Tuesday, August 11, 2015

"Have a Little Self-Respect And Charge For Your Work." Warning: Tough Love Ahead

If you like business advice where someone gives you hugs and tells you that you're awesome and uses lots of hearts and kisses, this isn't going to do it for you. But if you want some good advice, read on.

I recently peeked in on an online cake pricing group. I was horrified to see the low prices that people were quoting each other for fairly elaborate cakes. What I found most interesting is that people were saying "Don't charge any more than X amount," or "no more than x" when giving people advice on pricing.

This just demonstrates an "I'm not worth more than the minimum" mentality. Shouldn't you be trying to get as much as you can if you're in business? You shouldn't be trying to charge the smallest amount you could possibly charge, that just makes no sense at all!

I've written about this kind of thing before, many times, but really, whose fault it it that bakers are underpricing things? It's their OWN fault!

Now this is generally where I start hearing from people that I'm being mean and unsupportive, and that I should be a happy cakey cheerleader for people instead of telling the truth. However, I maintain that saying this is being more supportive than telling you to go "trust in your dreams" and end up earning $3 an hour. Think about this for a minute. If you don't want to charge enough to make a decent profit, is that anyone else's decision but yours?

If you're willing to drop your prices because someone tells you that you're too expensive, or because you feel like everyone DESERVES a custom cake at grocery store prices, or because you're afraid of losing business, don't complain that customers are cheap. That's your own decision. 

When you're willing to race to the bottom you end up at the bottom.

If you know that you need to charge a certain amount to make a decent profit, charge that amount. If you find that you can't charge that much and get enough business, it may just be that your area won't support another custom cake business. If that's the case, you'll need to decide whether you want to continue making not very much, change your focus to something that would be more profitable, or just do cakes for a hobby and not as a business.

But hey, if you don't want to listen to me, that's fine. I have a little backup...Here are some words of wisdom from Katrina Ryan, who owns Sugarland in North Carolina. Her business is consistently profitable and she knows what she's talking about:

"Kara asked me to talk about making money in a cake business. I wish there was a magic formula I could give you, but really it comes down to a couple of things. What are you willing to do to build your business, and what is the amount of money you'd need to make to have it be a viable business?

"Building a business is hard, and nobody wants to hire the baker nobody has ever heard of. That said, offering cakes cheap to "get your name out there" is a fool's errand. 

"If you sell great cake cheap, the customers who go for that aren't going to be your customers anymore once you raise your prices to a rate where you can make a living and have a life. You're better off packing up half a dozen cupcakes with a brochure and a card and dropping them off at every doctors office in town. Don't forget dentists. They are some of our best customers. Cultivate a client base that WILL pay your rates, even if they're not buying cake right now, vs. chasing every cheap order on Craigslist.

"Pricing cake is like building a house. The two major costs are time and materials. We have a base price for our "cake" which is about $3/serving. That is just cake alone. It's not torted or iced or anything.

"Even a basically designed cake is going to end up at least $5 or $6 a serving, which is the same as the frozen slab o' crap cake that they serve at Applebee's, so have a little self respect and charge for your work. 

"Our labor rate is $65/hr, or if I have to be involved, $100/hr. That might sound like a lot, but I've been doing this a long time, and I can decorate cake really fast. I also know how to do things that other people just don't. So, my time is worth more.

"Don't fool yourself about that labor rate. That's not what we make. That money pays the water and light bills. It pays for all the cake pans and spatulas and other supplies that aren't ingredients or disposables.

"By the same "house building" principle, I don't sketch a cake until I have a deposit in house. Will an architect draw up house plans hoping you'll choose them? No. Act like a professional if you want to be treated like one.

"It's really hard, almost impossible really to make a living on tiny cake orders. You don't pay any less for the eggs or the electricity for the oven for a cake that just says "happy birthday" than you do on the same 8 inch round that has $100 in decorations on it.

"Set a minimum order that you can live with. $150 is not a bad place for a beginner to start. Cakes that cost less than that need to be made in a commercial kitchen, where they are baking 20 cakes at a time for them to be profitable.

"Lastly, this is the part that nobody ever believes. People looking for cheap cake are your worst customers. They are the most likely to complain and generally make your life miserable. Nobody needs that, so just walk away."


So true. So have some self-respect and quit charging less than your ability and time are worth. And that elaborately-decorated cake is worth more than the $40 people in that pricing group are telling you to charge for it. Go figure out your own costs and ignore them.


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

1 comment:

k parker said...

Thanks! I will print this.