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Undercutting- So frustrating.

post #1 of 25
Thread Starter 

There's really not much I can do about this, so this is more of a vent than anything. 

 

In the past several months, we have lost jobs to one competitor in particular. We know because the potential client will call us, get a quote, and then we never hear from them again but we see the exact cake design later on the competitor's page. We've had some that we will send the quote and the client will say everything sounds good and ask us to send a contract over. But then we don't hear back from them, or if we do, it's for them to say they went in a different direction. We know it's due to price because before this they would have talked about how much they loved our cake and are impressed with the pictures of our work, etc. So we know it's not because they decide they don't like our work. 

 

It's just so frustrating. If it's a matter of them just not choosing to go with us from the beginning, that's one thing. But to have someone ready to sign on the line and pay their retainer suddenly changed their mind because someone undercut our pricing...grrrrr. icon_sad.gif

 

Anybody else ever had this problem, especially with a specific competitor? 

Before you ask- I'm licensed, inspected, insured, and all that jazz.
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Before you ask- I'm licensed, inspected, insured, and all that jazz.
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post #2 of 25

My problem is they want something custom but at Walmart prices. It just doesn't work that way. They don't understand the amount of time that goes into it. They just want a deal. My prices are incredibly low but there are some people that think it is just cake.

post #3 of 25
Quote:
Originally Posted by bct806 View Post

My problem is they want something custom but at Walmart prices. It just doesn't work that way. They don't understand the amount of time that goes into it. They just want a deal. My prices are incredibly low but there are some people that think it is just cake.
I've had this discussion with some co workers. I showed them a picture of a giant cupcake and asked how much they would pay for just to know and one said they wouldn't pay more than $25 and I told them thats not gonna happen. They continued to talk about what they could get a Sams and other grocery stores. I tried to educate them that's its not just about ingredients, I also said that grocery store cakes are so cheap because they use all kinds of processed and preservative ingredients. Those cakes are most likely mass produced and grocery stores don't make any money on those cakes they make their money on all the other goods they sell. People don't care about what goes into a price, they just care that's its cheap. I'm thinking about putting information on my website about these things so that I can educate people but also cut down on people even asking me for grocery Store prices. I know I'll still get asked but atleast if its available on the website I can direct people to educate themselves
post #4 of 25
Quote:
Originally Posted by LoveMeSomeCake615 View Post

There's really not much I can do about this, so this is more of a vent than anything. 

In the past several months, we have lost jobs to one competitor in particular. We know because the potential client will call us, get a quote, and then we never hear from them again but we see the exact cake design later on the competitor's page. We've had some that we will send the quote and the client will say everything sounds good and ask us to send a contract over. But then we don't hear back from them, or if we do, it's for them to say they went in a different direction. We know it's due to price because before this they would have talked about how much they loved our cake and are impressed with the pictures of our work, etc. So we know it's not because they decide they don't like our work. 

It's just so frustrating. If it's a matter of them just not choosing to go with us from the beginning, that's one thing. But to have someone ready to sign on the line and pay their retainer suddenly changed their mind because someone undercut our pricing...grrrrr. icon_sad.gif

Anybody else ever had this problem, especially with a specific competitor? 

I'm just starting out but I expect I'll have this problem, maybe not with one specific competitor but in general because where I am there is so much competition already and in one area too. I don't see where there is much you can do except get people to buy with you despite you costing more. Think why are u better than your competition?? See if there is something more you can offer that your competitors don't and without going to out of your way.
post #5 of 25
If they are undercutting you, but you're charging a fair price for the market, then they'll eventually either go out of business, or have to raise their prices to the level where they lose that advantage over you if they want to stay open. Clients that go for cheap over quality are the biggest PITA customers anyway so you shouldn't look at it as losing out, but getting off lightly!
elsewhere.
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elsewhere.
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post #6 of 25
Quote:
Originally Posted by BakerBee7468 View Post


I've had this discussion with some co workers. I showed them a picture of a giant cupcake and asked how much they would pay for just to know and one said they wouldn't pay more than $25 and I told them thats not gonna happen. They continued to talk about what they could get a Sams and other grocery stores. I tried to educate them that's its not just about ingredients, I also said that grocery store cakes are so cheap because they use all kinds of processed and preservative ingredients. Those cakes are most likely mass produced and grocery stores don't make any money on those cakes they make their money on all the other goods they sell. People don't care about what goes into a price, they just care that's its cheap. I'm thinking about putting information on my website about these things so that I can educate people but also cut down on people even asking me for grocery Store prices. I know I'll still get asked but atleast if its available on the website I can direct people to educate themselves


I just started to do this, and I read to never undercut the competitors around you. I don't have much where I am. I also had a friend who sells baked goods (muffins, cookies, etc.) in my area clue me in on the prices people will pay around my area. But I explain in my letters or emails that I send, just basically what you've said BakerBee7468! I tell them to remember that all my cakes are made from scratch, any filling they request and frosting is also made from scratch. Lastly, if they choose to go with my rolled marshmallow fondant, that too is made from scratch! Which means there is less preservatives and processed ingredients... People do think that little bake shops or "one man bands" should be cheap like those grocery stores.

