Showing posts with label pricing. Show all posts
Showing posts with label pricing. Show all posts

Wednesday, August 10, 2011

How to Determine a Cake Budget

My friend Stacey (who makes the best tasting "Crunch" snack ever!) has written a wonderful view of cake budgeting and the how's & why's that go into it. Brides will find it very helpful as they set up a wedding budget, and vendors will find some great tips on what questions to ask a bride to guide her thru the ordering process.

I am happy to share her blog article!

http://staceyssweetshop.blogspot.com/2011/08/howd-you-arrive-at-that-number.html

Friday, July 8, 2011

Pricing: Getting Your Mind Out of Yesteryear

A fellow caker sent me an email with a pricing question. It seems her mom made cakes in the 1970s-1980s and was frequently telling my caker friend that she was overpriced, reminding her of how much mom sold cakes for 'back in the day'. My friend was asking me, "Was mom underpriced or am I overpriced? Have things REALLY gone up that much?"

This type of thinking is more common than anyone cares to admit. Many folks get their mind locked into a certain era in time and their vision of what pricing trends are today are blocked by their wall of yesteryear's thinking. Plus, as we age, time seems to stand still. I remember a few times when I have referred to something that happened during my high school days ... then I have to pause and remind myself that was (gulp!) 35 years ago!



A friend of mine who is a realtor tells me that the hardest client she has when it comes to selling a house is an older, retired couple who just can't believe their house is worth THAT much money. If they bought the house for $20,000 forty years ago, they figure they are doing well if they can sell it for $40,000. My realtor friend says the hardest part of her job is convincing them the house is worth $110,000. The couple's idea of pricing is blocked by the wall of yesteryear's thinking.

What I shared with my caker friend is a little of my own history.

In the late 70's/early 80's, I was charging 75 cents a serving for wedding cakes. that included delivery, set-up, AND I'd stay and cut-n-serve it! Someone told me back then they had a relative in another state that was charging (gasp!) $1.25/serving!! I remember saying, "Wouldn't it be great if I could charge $1/serving!" And I think we ALL did it on the side back then! (health license? you needed one of those? No kidding? Huh! Whadda ya know!)

So .... an 8" round 2-layer cake that serves 24 at 75 cents/serving = $18. but .... since I didn't know much about proper pricing structures back then, I probably charged $12 or $15 for it.

In 2006, I was charging $1.75 for cake and $3.00 for the cake package: cake, plates, forks, mints/nuts, punch/cups, tablecloth, delivery, set-up, cut-n-serve, clean up and tear down. Within a year or 18 months, I was up to $3.50 just for the cake. doubled the price after I became educated about current cake pricing trends and a few good lessons on how to develop a proper pricing structure.

Yes, things HAVE gone up that much. In the 70's we all gasped when gas went up to oh my gosh 36 cents a gallon! We thought for sure gas rationing was coming with the price so unbelievably high! McDonalds used to have a commercial showing a guy counting his coins and ordering a hamburger/fries and coke ".....and we give you something you dont' expect .... change from your dollar!" You could get a whole meal AND change from your dollar!! Now we feel lucky to get ONE THING for just a dollar.

I sold little quarter sheets for $8 back then. The infamous "star" cakes (Wilton shaped pans) I sold to my friends for $12 or $15 because they had so many colors and were so much work. Today, if I got desperate enough to make one of these, they would have a price tag of $35 or more.

It's hard to imagine we actually made money back then. But we did. My husband worked a factory job and during the 1970s recession he was lucky to work 4 or 5 months a year. My cakes paid our rent.

As we age, we like sharing stories on how much things cost us 'back in the day' (don't even get me started on the price of a Hershey chocolate bar today!) but we also have to remember that these are stories, not pricing guidelines etched in stone, never to be altered or adjusted to meet the costs and inflation of today.

That's what my caker friend needs to remind her mom ..... that mom's pricing was probably just fine in 1972. But forty years later, things cost just a little more!

Thursday, January 20, 2011

Pricing: Add It Up!

I realize I seem to do a lot of articles on pricing and pricing issues, but in the (wedding) cake business, its a point of frustration for baker and client alike. I recently heard a story from a fellow baker that is a wonderful lesson and I'm happy that she agreed to let me share it here.

As I've written before, it is not uncommon for a baker to charge for a consultation or tasting. (http://cateritsimple.blogspot.com/search/label/consultation ) The baker incurs some expense in supplying various cakes, fillings and icings for the consulation, plus the "lost opportunity costs". Some bakers charge this fee, some don't. Some apply it to the order if the cake is ordered, some don't. It is one of the items I encourage brides to ask about as they make appointments.

In another article, I shared how my brides have told me that my higher-than-the-competition per-serving price can end up being cheaper than the "cheaper" place. (http://cateritsimple.blogspot.com/2009/10/lowest-price-isnt-always-cheapest.html )

As a bride does her comparison shopping (which I strongly encourage), she needs to take careful note of the various fees/charges that may apply and add them up.

