingredients cost more than average and I have to factor that into my price.

I never say that not everyone can afford my prices. It sounds pretentious and this is never good for business. To me, it is better to be humble and honest. You never know when the person you made to feel like they could not afford you will change circumstances, can afford your cake, and chooses instead to tell her new friends about your stuck up attitude. Business is business and you always want to be projecting a positive impression.

Many people like to complain. It's what they do best. If you gave your cakes away for free you would still have complaints.

A few customer comments when I used to set out samples: "Can't you put something with fruit flavor on this tray? You have a pineapple upside down cake in the case. That's what I prefer." "I don't like chocolate. I want to try your butterscotch." "These pieces are too small. How can we tell if we like it?" You'll have to learn to deal with this.

Just remember that your time is worth money (way more than $10 per hour, by the way) and you have a right to earn a living. Good luck, hon!

When someone balks at my prices, and say things like "that is crazy" and such, I have learned to just say "All of our cakes are very high quality and worth the price, but if its out of your range, I understand. Have a great day!"

I recently saw this quote and I love it. I thought I would pass it on...

At some point in their careers, wedding professionals have to decide if they want their target market to be the masses or a select group from the masses. A few people choose the masses and have success with it. Most people find success in working for just a select group ("niches are riches" and so forth).

Problems arise when people try to compare the two as if their success metrics were created equal. The masses and a select group are apples to oranges. If you want to reach everyone, thats fine, but if youre only trying to reach a certain segment of everyone, dont try to compare your success to the companies targeting a different or larger crowd. It's an inaccurate measure and you'll only be left frustrated.

I'd tell her she is right.

Lower prices would mean more business.
However you'd rather do 2 cakes a weekend at $50 a cake than 5 cakes for $20 a piece. It puts the same amount of money in your pocket.
It's simple math.
More orders doesn't equal more money.
It just means you never get to sit down or spend time with your family.

mommachris

.............If you are doing custom cakes then you are a cake artist, not just a baker. Artists don't have customers, they have clients. Customers are people who go into a store and shop for something off a shelf. Clients are met one on one with the artist and their final purchase is of a product made specifically for them. Huge difference............

*Excellent point*! We all need to hear this over and over until it is ingrained in our heart, soul and mind!

I tell people that I don't do kit cakes like you find at Walmart. I make customized, specialty cakes. I also ask people what they want to spend and how many they are trying to feed and then tell them what I can do for that price. I have found that a lot of people then go to a grocery store bakery only to find that they cannot get the customized cake they want and end up coming back to me anyway! After they get their first cake and love the flavor and look, they continue to come back for every occasion and so do their friends and family!

I always got fed up with friends who would say 'could you just knock me up a cake'. Which means for this - I am expecting your superb totally custom made cake at supermarket prices - so do not charge me more. I had to get used to looking at them in the eye - and say that the custom made bakery shop would charge them x and I will charge them y. Y being slightly less than x. The power of the contrast of the higher price first and then my reduced price would seem a good deal. In all the cakes I have priced and made for people I never once had people quibble over the price or suggest that I was too expensive, disappearing to another supplier. Giving a higher price to start with from an alternative supplier and then giving yours - seemed to work for me.

You know it's funny bc I've realized that people will spend any amount on all other 'must haves' for big occasions and yet moan about the price of a custom cake. I have a friend who wanted a cake for her sons birthday (16th), we decided on a 2 tier cake with decorations that I said would come to 100. She said it was too expensive and said no. I felt bad and spoke to my husband about it but he said to me that they are spending 10.000 on their sons birthday (we are family friends) and if they can't pay an extra 100 then I should let it go but definitely not lower the price as it was low to start with.
I honestly think that people have no idea what goes into cake decorating.