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Negotiation Help

post #1 of 22
Thread Starter 

HI Everyone,

 

I need your help on negotiating with my boss.  I am a cookie and cake decorator and my boss loves my cookies to sell at the shop.  I don't have the time to bake and make them at work because of the cakes. I am also licensed from my home as well.  I would like to make extra money on the side so I would like to make them from home.  What do you all think would be a good and fair percentage between the both of us?  It would be my supplies, utilities, and time.

post #2 of 22

No percentage - you make them at home with all your own supplies - you work out what you need to sell them for (not cheap because he is your boss) - you give him the price - if he wants to sell them he pays you what you ask - when he sells them in his shop he adds his mark-up.

 

When you are calculating your price - do NOT think about what he will sell them for and use that to factor your price. 

IF he doesn't want to pay what you ask...... DO NOT negotiate !

IF he REALLY wants them - he WILL pay   ....  don't let him get rich at the expense of your health and well being - you want to make EXTRA money - not run a charity for your boss

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

 

 

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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...

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post #3 of 22
Solid advice!

All too often people get all excited about selling to a store. They try to lower the price to make it easier for the company to purchase them. Are they any easier to make? No!

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You may get a cake for $way to little but you won't get this cake!

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www.VeryDeliciousDesserts.com

https://www.facebook.com/pages/Delicious-Desserts/207874222593145

 

It's never "just cake!"

 

You may get a cake for $way to little but you won't get this cake!

Animal
(4 photos)
 
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post #4 of 22
Thread Starter 

you are so right!  That's why I need your help.

post #5 of 22
Just be honest with him - "the cookies cost me $x to make and x hours at $x per hour, so I can't sell them for less than $x each. It's my time off and I don't need to spend it working for less than a fair wage."
elsewhere.
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post #6 of 22
Very likely, his ingredients are cheaper than yours, so I would work something out where you could buy your ingredients through his supplier and then give him a little break on the price. Seems to me that if you want to charge too much, he'd just hire someone else to make them in bulk - KWIM?

If it were me, I would keep it simple and factor it as overtime. If you're doing the labor anyway, why not stay longer at work and have him pay you time and a half? Seems easier than negotiating or figuring out what he owes you, him ordering from you, transporting them, etc. Unless he's willing to let you slap a sticker on them with your name, etc. then I would do it as overtime.
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post #7 of 22
Quote:
Originally Posted by BrandisBaked View Post

Very likely, his ingredients are cheaper than yours, so I would work something out where you could buy your ingredients through his supplier and then give him a little break on the price. Seems to me that if you want to charge too much, he'd just hire someone else to make them in bulk - KWIM?

If it were me, I would keep it simple and factor it as overtime. If you're doing the labor anyway, why not stay longer at work and have him pay you time and a half? Seems easier than negotiating or figuring out what he owes you, him ordering from you, transporting them, etc. Unless he's willing to let you slap a sticker on them with your name, etc. then I would do it as overtime.

If he doesn't come to the party with your pricing - I'd offer him THIS ^^^ as an alternative - but make sure you add in the proviso that you will take as long as is necessary to achieve the quality of your cookies - don't let HIM dictate how many you should be pumping out per hour

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
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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)
  
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post #8 of 22
Thread Starter 

Thank you all for your help!!   It was very helpful.

post #9 of 22
Quote:
Originally Posted by ApplegumPam View Post

No percentage - you make them at home with all your own supplies - you work out what you need to sell them for (not cheap because he is your boss) - you give him the price - if he wants to sell them he pays you what you ask - when he sells them in his shop he adds his mark-up.

Agreed. Check out the Pricing Formula link in my signature for details on how to incorporate ingredients, labor, overhead, and markup to come up with a price.
Quote:
When you are calculating your price - do NOT think about what he will sell them for and use that to factor your price.

It is still important to consider what the final price will be after the retailer's markup (which you should find out before you work out pricing). If the markup pushes the retail price higher than your target market is willing to pay then the product won't sell, in which case you need to reduce your costs and/or come up with a different product that provides enough value to make the final price workable.

Go into your negotiations with an idea of what your minimum acceptable wholesale price would be (preserving a decent wage and profit margin for yourself), but start by offering a higher wholesale price that produces a retail price at the upper range of what the market will accept.
post #10 of 22
Quote:
Originally Posted by BrandisBaked View Post

Unless he's willing to let you slap a sticker on them with your name, etc.

It's standard practice to include the manufacturer's brand on a product that is sold wholesale (with the exception of private label deals such as generic products for grocery stores). If OP is interested in growing his business then not being able to advertise his brand would be a deal-breaker.

