I bet most of you are Under Pricing your Cakes
Often customers make us feel we do not deserve to be paid as much as we charge when the truth is that often we are not charging enough and still feel guilty. This post aims to share a little light on under pricing your cakes.
If you haven’t had at least one customer in the span of six month roll her eyes over your prices – I bet you are under pricing your cakes.
You know why? Because there a so many of our customers who have no clue about baking or cake decorating and I really mean NO CLUE; they probably believe the ingredients go into the oven and the cake comes out all dressed in fondant, decorated with flowers. And we probably just charging to put things in and out of the oven. Right?
The classic attitude
This week I had two customers who gave me the attitude that I am over pricing my cakes.
One gave me the classic, “wow that much for a cake? geegs”!!.
The other said – “Gosh if you want to get business you need to price more appropriately lady!!”
This attitude is not new to me and I know it’s not new to most of you. But we all go thru what I went thru this week. Wondering….. !!! those second thoughts? those doubts?
Am I really over charging my cakes?
May be if my prices were better, I’d get more orders.
May be I can reduce the price of my ingredients.
So what do you do when you have these question in your head. If you are like me, you go back to the spread sheet. Put those numbers down and figure it out.
Well that’s what I did today. I picked one of my popular cake sizes and made the costing. Here it is!!
Now I shared the basics of cake pricing with you in my previous post on Cake Pricing a beginners guide so won’t get into how to pricing here.
Guess what? I’m not over charging at all.
In fact I’m just about covering the cost and my wages. And trust me – this is just the basic. I have not even added a premium for
- the time and money I spend to learn cake decorating.
- All the time and money I spent in trial and error.
- All the fancy extra equipment such as Airbrushes and dehydrators that we buy
So trust me this is still a modest costing.
Let me ask you – When you make the cost of your cakes do you just add cost of ingredients?
Do you remember to add all the extra cost? such as
Shopping for ingredients? The time you spend on research? The time you spend preparing and baking your cake? the gas, the oven, electricity.
Do you know that your business card and your tax accountant cost money?
Do you ask yourself how much should I pay myself? Often people ask me how do I decide my own hourly wage.
I think the answer is simple – How much do you think your time and work is worth?
Here’s a simple way to get to the answer.
If someone employed you what would they need to pay you , so you would accept their job?
Would you take that job if they paid you 40 dollars an hour or would you say -no I need at least 50 to make it worth my time.
The minimum wage in Israel is 25 so when I started cake decorating I did actually charge only 25 per hour. Now I have moved up to 50 because I think that’s modest.
It’s definitely not what an artist should be paid but I’m still OK which what I pay myself. So, you see; it’s up to you!! And what you think is fair to you!
I have a post on Pricing Cakes – A beginners Guide, often I get some cake decorator who will message me about pricing and vent out that she is not getting cake orders and that people are complaining about her prices.
So what do you do in situations like these? Well the answer is simple.
You cannot please everyone and not everyone is your customer. I would love to own a Lexus but I cannot afford a Lexus so I am not their customer. You get the point?
Price vs Quality
Often people consider reducing the cost of the cake ingredients.
Yes, you can reduce the cost of the cake. How?
- Are you going to make a basic cake instead of your premium recipe?
- Are you going to use an inferior brand of Fondant to reduce cost?
If you do that – Are you really reducing cost or are you actually reducing quality too?
- And if you are reducing quality than is that really the direction you want to take your business in? Isn’t that what supermarkets sell?
- Are you competing with the supermarket prices?
Personally, I use my premium recipe that adds more to the basic cake cost. I use real good quality chocolate along with my Cocoa powder and I use Satin Ice which is thrice the price of a local brand of fondant. But I would rather charge more than change any of that.
To me, no matter how gorgeous the cake looks on the outside. If it don’t taste as good, it’s not worth all my time. Most of my customers come by word of mouth and it’s nice to see that they always remember how tasty the cake was!!
Marketing / Advertising
So how do you get more orders for your cakes? By reducing your price? NO!!
Pay attention to marketing / Advertising instead.
Look at marking your cake in the right places.
Find out where the people that can afford your cakes really are?
Spread the word thru friends and colleagues, give free samples to the right people.. etc.
I will touch up on Marketing in another post and chat more on that subject too.
For now, I do hope you find my little chat/ blabber useful. Feel fee to share your thoughts with me in the comments below.
You may also like….
Planning to become a professional Cake Decorator? – Three Business Tips for an Aspiring Cake Decorator.
Want to learn more about Pricing ? Cake Pricing – A Beginners Guide –
Do you bake as a Profession or Hobby? – Cake Decorating as a Profession or Hobby?
Find communicating with customers a challenge – Effective Communication with Customers