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Sucker for underpricing!

post #1 of 68
10/21/05 at 6:52pm
Thread Starter 
Hello everyone. icon_biggrin.gif I've been decorating cakes for a few years but only recently decided to make a business out of it. I'm no math wiz or business woman, so pricing does present a challenge.

My biggest problem comes when someone asks "How much would you charge to do a _____ cake for ___ people?" I feel like a deer caught in headlights. Too many times have I been suckered into underpricing a cake to the point where end up working for pennies. icon_cry.gif It's just that I'm afraid quoting a price that's too high will result in no clients. Pathetic, I know.

A woman at work asked me to make a cake for a retirement party. I asked her what kind of budget she's looking to stay within and she replied "Well, at costco they sell 1/4 sheets for around $15 dollars so around that range" icon_mad.gif Now, I know that store bought cakes are no competition for custom homebaked goods, but how do I explain this to her without making her feel bad?

Also, how can I develop a quick way of quoting cakes?
Help! Advice! Please!

And thanks for reading! thumbs_up.gif
A bad day in the kitchen is better than ANY good day at work!
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A bad day in the kitchen is better than ANY good day at work!
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post #2 of 68
10/21/05 at 7:40pm
Hi there and welcome. The first thing I want to say is that store bought cakes hold no competition to a home made cake. I'm sure she knows this because she's wanting to buy one from you and not costco. You could politely tell her that if she's wanting to pay $15.00 then it's probably best if she buys it from costco. Just tell her you put alot of time into personalizing a cake and that yours are alot more flavorful, just explain to her and keep a smile on and I bet she'll still buy from you if she wants quality over savings.

There is also a pricing matrix that you could use to help you price your cakes I hear that is very helpful.

Good Luck, Melony
Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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post #3 of 68
10/21/05 at 7:48pm
Here is the link to the price matrix.

http://www.cakecentral.com/cake-decorating-ftopict-5711-.html

Another fiarly accurate option is the 3x method....price out everything for the cake and then times it by three and adjust accordingly!

Oh yeah...a big welcome to Cakecentral!! We are glad to have you on board!!
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Whatever you do, do with all your heart!
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post #4 of 68
10/21/05 at 7:49pm
Sometimes I have to take a deep breath when the price part of the conversation comes up. I've found it's easer to come up with some kind of price list to stick to than to try and give a guess on the spot. Plus I always did it for less before I set some standard prices. Now I quote my price without flinching... most of the time!
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My drug of choice is FROSTING!
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post #5 of 68
10/21/05 at 8:00pm
I barely sold my first paid cake last weekend and I was so out of the loop on what to charge. I wasn't even sure if my cakes were good enough to put a price on yet but I sucked it up and charged.

The first was a 1/2 sheet and I charged $20.00 and the other was a cross cake that I made out of a 1/2 sheet and I charged $25.00.

Probably not enough but It's a start.
Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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post #6 of 68
10/21/05 at 8:09pm
Melony - that's not enough for sure. Can you even get a half sheet from Wal-mart for that?

There's no shame in telling the customer you need to get back to them with a price. If you're not sure, don't put yourself on the spot, just go home, do some figuring and call her back. No problem! icon_biggrin.gif
Ali
That is the saving grace of humor, if you fail no one is laughing at you



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Ali
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post #7 of 68
10/21/05 at 8:21pm
yeah I know I think with me my problem is that I'm still not convinced I'm ready to actually charge. Although I am proud of this weekends cakes. I'll post them soon to get everyones opinion.

Another thing that's hard is that people are used to getting all my practice cakes for free and I don't know how to tell them that the freebies are gone.

My sister in law called me and asked me for a 1/2 sheet practice cake for her sons football team, I was like sorry it's not practice anymore so we'll see if she still wants me to do it.
Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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post #8 of 68
10/21/05 at 8:34pm
Like others have said before me, it's better to get people used to paying full price from the start. That way they aren't shocked twice - once at actually having to pay and again when you raise your prices because you're so stressed out you can't breathe and you're only making $5 on the darn cakes anyway. Maybe you can approach it like this: the first 10 customers get a (say) 25% discount off your regular prices. Just make sure the customers know that. Tell them, for example, "This cake will cost $30 but I'm giving a 25% discount on my first 10 cakes, so that will only cost you $22 this time. The next one will be the regular price unless you order again soon."

