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Discounts and cheaper quotes. - Page 2

post #16 of 25
I have to agree with Jason Kraft. I would never drop even $5 or $10 just because someone asked. My prices are determined by calculating my costs and required profit, so if I say "Here, I'll give you $10 off", I am immediately painting myself as someone who pads her prices unnecessarily, someone who can blithely afford to take some off just like that.

In the words of the classics: Good cake ain't cheap, and cheap cake ain't good!

If someone is happy enough to talk about compromises in the design to work within their budget THEN I will calculate a cheaper price. It doesn't make sense to sully your reputation by appearing to be the caker with no idea of the value of her cakes!

Just my take on this.

Quite separate to this, but another aspect...seasoned cake makers have ALL had the experience when they have mistakenly quoted too low, or felt sorry for someone (usually a "friend", or family member), and has agreed to make a cheap cake. You will end up hating every. damned. second you spend making that cake!

Dunno about you, but resenting every moment of making a cake is NOT how I want to do business or spend my life at work!

Life's too short to make cake pops.
___________________________________
www.sweetperfection.com.au

www.sweetperfectioncakes.blogspot.com.au/
www.facebook.com/sweetperfectioncakes (come visit sometime!)

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Life's too short to make cake pops.
___________________________________
www.sweetperfection.com.au

www.sweetperfectioncakes.blogspot.com.au/
www.facebook.com/sweetperfectioncakes (come visit sometime!)

Reply
post #17 of 25
Thread Starter 
Really great comments everyone, thanks! I 100% agree about offering money off ultimately being a mistake, I went down that route in the beginning and it's really hard to come back from if you are under charging. You don't want to be busy for being cheap, and all of those $10's off here and there really add up over the year.
post #18 of 25
I hear you all! I'm a hobbyist, and if I was making a business of it then I wouldnt be bargining my prices with people, but I wouldn't be complaining about those that do! I was giving an alternative to think about! But I like all your reasoning for not lowering prices. And like the OP, if you are good then the customers will come back!
post #19 of 25
To all of you who don't lower your prices, how do you handle people constantly undercutting you?

For example where I am from, we have people with little experience selling cakes happy to just to make a few meager bucks (e.g., stay at home moms etc.) In our area we all advertise in the same online location because that's the main place where all the people go looking for cakes. I get some refferred business but that costs me 15% and some word of mouth business but the main bulk is this online site.

I even saw an add a little while ago that said something like "I love making cakes. I just want you to pay for the supplies and I will just make your cake for you." Granted, that add was not up for long, but, it's the culture of the business in our area. And to SO many of the people logging on that kind of stuff seems like the best idea and the best deal especially since the commercial bakeries around here are either obscenely expensive or cheap but bake using mixes filled with chemicals and taste plain nasty!

Moreover, so many customers don't have an eye or taste for true quality. Advice anyone?
post #20 of 25
I agree with Jason's pionts. This model never works. If it did, it would be common practice.

I give discounts to higher volume and corporate accounts, but I built that into my price structure in my business plan.

Lowering your price makes you look unprofessional, a pushover, like not a knowledgeable business person, and not sure of the quality of your product. If you give in, the client is also less sure of your product.

Word-of-mouth does spread by clients passing on the little savings tidbit.

Edit: The wrong pricing structure, too high or too low, is also bad.
post #21 of 25
Quote:
Originally Posted by BlueSkyGirl

To all of you who don't lower your prices, how do you handle people constantly undercutting you?

For example where I am from, we have people with little experience selling cakes happy to just to make a few meager bucks (e.g., stay at home moms etc.) In our area we all advertise in the same online location because that's the main place where all the people go looking for cakes. I get some refferred business but that costs me 15% and some word of mouth business but the main bulk is this online site.

I even saw an add a little while ago that said something like "I love making cakes. I just want you to pay for the supplies and I will just make your cake for you." Granted, that add was not up for long, but, it's the culture of the business in our area. And to SO many of the people logging on that kind of stuff seems like the best idea and the best deal especially since the commercial bakeries around here are either obscenely expensive or cheap but bake using mixes filled with chemicals and taste plain nasty!

Moreover, so many customers don't have an eye or taste for true quality. Advice anyone?


This is a major problem around here because of the cottage food law that passed a couple of years ago. People are opening businesses left and right, and even if they close because they're charging too little and get burned out, three more will open to take their place. I've been around for a long time so it hasn't affected me so much, but I see a lot of people who don't have the network that I do who are having trouble getting business.

