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How is it even possible?

post #1 of 41
Thread Starter 
An acquaintance had suggested that I make a cake for her event but never really followed up so I didn't bother with the issue.

Recently I overheard (I couldn't avoid it, they were standing right next to me) said acquaintance describing the order she recently placed with another home-based baker for that event. When asked how much she was paying, she didn't say but mentioned that she had used that caker before and the caker had provided her with a "2 layer cake that served about 100 people for $60." I could have fallen out of my chair! icon_lol.gif

How is that even possible? I could go over my costs 100 times and never be able to justify that price. I imagine even cake mix isn't that cheap, then add the buttercream, cake board, box e.t.c

Seriously, this is not even a rhetorical question, please help me understand what one would do to sell cake at $0.60 a serving and still stay afloat?
post #2 of 41
A lot of home bakers have no clue and have not figured out their costs/expenses to know that they are giving cakes away. I see it happen all the time. I give my family huge discounts, but make sure I get compensated for my ingredients. They are the only ones who get discounts.
Debbie - US Army (Retired) --aka "The Cake Sarge"

Good Cake Ain't Cheap! Cheap Cake Ain't Good!
Reply
Debbie - US Army (Retired) --aka "The Cake Sarge"

Good Cake Ain't Cheap! Cheap Cake Ain't Good!
Reply
post #3 of 41
These kind of prices really just make me want to scream: " PLEASE STOP UNDERMINING THE INDUSTRY!!!!"
post #4 of 41
I too don't know how this is possible. Sounds like this person is undercutting the competition to get business and is operating at a serious loss. It is always unfortunate to see this happen as it undermines those who run this as a business.
post #5 of 41
Quote:
Originally Posted by Edit

These kind of prices really just make me want to scream: " PLEASE STOP UNDERMINING THE INDUSTRY!!!!"



Couldn't have put it better!
post #6 of 41
Quote:
Originally Posted by Edit

These kind of prices really just make me want to scream: " PLEASE STOP UNDERMINING THE INDUSTRY!!!!"



I too feel this way. I have had to put a lot of work into building my brand to move up to a higher price point and separate my business from those who are operating at a loss or break-even. I do believe that with forums like CC, as more people join and read posts about being cheap or charging too little that they will realize they need to:

1. Get professional work experience at a bakery or with a cake artist for at least a year before they open their own business, do it as a hobby or do it on the side. I worked with a caterer and cake decorator for two years before I went off on my own.

2. Get financial and legal advice on how to price their goods and operate their business.
post #7 of 41
What amazes me is that most professionals in fields such as dentistry, medicine, law, etc have to and are required to do a one year internship (or some period of internship_ where they work with someone who has decades of experience in the field they want to pursue.

Why is it so different for the cake business? Is it because there are free tutorials online that can teach someone how to bake and decorate and none to teach someone how to do a root canal? Are CFLs ripping apart the industry vs people who are required to use a licensed kitchen or choose to be professional and take this route and pay legal taxes etc.?

All these below market prices I am seeing cropping up just forces each of us who takes this seriously to push harder and use different strategies to set us apart. While there are no CFLs where I am, my challenge is dealing with people who operate with under the table cake businesses that are not registered. They don't have the quarterly legal and tax fees that I have to pay.
post #8 of 41
I have to wonder why an acquaintance who discussed a possible order with you would stand right beside you and describe the order she placed with another baker. Is it possible that she did this for your ears to hear?

I always look at people's motives. Sounds a bit odd to me.
post #9 of 41
Many people have no idea what it costs them to make a cake. And many (not all, but many) are too lazy to learn. I cringe when I see people post a thread asking how much to charge. I cringe again when CC members answer with, "Lots of things to take into account, but I would charge xx." I believe it's a disservice to all of us when the poster gets an answer. Because, you know, they will just use that price since they don't want to do the math. Eventually they will realize there is no money in their cake-making "business" and will stop. But new people will always start.

My first year in business, I sold at craft fairs. Inevitably, there was a home baker whose products sold for half the price of mine. At the end of the day, she would swing by my table to complain that she sold out but didn't make any money and would not continue in her "business." In the meantime, I lost sales to her cheap prices. I stopped selling at craft fairs, the ones that let anyone sell anything, no license or permit required.

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post #10 of 41
Just remember ........ anyone can charge whatever they want for what ever it is they are selling.
The person telling the story might not be telling the truth.
The seller most likely has NO idea how much it is costing them to make that cake.
Don't always believe what you hear icon_smile.gif
post #11 of 41
Quote:
Originally Posted by MimiFix

Many people have no idea what it costs them to make a cake. And many (not all, but many) are too lazy to learn. I cringe when I see people post a thread asking how much to charge. I cringe again when CC members answer with, "Lots of things to take into account, but I would charge xx." I believe it's a disservice to all of us when the poster gets an answer. Because, you know, they will just use that price since they don't want to do the math. Eventually they will realize there is no money in their cake-making "business" and will stop. But new people will always start.