Don't be afraid of cake, make cake be afraid of what you will turn it into!

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Don't be afraid of cake, make cake be afraid of what you will turn it into!

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post #7 of 25
Quote:
Originally Posted by CakeRae80 View Post


I just started to do this, and I read to never undercut the competitors around you. I don't have much where I am. I also had a friend who sells baked goods (muffins, cookies, etc.) in my area clue me in on the prices people will pay around my area. But I explain in my letters or emails that I send, just basically what you've said BakerBee7468! I tell them to remember that all my cakes are made from scratch, any filling they request and frosting is also made from scratch. Lastly, if they choose to go with my rolled marshmallow fondant, that too is made from scratch! Which means there is less preservatives and processed ingredients... People do think that little bake shops or "one man bands" should be cheap like those grocery stores.
They do but we have to educate people. We can't do that with every single customer but we can do it with a few and put it on our websites or in our emails or brochures or something. I don't see this as losing customers because I never expected grocery store ppl to be my customers
post #8 of 25
Quote:
Originally Posted by kikiandkyle View Post

If they are undercutting you, but you're charging a fair price for the market, then they'll eventually either go out of business, or have to raise their prices to the level where they lose that advantage over you if they want to stay open. Clients that go for cheap over quality are the biggest PITA customers anyway so you shouldn't look at it as losing out, but getting off lightly!

This is so true! For the past 2 years there has been a cupcake business in the area who charges $1.85 per cupcake, with a ton of flavors and a cute place in a shopping strip. I have had to listen to "omg, have you tried ••••••• cupcakes?? They are SO GOOD!" And saw all my friends and clients "checking in" there on Facebook, and people asking why mine are more, since I just have a commercial kitchen... Yadda yadda... And a now the business is closed, because she wasn't making enough, and had a second job, and heart attack.... Terrible! And the saddest thing is that they really were good, and a Gigi's came in, and I think they are gross, but they are doing really good business, so she could've doubled her prices and made some money, rather than being the cheap cupcake place, and running herself ragged.

And to add insult to injury, there was a sign on the door after she closed saying how she was so proud to provide the people of northern Kentucky with reasonably priced cupcakes because this isn't New York City and people here don't want to pay the big bucks for cake... Or some such drivel. I took it to mean she is making a jab at the businesses that were still in business, like me, since my cupcakes are $2.50 for an individual and $24 a dozen. That is how much I have to charge to make any money, and I don't have half the overhead she did.
Beginners, be sure to parrot advice and get your post count up as fast as you can. After all, it's not what you know, it's what people THINK you know.
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Beginners, be sure to parrot advice and get your post count up as fast as you can. After all, it's not what you know, it's what people THINK you know.
Reply
post #9 of 25
Quote:
Originally Posted by Annabakescakes View Post



This is so true! For the past 2 years there has been a cupcake business in the area who charges $1.85 per cupcake, with a ton of flavors and a cute place in a shopping strip. I have had to listen to "omg, have you tried ••••••• cupcakes?? They are SO GOOD!" And saw all my friends and clients "checking in" there on Facebook, and people asking why mine are more, since I just have a commercial kitchen... Yadda yadda... And a now the business is closed, because she wasn't making enough, and had a second job, and heart attack.... Terrible! And the saddest thing is that they really were good, and a Gigi's came in, and I think they are gross, but they are doing really good business, so she could've doubled her prices and made some money, rather than being the cheap cupcake place, and running herself ragged.

And to add insult to injury, there was a sign on the door after she closed saying how she was so proud to provide the people of northern Kentucky with reasonably priced cupcakes because this isn't New York City and people here don't want to pay the big bucks for cake... Or some such drivel. I took it to mean she is making a jab at the businesses that were still in business, like me, since my cupcakes are $2.50 for an individual and $24 a dozen. That is how much I have to charge to make any money, and I don't have half the overhead she did.
So how come yours aren't $30 a dozen? That's $2.50 for each cupcake?
post #10 of 25
Quote:
Originally Posted by BakerBee7468 View Post

Quote:
Originally Posted by Annabakescakes View Post



This is so true! For the past 2 years there has been a cupcake business in the area who charges $1.85 per cupcake, with a ton of flavors and a cute place in a shopping strip. I have had to listen to "omg, have you tried ••••••• cupcakes?? They are SO GOOD!" And saw all my friends and clients "checking in" there on Facebook, and people asking why mine are more, since I just have a commercial kitchen... Yadda yadda... And a now the business is closed, because she wasn't making enough, and had a second job, and heart attack.... Terrible! And the saddest thing is that they really were good, and a Gigi's came in, and I think they are gross, but they are doing really good business, so she could've doubled her prices and made some money, rather than being the cheap cupcake place, and running herself ragged.