I'd say to keep advertising, but take it up a notch. Emphasize the individualized quality of your cakes, not the pricing. Work to get to know other businesses that can help you get business by referrals. Spruce up your website and facebook page, and get those if you don't have them. What online site are you using now? Please tell me it isn't craigslist... that's where all the cheapos go, so you don't want to have that be your primary advertising outlet!
post #22 of 25
Quote:
Originally Posted by jason_kraft

if you want to please customers, provide a superior product. Your ideal target customer would be happier with a better product or above-and-beyond service than a lower price anyway.



Never a truer word said Jason

The last thing i ever want to known for is being *the lady who sells cakes cheap* - because at the end of the day anyone can do a cheap cake - not everyone can supply a cake that is worth the work i put in.
I am not a machine - thus i will not and do not pump out cakes at a penny a serve.
Someone wants one of my cakes - they pay for every minute and every egg that goes into it.

chaaaaa ching. icon_smile.gif

Bluehue
post #23 of 25
Quote:
Originally Posted by BlueSkyGirl

To all of you who don't lower your prices, how do you handle people constantly undercutting you?


If everyone is advertising in the same location, you may need to think outside the box and look for under-served customer segments (this could be corporate customers, birthday cakes, wholesale to retailers or restaurants, partnering with party venues, etc.).

You'll also need a clear competitive advantage that gives customers a reason to order from you instead of a competitor. If you have a licensed commercial kitchen and are in a CFL state, you can emphasize the fact that your kitchen is inspected by the health department to customers, venues, and/or wholesale partners, plus you can offer products CFL bakers can't. If you have a licensed kitchen and are not in a CFL state, you can contact the health department about unlicensed home bakers and have them shut down. If you are a CFL baker in a CFL state you'll need to find other advantages, such as unique products, exclusive venue partnerships, a superior tasting experience, or a focus on niche markets (vegan, gluten-free, paleo, etc.).
post #24 of 25
Quote:
Originally Posted by BlueSkyGirl

To all of you who don't lower your prices, how do you handle people constantly undercutting you?

For example where I am from, we have people with little experience selling cakes happy to just to make a few meager bucks (e.g., stay at home moms etc.) In our area we all advertise in the same online location because that's the main place where all the people go looking for cakes. I get some refferred business but that costs me 15% and some word of mouth business but the main bulk is this online site.

I even saw an add a little while ago that said something like "I love making cakes. I just want you to pay for the supplies and I will just make your cake for you." Granted, that add was not up for long, but, it's the culture of the business in our area. And to SO many of the people logging on that kind of stuff seems like the best idea and the best deal especially since the commercial bakeries around here are either obscenely expensive or cheap but bake using mixes filled with chemicals and taste plain nasty!

Moreover, so many customers don't have an eye or taste for true quality. Advice anyone?



Simply put:
Be Better than everyone else in your market.
And I'm NOT saying you're good or bad at what you do- I've not looked at your photos and I'm sure you're great. I think you underestimate your customers if they can't see quality in your workmanship. Either that or you are marketing to the wrong customers. My customers order from me because they trust that I will make them look good at their event. They don't order from me because I'm a deal. I'm not.
If you are having trouble competing with low-ball businesses, you need to refocus your efforts to the right market and make darn well sure you offer a clean, professional product from initial contact to delivery or pickup (again, I have NO idea what you offer, just speaking to the issue in general).
The OP 's situation is what I get a lot. I had a lady 2 weeks ago tell me that another bakery could do her cake for 40% less than I quoted. I told her "yes, they could, but would they do as good of a job as I will?" She said," Nope, you're right. You're worth the money because I know you will wow me."
Now, I don't have to deal with a cottage food law, and if I do, I'm sure it will cause a few headaches. But as long as I keep tabs on my competition and make sure I produce a stellar product every time, I am confident I'll be able to keep on keepin on.
life is short, get a cakesafe.
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life is short, get a cakesafe.
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post #25 of 25
Quote:
Originally Posted by costumeczar

This is a major problem around here because of the cottage food law that passed a couple of years ago. People are opening businesses left and right, and even if they close because they're charging too little and get burned out, three more will open to take their place. I've been around for a long time so it hasn't affected me so much, but I see a lot of people who don't have the network that I do who are having trouble getting business.

I've seen this, too. Too many people just starting out don't understand that the way to increase business is not to lower prices but to find the customer.

My advice: there are plenty of people out there who want a cake lady to be their slave or who don't understand that this is a luxury item. These are not your customers. Walk away

If someone wants to negotiate, I just offer them a lesser cake. If that's not possible, I send them on their way as politely as possible.
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