For ingredients you can just approach wholesale suppliers directly, as long as you have a business license there shouldn't be an issue.

The other thing to consider is if your home bakery license allows you to sell wholesale, in some states this would require a separate commercial kitchen. If wholesale is not an option for you then you would need to make a case that the increased revenue from the cookies would exceed the shop's incremental costs for your overtime.
post #11 of 22
Quote:
Originally Posted by jason_kraft View Post

It's standard practice to include the manufacturer's brand on a product that is sold wholesale (with the exception of private label deals such as generic products for grocery stores). If OP is interested in growing his business then not being able to advertise his brand would be a deal-breaker.

Bakeries don't always advertise who makes their product. I worked at one that baked Otis Spunkmeyer cookies daily but claimed they were scratch. In my experience, the standard practice for bakeries is to want credit for everything they sell.
Quote:
Originally Posted by jason_kraft View Post

For ingredients you can just approach wholesale suppliers directly, as long as you have a business license there shouldn't be an issue.

Wholesalers will often have different prices for different customers. A bakery that buys in larger quantities will get a price break that a small home-based business will not. Also, some wholesalers will only deliver to actual businesses - with some only delivering to those with loading docks. Many wholesalers operate only by delivery and only to actual businesses (those semi trucks aren't usually allowed on residential streets).
Quote:
Originally Posted by jason_kraft View Post

The other thing to consider is if your home bakery license allows you to sell wholesale, in some states this would require a separate commercial kitchen. If wholesale is not an option for you then you would need to make a case that the increased revenue from the cookies would exceed the shop's incremental costs for your overtime.

In some states selling wholesale requires different procedures and permits and you must label all products with ingredients, etc. You would have to check with your local health department to find out if your current license allows you to sell wholesale and what additional requirements apply to wholesaling in your area.
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post #12 of 22
I pretty much agree with Brandi, but a few points to add:
 
Originally Posted by jason_kraft View Post

It's standard practice to include the manufacturer's brand on a product that is sold wholesale. I'm not aware of any standard practice. Food establishments that purchase product can elect to have the items pre-packaged with the manufacturer's name; or the food establishment can sell it either in their own packaging or put the items in their display case (with no acknowledgment about where the items were made).  

For ingredients you can just approach wholesale suppliers directly, as long as you have a business license there shouldn't be an issue. Huge issue alert: Most bakery suppliers will only deliver to a business that has a retail location or a manufacturing facility. They will not deliver to a residential address.

The other thing to consider is if your home bakery license allows you to sell wholesale, in some states this would require a separate commercial kitchen. In NY, the home processor permit has no restrictions on wholesale.

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post #13 of 22
Quote:
Originally Posted by MimiFix View Post

I'm not aware of any standard practice. Food establishments that purchase product can elect to have the items pre-packaged with the manufacturer's name; or the food establishment can sell it either in their own packaging or put the items in their display case (with no acknowledgment about where the items were made).

You're right that there are other options for selling wholesale, but if OP is interested in growing his business then selling the items packaged with OP's business name and brand is the best way to do that. Generally that's how things go when a manufacturer approaches a retailer to sell a packaged good. Of course open stock is a different story (although it does make packaging much easier), and private label arrangements tend to be initiated by the retailer.
Quote:
Huge issue alert: Most bakery suppliers will only deliver to a business that has a retail location or a manufacturing facility. They will not deliver to a residential address.

The wholesale bakery supplier I dealt with (BakeMark) had no problem with a cash & carry pickup as long as it was arranged in advance. They have many distribution centers across the US. Wholesale prices are also available at restaurant supply stores like Restaurant Depot.

As far as price breaks, they might be available if you buy by the pallet, so unless OP's boss runs a chain that leverages their procurement across several different bakery locations it's doubtful there will be an advantage for OP buying on his boss's account. Assuming OP's boss is even willing to do that.
Edited by jason_kraft - 9/15/13 at 1:08pm
post #14 of 22
Quote:
Originally Posted by jason_kraft View Post

As far as price breaks, they might be available if you buy by the pallet, so unless OP's boss runs a chain that leverages their procurement across several different bakery locations it's doubtful there will be an advantage for OP buying on his boss's account.

What are you basing that on? Have you worked with any suppliers other than your local BakeMark?
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post #15 of 22
Quote:
Originally Posted by BrandisBaked View Post

What are you basing that on? Have you worked with any suppliers other than your local BakeMark?

That's been my experience at BakeMark, Restaurant Depot, and two independent Cash & Carry stores in San Jose.

Can you share your own experience of different price points at wholesale suppliers?
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