Harsh Reality for Cake Businesses for 2015 Part 1

The business of making custom cakes has changed a lot in the past six years or so. When I started (in the olden days) there weren't that many businesses in my area that made custom cakes, and the ones that made wedding cakes were even more limited. If people wanted to get a wedding cake it was more normal to go to a storefront bakery and choose from a book of designs. Now, with the advent of cake tv, internet cake photos all day and night, cottage food laws, and the plethora of classes and tutorials available online, that has changed.

And it's not changing back.

There's More Supply Now...

For everyone who says "just wait, as soon as one of those businesses opens it will fail within 6 months" I have to ask this: What about the other ten businesses that open at the same time? While I'm waiting for them to fail they're each draining off one wedding cake from the available pool of customers on the market. That isn't good for the bottom line.

For everyone who says "there's enough business to go around" I have to ask if they understand supply and demand. If that statement confuses you, click here to read this: No There's Not.

Which Drives Prices Down...

All of this added supply on the market means that prices are going to be lower. Here's a photo from a facebook group, location to be left to the imagination. I assume that this kind of thing goes on all over:
Aside from the fact that I'd get two of the 3 for $1 brownies instead of the 6 for $3 deal, this is what we're now working against. It isn't price gouging, it isn't undercutting, it's a NORMAL RESULT OF TOO MUCH SUPPLY. Part of it is also ignorance of how to price items appropriately, but here's the thing...

You Can't Tell People What's An Appropriate Salary For Them.

I can yap all day about how to price a cake, but if someone thinks that making $3 an hour is okay FOR THEM, I'm not going to get anywhere. And for some people, $3 an hour is okay.

Now, all of this is good for the consumer because they can get baked goods at lower prices from a cottage baker who isn't making much of a profit. But guess what, they don't care. Click here for another blast from the past on this subject: They don't care.

Prices are lower now and if you want to charge what you need to charge you're going to find a smaller pool of customers who are willing to pay that. Which means that your marketing better be at the top of its game because that's what's going to keep your business fully booked.

So that's part of what's changed on the consumer end of it, but what about cake decorators themselves? Tune in tomorrow for that part of the puzzle.

Part 2: http://acaketorememberva.blogspot.com/2014/12/harsh-reality-for-cake-businesses-for_31.html

Part 3: http://acaketorememberva.blogspot.com/2015/01/harsh-reality-for-cake-businesses-for.html


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