Hold your ground on your prices. They need a cake more than you need to make one for pennies profit.
Ali
That is the saving grace of humor, if you fail no one is laughing at you



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Ali
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post #9 of 68
10/21/05 at 9:24pm
Very well put. I need to get a back bone really soon, lol.
Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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Everything I need to know I learned in Cake Central !

Lots of love, Melony.
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post #10 of 68
10/21/05 at 10:05pm
Thread Starter 
I'm in the same boat as melony. I'm always afraid to charge what I truly believe my cakes are worth for fear losing potential clients. I am very confident in my abilities, but I always manage to stupidly bend over backwards to just to please a bunch penny pinchers and get another cake in my book. icon_redface.gif I'm doing the best I can to increse the number of cakes in my portfolio, yet I feel that in order to do that I need to get the job.

I guess I do need to get my prices in writing. Maybe that will help me stand my ground a little better.

Now a question. What would any of you charge for a 4 tier, fondant covered, gum paste flower cascading cake (AND each tier is a different flavor)?

Are there any idiot proof formulas for pricing anyone knows about?

Thanks a million!
A bad day in the kitchen is better than ANY good day at work!
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A bad day in the kitchen is better than ANY good day at work!
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post #11 of 68
10/21/05 at 10:13pm
Welcome to CC! (Forgot to mention that earlier)

I would charge absolutely no less than $3 a serving and very possibly more. A lot of it depends on your market - whether you're in a small town or big city. I don't do gumpaste flowers yet, so I can't really say, but they're pricey.
Ali
That is the saving grace of humor, if you fail no one is laughing at you



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Ali
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post #12 of 68
10/21/05 at 10:45pm
I charge $4.00 per serving.
To do what you truly love is to never work!
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To do what you truly love is to never work!
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post #13 of 68
10/21/05 at 10:50pm
Thread Starter 
Thank you for the warm welcome's! icon_lol.gif

b]Example of a situation:[/b]
You hear someone discussing throwing a potluck, birthday party...etc. You think, "if I could make the cake, it would be a good way to show my work/advertise". How do you offer to make the cake without seeming pushy, or without them thinking you'll charge Wal-Mart prices. In other words, you want the task, but you want them to know you're not working for cheap here. (Nicely icon_biggrin.gif )

Here is what happened to me. I offered to make the cake (1/4 sheet) and the lady thought it would cost around $15, which is ridiculous! I felt like saying "Well if you're gonna be cheap about it NEVERMIND". I mean, its only fair to get paid accordingly for your work, right? But how would I decline the job then when it was I who offered? I think " why did I open my mouth?" tapedshut.gif
A bad day in the kitchen is better than ANY good day at work!
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A bad day in the kitchen is better than ANY good day at work!
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post #14 of 68
10/21/05 at 10:56pm
I know how you feel about underpricing your cakes. I just did it again to myself tonight. This lady wants a 1/2 sheet banana cake with a 12" round chocolate stacked on top, with red roses (of all colors), for a 60th anniversary cake. I have told myself over and over to tell any client that I would call them back with a price. Instead of doing just that, I quoted her $40.00. I think maybe I should have charged her closer to $60.00. Oh well, I guess I will get the hang of this sooner or later.
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post #15 of 68
10/22/05 at 12:06am
Thread Starter 
Well MakeItYours, I hope its soon, otherwise we'll both end up rocketing to the poorhouse! icon_biggrin.gif I think $60 sounds about right. I mean, considering that most of these projects are customized and are new "first timers", it's just so difficult to come up with a well calculated price on the spot! You never really know what to expect. What happens when someone asks for something out of the ordinary, like a cake-purse? icon_eek.gif What price do you quote then? I can just picture my dumbstruck face at the request already! He He.
A bad day in the kitchen is better than ANY good day at work!
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A bad day in the kitchen is better than ANY good day at work!
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