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Cake price research - Page 4

post #46 of 56
Quote:
Originally Posted by SystemMod2 View Post

I need to remind you all to be helpful and please leave off the vulgarities and rudeness.

I'd also like to remind you that you were all once Newbies, and that we encourage new members here on CC. What you may consider a "silly question", the newbie may be in the dark about. Please exercise a bit of patience and guidance, instead of judgement.

There is SO much I want to say to this comment but I know it will just fall on deaf ears

Yes, I was a 'newbie' once - 30 odd years ago and I managed to learn what I did .... not through the internet but through a group of very kind ladies and gents that passed on what they knew.  It might SURPRISE you that they DIDN"T sugar-coat their advice back then - if I was to 'learn' from them it was a a 'boots and all' lesson - yes they made me do the same thing - over and over again - until I perfected it.  They didn't give me step by step pictorials nor priced my cakes for me - they told me the process to follow and told me to go home and do it.....  I STILL subscribe to this method of learning as being the most effective - the have a go yourself method!
 

HOW is what has transpired on this thread ANY different - the advice people are giving is not 'less caring'  - I can't see ANYWHERE where people called it a 'silly question'.   There was LOTS of GUIDANCE offered and the only patience lost was was mine and it was NOT directed at the 'newbie'  - as for your reference to 'vulgarities and rudeness'  - I can only see where you have EDITED my post and removed my reference to a 'was*e remov*l syst*m" with an emoticon of dropping your dacks  - sorry if THIS is what you have deemed VULGAR....  gosh I have seen so much worse on here and never given it another thought - it was meant in FUN !

I think 'judgement' here is aimed at the very people that were trying to offer HELP -   it certainly makes one question WHY they even bother!

 

A sense of humour is a wonderful thing  - without laughter, the world is a SUPER boring place

PS..... only smart people can read truly WITTY comments and chuckle instead of getting all miffed

Hero of all time - GODOT

 

 

www.facebook.com/applegum

Th...

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A sense of humour is a wonderful thing  - without laughter, the world is a SUPER boring place

PS..... only smart people can read truly WITTY comments and chuckle instead of getting all miffed

Hero of all time - GODOT

 

 

www.facebook.com/applegum

Th...

Misc 3D Cakes
(1 photos)
  
Reply
post #47 of 56

woo hoo! I'm off this site for a couple of days and i miss all the fun!

 

My 2 cents is that you should have a general idea of what the market in your area is charging just so you know, but to ignore it and charge what you need to in order to pay yourself what you're worth.

post #48 of 56
Quote:
Originally Posted by costumeczar View Post
 

woo hoo! I'm off this site for a couple of days and i miss all the fun!

 

My 2 cents is that you should have a general idea of what the market in your area is charging just so you know, but to ignore it and charge what you need to in order to pay yourself what you're worth.

If you ignore it, how do you know what you're worth?  Regardless of my worth, I charge as much as I can. Why would I charge less (or more) based on some sort of subjective construct about my worth?

 

If you put your house on the market, the Realtor is going to do research on what your house is worth and give you comps on what other homes have sold for... and the plan is to not sell for a penny less than you can get, right?    If you sell a $350 cake every week for a hundred dollars less than it's worth, at the end of the year you've lost $5,200. Or if you'd just charged $350, you could have made the same amount of money and taken off the summer.

post #49 of 56
Quote:
Originally Posted by howsweet View Post

If you ignore it, how do you know what you're worth?  Regardless of my worth, I charge as much as I can. Why would I charge less (or more) based on some sort of subjective construct about my worth?

If you put your house on the market, the Realtor is going to do research on what your house is worth and give you comps on what other homes have sold for... and the plan is to not sell for a penny less than you can get, right?    If you sell a $350 cake every week for a hundred dollars less than it's worth, at the end of the year you've lost $5,200. Or if you'd just charged $350, you could have made the same amount of money and taken off the summer.

You have to know what the general market is so that you can be ready with your marketing, or your sales pitch, when people say that you're too expensive if you plan on charging more than what they're used to paying. You have to know what your expenses are and what you want to earn hourly to know what you and your time are worth. It's not subjective at all, it's pretty straightforward. When a realtor is pulling comps that's concrete information, and people always pad that to start so that when they get negotiated down it's the figure they really want to sell the house for. I don't know that real estate is a good analogy for custom cakes unless you intend to negotiate on your pricing, which I don't, because I know what I'm worth. But I've only been pricing my wares for a little under 20 years and making a good living at it, so don't mind me.
post #50 of 56
Real estate is a bad comparison because comps ultimately set the limit on what you can ask, a buyer can only finance what the bank decides its worth, which they use comps for. If your house doesn't appraise for the selling price, your seller won't be able to borrow that much. Whereas cake can cost whatever anyone wants to pay for it.
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post #51 of 56
Quote:
Originally Posted by costumeczar View Post


You have to know what the general market is so that you can be ready with your marketing, or your sales pitch, when people say that you're too expensive if you plan on charging more than what they're used to paying. You have to know what your expenses are and what you want to earn hourly to know what you and your time are worth. It's not subjective at all, it's pretty straightforward. When a realtor is pulling comps that's concrete information, and people always pad that to start so that when they get negotiated down it's the figure they really want to sell the house for. I don't know that real estate is a good analogy for custom cakes unless you intend to negotiate on your pricing, which I don't, because I know what I'm worth. But I've only been pricing my wares for a little under 20 years and making a good living at it, so don't mind me.