I too agree with this sentiment about people asking how much to charge. I know how much my goods cost because I have taken the time to sit down, look at what I spend and factor in what I charge per hour, etc. I also do research on my ingredients factoring in quality and price as well.

As for this cheap cake your acquaintance mentioned, this baker is probably underselling. Sometimes people don't understand that they are giving things away and losing out on it. They are either afraid of losing the business, or don't care about the money loss.

Either way, you do get what you pay for. Who is to say what the quality of this cake is, or what shortcuts she takes.
post #12 of 41
This is why Cottage Food Laws should require a short class on business literacy (an hour or so should do it) covering at least the basic concepts of pricing before allowing home bakers to start a business, similar to how most CFLs require food safety classes.

It wouldn't be a cure-all, but seeing numbers in black and white (e.g. if you price this way you will earn the equivalent wage of 10 cents an hour) might encourage new CFL business owners to at least think about pricing instead of just throwing out numbers.
post #13 of 41
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What amazes me is that most professionals in fields such as dentistry, medicine, law, etc have to and are required to do a one year internship (or some period of internship_ where they work with someone who has decades of experience in the field they want to pursue.

Why is it so different for the cake business?


Because it is. Anyone with an oven can make a cake.

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Are CFLs ripping apart the industry vs people who are required to use a licensed kitchen or choose to be professional and take this route and pay legal taxes etc.?


No, they are not "ripping apart the industry". You're pitting home baker vs. shop baker, again. Why go there? Lots of home bakers underprice. It's not a law's fault, it's not anyone's fault, it's just LIFE.

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I cringe when I see people post a thread asking how much to charge. I cringe again when CC members answer with, "Lots of things to take into account, but I would charge xx." I believe it's a disservice to all of us when the poster gets an answer. Because, you know, they will just use that price since they don't want to do the math.


It's not a disservice to help the person by answering their question in a helpful way. What annoys me to no end is people who won't give an answer, which is what was happening for a while in this forum. Why not help people by letting them see the gamut of prices? Of course I wish they would sit down and figure out their costs. And if they're serious, eventually they will. But it's no skin off my back to tell them what I charge, my prices are right there on my web site.

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This is why Cottage Food Laws should require a short class on business literacy (an hour or so should do it) covering at least the basic concepts of pricing before allowing home bakers to start a business, similar to how most CFLs require food safety classes.


Wrong. Cottage food laws ease the regulatory burden on micro food businesses. What other law do you know of that requires people to take a class to learn to price their product before they can go into business? It's a free country, Jason. Your proposal is ludicrous.

There will always - always- always always always be this conflict, laws or not. Some people like to do cake as a hobby, and charge next to nothing. Some people are trying to make a living at it, and charge what they need to charge to make a living. We can educate people and help them try to charge fair market value, taking into account their expenses and their time, but in the end, as kakeladi said, anyone can charge whatever they want for their product.

p.s. Underpricing drives me mad also, don't get me wrong. But blaming home bakers or cottage food laws, or refusing to tell people what you would charge, or dreaming up new requirements for laws that are supposed to make things easier, those things are counter productive.
post #14 of 41
[quote="Pearl645"]What amazes me is that most professionals in fields such as dentistry, medicine, law, etc have to and are required to do a one year internship (or some period of internship_ where they work with someone who has decades of experience in the field they want to pursue.

Why is it so different for the cake business?
quote]

This is truly a misguided, if not ridiculous, statement. While very many small business fail because people think they can just jump into it, comparing training to decorate a cake to getting a medical degree is a huge stretch.
post #15 of 41
Quote:
Originally Posted by kelleym

Cottage food laws ease the regulatory burden on micro food businesses.


And that's exactly the issue here. The day before a CFL is signed, there are high barriers to entry in the food industry that require new business owners to make significant investments in time and money to get started. The next day, there are virtually no barriers to entry for a good portion of the market.

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What other law do you know of that requires people to take a class to learn to price their product before they can go into business?


Perhaps requiring a baseline level of knowledge in things like pricing would help bring down the failure rate for new businesses in other industries. Do you know of any other law that instantly removes barriers to entry to the extent a CFL does?

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It's a free country, Jason.


I agree, but I'm not sure what that has to do with this discussion. How exactly is my proposal impinging on the freedom of business owners?

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We can educate people and help them try to charge fair market value, taking into account their expenses and their time, but in the end, as kakeladi said, anyone can charge whatever they want for their product.


And that's exactly what I'm recommending, just on a larger scale. Obviously there's no way to force people to price a certain way, but you can at least let them make an informed decision.

If CFLs lead to rampant underpricing by home bakeries, this will only give ammunition to the opponents of CFLs who can and will point to declining tax revenues as an argument to increase fees, tighten restrictions, or even repeal the CFL altogether.
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