Monday, October 10, 2011

Pricing Undercutters Part 1

In every industry there are the discount businesses. They enter the market, advertise their low prices, and take business from the rest of the people who have their prices set at what will allow for more than poverty-level wages for the owners.

When a new cake business (or any other wedding profession, to be fair) opens and undercuts existing businesses’ prices, people get mad. Business owners go crazy on the online forums discussing what they can do to prevent people from undercutting their prices. The undercutters respond by saying that they’re new and don’t feel like they can charge as much as established businesses.

So what can you do to keep people from undercutting your pricing? Honestly, nothing.

If someone in any industry is priced so low that they’re not making a decent profit, one of two things will happen. They’ll eventually wise up and raise their prices, or they’ll get so much business because they’re so cheap that they’ll get burned out and quit. I’ve seen both happen in my area.

I’ve also seen people who have very low prices NOT get business because people tend to be suspicious of the lowest-priced quote that they get. Why are they so low? Probably because they’re not very good, right? That’s the general thought most of the time.

So what can you do to counteract the undercutters? If you have ideas leave a comment. I’ll post my thoughts on Wednesday.

 Kara Buntin owns A Cake To Remember LLC in Richmond VA, and cake supplies online at www.acaketoremember.com and www.acaketoremember.etsy.com

3 comments:

Jamie said...

You're right, we can't do much unfortunately. Thankfully the discerning customer will do their homework, and won't shop by price only. I'm not bargain priced, and my work isn't quickly and cheaply done either.

Jennifer said...

I ignore undercutters. They will either burn out or raise their prices. I also know that because for a short time I WAS an undercutter! I learned fast that I couldn't live like that.
I live by the mantra, do what you do and do it well.
But of course I live in an area where MANY decorators still think a wedding cake without a fountain and stairs is a crime, so when I make a modern wedding cake, brides come running!

Ultimate Cake said...

Geez - who the heck wants to be known as "The Cheap Cake Lady"? Not me. I have the most expensive cakes in town - and I'm still fully booked every single week and have to turn down orders.