And to add insult to injury, there was a sign on the door after she closed saying how she was so proud to provide the people of northern Kentucky with reasonably priced cupcakes because this isn't New York City and people here don't want to pay the big bucks for cake... Or some such drivel. I took it to mean she is making a jab at the businesses that were still in business, like me, since my cupcakes are $2.50 for an individual and $24 a dozen. That is how much I have to charge to make any money, and I don't have half the overhead she did.
So how come yours aren't $30 a dozen? That's $2.50 for each cupcake?
because packaging for 1 costs 17¢ and packaging for 12 costs 44¢. It is cheaper to sell 12 in a box than 12 singles, so a quantity discount is an incentive for people to buy more.
Beginners, be sure to parrot advice and get your post count up as fast as you can. After all, it's not what you know, it's what people THINK you know.
Reply
Beginners, be sure to parrot advice and get your post count up as fast as you can. After all, it's not what you know, it's what people THINK you know.
Reply
post #11 of 25
Oh ok.
post #12 of 25

I'm sorry this has happened to you. I've experienced this too - I've seen a few of my designs being replicated by other local cakers and not getting credit for the design. I really do my best to give credit where it's due when it comes to others designs. I guess I shouldn't let it bother me, but it does.

 

One thing that I'm in the process of changing with my consults is not providing a sketch of the cake design until after a deposit has been paid.

In the past, I've created a sketch for the couple during their tasting and some have asked if they could take a picture of it so they could show their parents or some such excuse.  But then I never hear from them again. I found out that what they were REALLY doing was taking that design to another caker in town who would do it on the cheap.  That was upsetting so I stopped my prospective clients from taking pictures of their sketches.

But now, it seems that some are taking notes and then going to other cakers who have cheaper prices and describing it to them to have the design replicated that way.  

 

I've just come to the realization that people are just RUDE.  And that it's like stealing intellectual proprety, IMHO.  So now, I'm changing my policy and not providing a sketch until I have a deposit in my hot, little hand :/  Ugh.  I hate having to do that.

The great thing about cake is it doesn't feel like work. You forget about work. Kids, adults, they all get the same look in their eye when they're decorating cakes... That's the magic right there. ~ Duff Goldman

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The great thing about cake is it doesn't feel like work. You forget about work. Kids, adults, they all get the same look in their eye when they're decorating cakes... That's the magic right there. ~ Duff Goldman

Reply
post #13 of 25
Quote:
Originally Posted by Sweetface421 View Post

I'm sorry this has happened to you. I've experienced this too - I've seen a few of my designs being replicated by other local cakers and not getting credit for the design. I really do my best to give credit where it's due when it comes to others designs. I guess I shouldn't let it bother me, but it does.

One thing that I'm in the process of changing with my consults is not providing a sketch of the cake design until after a deposit has been paid.
In the past, I've created a sketch for the couple during their tasting and some have asked if they could take a picture of it so they could show their parents or some such excuse.  But then I never hear from them again. I found out that what they were REALLY doing was taking that design to another caker in town who would do it on the cheap.  That was upsetting so I stopped my prospective clients from taking pictures of their sketches.
But now, it seems that some are taking notes and then going to other cakers who have cheaper prices and describing it to them to have the design replicated that way.  

I've just come to the realization that people are just RUDE.  And that it's like stealing intellectual proprety, IMHO.  So now, I'm changing my policy and not providing a sketch until I have a deposit in my hot, little hand :/  Ugh.  I hate having to do that.
You do what u have to do, I don't blame u one bit. Some people don't care about what goes into prices or your skill or that they're taking your ideas elsewhere to find cheaper prices for the same work. Another idea could be to charge a fee to see your sketch while they taste your cake, but would be put towards their deposit or refunded upon making a deposit for you to make their cake. I understand it can be frustrating so hopefully this deters people from taking your sketches elsewhere. Another idea if its even possible is to copyright your sketches so no other caker can use your sketches
post #14 of 25
Atleast not without approval from you, so you still get the credit for your designs
post #15 of 25
Thread Starter 
Quote:
Originally Posted by Sweetface421 View Post

One thing that I'm in the process of changing with my consults is not providing a sketch of the cake design until after a deposit has been paid.

In the past, I've created a sketch for the couple during their tasting and some have asked if they could take a picture of it so they could show their parents or some such excuse.  But then I never hear from them again. I found out that what they were REALLY doing was taking that design to another caker in town who would do it on the cheap.  That was upsetting so I stopped my prospective clients from taking pictures of their sketches.

Oh yes, we never provide a sketch to a prospective client without a retainer paid and contract signed. That's been our policy for a long time. 

Oddly enough, the most recent bride that this happened with had asked me for a sketch so that she could visualize what the cake and cupcakes design she wanted would look like, and I told her we would provide the sketch once she was booked with us. She then asked if I would go ahead and send the contract over (So I'm thinking, ok she's good with everything!) so she could go over it with her planner, whom she was meeting with that weekend. That was the last I heard from her. 

 

Maybe she got offended that I wouldn't provide a sketch until she was booked? She didn't seem ticked off in her response, but who knows. We've never had anyone have a problem with that policy before. 

 

But regardless of whether anyone has a problem with it or not, that policy is not changing! 

Before you ask- I'm licensed, inspected, insured, and all that jazz.
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Before you ask- I'm licensed, inspected, insured, and all that jazz.
Reply
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