Analogies are never perfect - it was fine for my point which was only that you have to know the market. You said "you should have a general idea of what the market in your area is charging just so you know, but to ignore it and charge what you need to in order to pay yourself what you're worth."

 

My point was that market prices should not be ignored.  And if you base your hourly wage on "what you need to in order to pay yourself what you're worth", that's definitely subjective.

 

Quote:
Originally Posted by kikiandkyle View Post

Real estate is a bad comparison because comps ultimately set the limit on what you can ask, a buyer can only finance what the bank decides its worth, which they use comps for. If your house doesn't appraise for the selling price, your seller won't be able to borrow that much. Whereas cake can cost whatever anyone wants to pay for it.

As I said, analogies are never perfect - it was fine for my point which was only that it's extremely valuable to know the market in order to set a price. I don't understand the point of picking out the differences and then deciding the analogy inappropriate. I can probably list more differences than most people because I used to own a RE/MAX.

post #52 of 56

Which is probably why it was at the tip of my tongue. I hope know one is going to explain to me that I'm not actually speaking, but typing and that they are not the same. Besides - for all you know, I may talk to the computer :lol:

post #53 of 56

My point is that you have to know what people think they're going to be paying based on what the market in your area has been. Then you have to figure out what you want to earn based on what you think your expenses are and how much you think your time and experience are worth. If those two are similar then your job is easy because you won't have to have the extra step of explaining why your cakes are more expensive than the average that people are used to paying.

 

If your prices are going to be higher, you need to ignore what people are charging in your area because your pricing shouldn't be based on the average, it should be based on your own figures. You also may have to sell your product harder and in a different way, because you're going to be getting a lot of "HOW MUCH?" when people call you. And you have to know HOW MUCH YOU THINK YOU'RE WORTH, because if you don't, you're going to cave and start adjusting pricing for whiners and moaners who claim poverty. If you have a solid sense of how much your work is worth, you won't feel bad about charging that amount, even if you know that your prices are higher than the average. It doesn't matter how much other people are charging, but you do need to know what they're charging in general, just so that you can be prepared to adjust your marketing if you have to go that route.

 

People who don't know what they're worth tend to end up on here posting "Did I charge too much?" threads.

post #54 of 56

Are you saying when comparing your prices with others, ignore prices of people who undercharge if you want to be fair to yourself?  I definitely understand that. I try as hard as I can to "ignore" them when pricing,  but they do drag down the market.   I would never suggest charging in line with people who are undercharging - in my mind, that goes without saying.

 

But you're exactly right -- it really doesn't go without saying.  There are plenty of people who would just call three cheap cake ladies and price accordingly. 

 

What I have to do to compete with these people is produce a product as near to perfect as I can get it. That's fine, its what I do anyway. I don't try to sell anyone - I just let the pics speak for themselves. If I lived in a small town, I'd probably not be in business as the cheap cake ladies (aka cake subsidizers) often dominate.

post #55 of 56
Quote:
Originally Posted by howsweet View Post

Are you saying when comparing your prices with others, ignore prices of people who undercharge if you want to be fair to yourself?  I definitely understand that.

If a competitor is pricing below market value then yes they need to be ignored from a pricing perspective, but if there is enough of a local supply of sufficient quality available at these unsustainable prices that is something to consider when determining your marketing strategy.

I like the real estate analogy, as long as you look at real estate investment and sales as an ongoing concern (i.e. flipping houses). If you buy a house for $400K and spend $100K to upgrade the existing kitchen to a state-of-the-art gourmet kitchen, you need to consider the target customers for that particular property. If you ignore market values you might list the property at, say, $550K.

If median home values in the surrounding area are $400K, you may have been better off spending less on upgrades to a point where the house is "good enough" for the target customer (e.g. spend $10K in upgrades and list at $450K), since $550K might be a tough sell for buyers looking in that area. On the other hand, if the house is surrounded by $600K properties, you can consider listing significantly higher than your original $550K estimate based on costs only.

Looking at the issue of underpricing, if several local homeowners decide to list their properties on their own and don't do the necessary research, this can impact both the supply and comps. Using our example above, let's say your house is in a tract with a median home price of $600K, and four of your neighbors list their $600K homes for $450K. Based on this information you wouldn't immediately adjust your selling price down to $450K, but since these listings will depress market values you may end up holding off on listing your property for the time being or deciding to rent it out instead. Drawing parallels to the world of custom cakes, this would translate into holding off on starting a business, targeting a different area, or marketing to a specific niche if you can provide a unique feature.
post #56 of 56
Quote:
Originally Posted by howsweet View Post
 

Are you saying when comparing your prices with others, ignore prices of people who undercharge if you want to be fair to yourself?  I definitely understand that. I try as hard as I can to "ignore" them when pricing,  but they do drag down the market.   I would never suggest charging in line with people who are undercharging - in my mind, that goes without saying.

 

But you're exactly right -- it really doesn't go without saying.  There are plenty of people who would just call three cheap cake ladies and price accordingly.

 

 

Yeah, I realized that I didn't specify that I'm assuming that you'd be charging more than the average in town if you're offering custom work. Maybe that would have made it more clear, hahaha! I think that you need to know how your pricing fits in with what people are expecting to pay in your area, if they've been trained to pay a certain price range, just for your own information. Then ignore that when you're pricing your own stuff and just charge as high as you think you want to. But you do need to know what people will be thinking price-wise if you want to run a business, because that will affect your sales pitch. I'm with ApplegumPam on the idea that your pricing shouldn't be reflective of anyone else's specifically, but I think that you do need to know what's going on in your area in a general way.

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