Couldn't have put it better!

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.

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.

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

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.

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.

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.

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.

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?

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?

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.

So what? So you're saying if you have enough money, you don't need to take a class? People with more money than sense open businesses every day, whether it's a storefront or not.

Government-mandated anythings usually end up restricting the freedom of everyone. I'm sticking to generalities because we apparently have a fundamental difference of opinion on how things should be run.

Laws do not (theoretically) exist to regulate prices or competition. I think you and I probably have a very fundamentally different view on the role of government in our lives.

Cottage food laws are wildly successful, giving consumers more legal choices for certain homemade foods. When more providers enter the market, the consumer wins. I don't think your scenario is anywhere in the realm of possibility.

Note that I mentioned investments in both time and money. Part of the time investment is learning how to run a business, and with higher barriers to entry there is more of an incentive to learn how to do it right instead of just winging it.

Again, please explain how a one hour class on business basics (similar to the required food safety classes, which are much longer) restricts anyone's freedom. "Government bad!" is not an argument.

There absolutely are laws that exist to regulate both prices and competition. In fact, there's a whole organization (the FTC) devoted to this task.

We're probably closer than you think. I believe government should provide citizens and businesses with the infrastructure necessary to be successful -- no more, no less. IMO that infrastructure includes making sure people who sell food know how to make it safely and sell it at a fair price.

Which metrics are you using to measure success?

An absolute statement like that is, to use your word, ludicrous. If there is a flood of new market entrants that underprice existing businesses, consumer demand will eventually shift to the lower end of the price spectrum, and the market will no longer be able to support higher wages for many mainstream vendors. The long term supply of quality products outside niche markets will dry up in favor of transient businesses that enter the market at too low of a price point and quickly burn out. Normally this would not be a big issue, but with zero barriers to entry there is a virtually unlimited supply of these transient businesses so established players can't just wait them out.

If you're just looking at things from a Walmart perspective where low prices are valued above all else I would agree with you (and businesses in other industries would certainly benefit since consumers are no longer spending as much on cake), but you need to look at the whole picture, including long term economic effects.

I don't have the time or inclination to "lobby" for such an amendment, but I did bring it up to SELC when I first heard about the CA bill.

If you have any additional points to add to my arguments I would love to hear them, but the personal attacks are not necessary and do not add value to the discussion.

As an aside, I'm not sure what the big deal is about "having the last word". If you bring up a point and I have a response to it, of course I'm going to post it. If you'd prefer to have a one-sided discussion you are free to post on your own blog so you can control the conversation.

Unfortunately, the decorators do it out in the open around here. Just last night on a local "craigslist" style Facebook page for my town, was an ad that read "Thinking of selling these...what would you pay?" They were decent looking cupcakes with a fondant flower on top wrapped in a pretty cellophane bag. Naturally the responses varied from super cheap to cheap to super cheap, etc. One person offered $4.00, but the decorator said "oh I can do it for $1, wrapped!"

Same person had a cake posted for $20 since "she was just starting out, and it is fondant after all", so it costs more.

Then there are some that outright advertise "Cheap Cakes 4 sale". Very sad really.

In this sector this already happens with or without CFLs. I am not passing judgement on what people do, however, it clear from the regular posts there are people going into business in non-CFL states from home. Even in CFL states I guarantee you will find cakers who are not running legal "enterprises." You claim that there are high barriers to entry belies the fact that many enter the market even with those boundaries in place.

This fact along with the empirical data from CFLs, there are plenty of established non-niche bakeries/cakeries in states with CFLs, emphatically disprove your race to the bottom scenario. Indeed even with the existence of home bakeries and underground businesses, people continue to spend their money in established bakeries. Your vision of the market is simply hypothetical and does not represent how the markets work in CFL states.

I absolutely agree, the issue is one of magnitude. There's no doubt that CFLs have greatly increased the number of legal home bakeries...that's not a bad thing in and of itself, but with this increase in new businesses comes an increase in businesses that underprice, since some percentage of those new businesses (definitely not all, to be clear) will not know how to price correctly.

Of course businesses will still enter markets with high barriers to entry, my point was that because much more is at stake they are more likely to spend the time to do things right. And if you are referring to illegal market entrants, they can be shut down relatively easily if they interfere with the market.

Which empirical data, can you provide a link?

To clarify, I'm not saying it's impossible to run a non-CFL business in a CFL state, it will just get more difficult over time due to the greater likelihood of being undercut by legal businesses, and the number of mainstream non-CFL businesses will dwindle.

You're right that my vision is hypothetical (albeit based on economic principles), because AFAIK no long-term economic data exists analyzing the impact of CFLs on critical metrics like total industry revenue, which would be a much more important figure than just counting how many non-CFL shops are still open.

While some people are experts at crying "personal attack", there was no attack.

Jason, the fact that you will, on this forum, propose radical and nonsensical legislation, such as forcing everyone in America who wants to sell something to first take a government-mandated class, and then you say that you have "neither the time nor inclination" to actually lobby in the real world for such a thing, makes it very clear that you're simply amusing yourself here.

I am not surprised, at all, that the SELC did not not incorporate this suggestion into the bill draft. It is breathtaking in its scope and overreach. Want to sell a bracelet on Etsy? Oops, you have to take a government-mandated class first.

Now, if the California cottage food law does pass, then it would be a great idea for a private citizen such as yourself to begin offering such classes. They'd probably be a big hit!

Everyone who runs a legal food business in the US already has to take a government-mandated class on food safety. I fail to see what is "radical" or "nonsensical" about a similar, much shorter, non-binding class on how to price your products.

I do enjoy debating business-related topics, but since I sold my bakery and have other higher priority projects on my plate I just don't have the time to lobby for this issue. I'm not sure what this has to do with the points I've made.

I know you think you aren't posting personal attacks, but go back and look at your last post, and examine how much of it was focused on tearing me down as an individual instead of addressing my points.

To be clear, my proposal was tied to the CFL, not to all businesses everywhere. So unless you can eat the bracelet, you wouldn't have to take a government-mandated class. And if you are selling edible bracelets, you would already have to take a government-mandated class under the current laws in most states.

Thanks for the advice, but SCORE already offers this service for free, as do some people on CakeCentral.

I thought this was weird too and I wouldn't be surprised if that was the intent. I'm not sure what effect she expected though.