Here's the story I want to share:

A client canceled a consultation appointment when she found out there was a $10 charge for the consultation, giving a reason that the competing bakery did free consultations. This competing baker's pricing was also higher per-serving than the first baker.

Let's do some theoretical math to see how this works out and to illustrate what a bride should look for.

Client is looking for a cake to serve 50 people.

Baker A charges $3/serving plus a $10 Consultation Fee.
50 servings x $3/serving = $150 + $10 consultation fee = $160 total cost.

Baker B charges $3.50/serving and consultations are free.
50 servings x $3.50/serving = $175 total cost.

It is costing the client fifteen dollars more to get the "free" consultation.

It is a given that the bride/client needs to also consider the taste of the cake, the quality of design and execution of the work, and not just the price per serving or not just whether a consult is free or not.

Baker A tells me that she charges the $10 consult fee because many of her clients know what they want and order their wedding cake via email or phone. She does not want to just add in the cost of the consults into the base price because she does not want to charge extra to those who do not need the private consulation appointment. It is how she keeps her expenses covered and her pricing fair to all of her clients.


When planning a wedding, people seem to forget how to "Do The Math" (see this blog article where I discuss that: http://cateritsimple.blogspot.com/search/label/Do%20The%20Math ) and this article is to show why it is important to always, always, always ask questions and keep track of the details.

They add up and can sneak up on you!

Wednesday, January 5, 2011

Bakers: Help in Pricing a Wedding Cake



A question asked frequently ...... FREQUENTLY...... in the cake world is "How much should I charge for this cake?"

It's not a simple question. Most bakers struggle with coming up with a good pricing structure that works for their business. There are SO many factors to consider: cost of ingredients, overhead, labor costs (most bakers overlook this because they fail to factor in their time as an expense), skill value and more. Even what part of the country a baker is in can be a factor. New York wedding cakes have a higher cost base than, let's say, one I would make here in Indiana simply because I can rent a shop much cheaper in Indiana than what a baker would have to pay in New York, making my overhead much lower than the NY baker.

One of the best articles on this topic is from my friends at Cakeboss Software for Bakers. Here is the link to their article. If you are a new baker who is just setting up a pricing structure for a new business (or an "old" baker who struggles with pricing in general!), I'm sure you'll want to print out this article and hang it next to your desk area for easy reference!!

http://www.cakeboss.com/PricingGuideline.aspx

Sunday, October 3, 2010

The Question NOT to Ask: "How much are your cakes?"

Sounds too simple. A bride is researching costs for her upcoming wedding and it just sounds simple to call a baker an ask "How much are your wedding cakes?"

Unfortunately, it doesn't work that way. It's like calling a home builder and asking, "How much are your houses?" and expecting to get a one-price answer. We all know the price of the home depends on the square footage, how many rooms, size of rooms, type of extras like fireplace, air conditioning, cheap or expensive carpet, if there is a dishwasher or not and the quality of the dishwasher, ultra fine wood cabinetry or cheap buy-em-in-any-home-improvement-store caliber. This list and more affects the final cost of the house.

Cakes are the same way. A baker's version of square footage is "how many people does it need to feed?" How many rooms and the size of rooms can be compared to the number of tiers and what size those tiers are. And dont' be mistaken. Many bakers charge more for small tiers (sometimes also known as "mini cakes") because these are harder to work with and therefore incur higher labor costs.

"Extras" on a cake include things such as hand-made gumpaste flowers or fondant figures, some of which are VERY labor intensive and can take hours to make for a wedding cake. As I've pointed out in other columns and other writings, some sugar flowers can take an hour to make just one, so a cake with a small assortment of just 20 flowers will incur 20 hours of labor and if we assume $15/hour for the sugar artist, the bride is looking at $300 JUST in the labor costs. This doesn't include the costs of materials and any overhead the bakery must cover. For a cake for 100 people, this breaks down to $3.00 per person JUST FOR THE FLOWER WORK.

Another example of "extras" can be cake and filling flavors. A white cake with plain white buttercream icing as the filling is pretty quick, simple and easy for a baker. Customized and exotic cake flavors and fillings can have higher ingredient costs and additional labor costs.

This is why bakers encourage a one-on-one consutlation appointment with brides so both of them can have a conversation about the bride's vision for her wedding cake and the baker can get a better idea of what the bride is looking for, enabling the baker to offer a more accurate quote for the bride.

But to address the original problem of a bride trying to find out a general price range so she can determine her budget, I DO recommend calling bakers to ask the preliminary questions. Bakers are happy to help brides who are working to see what things do cost.

I recommend the bride tell the baker she is in the prelinary planning stage and is looking for an idea of what cakes to serve 100 will cost. It's helpful if the bride explains to the baker "I'm aware there are many factors that affect price, but I'm just looking for a general price range right now so I can establish the budget I'm going to need."

Being prepared with accurate and current pricing information greatly reduces the stress of planning a wedding for a bride!

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Saturday, October 10, 2009

The Lowest Price Isn't Always the Cheapest

This blog entry is being written shortly after a bride told me, “Even though your per-serving price is higher, you ended up being the best bargain for a cake.”

I’m learning a lot from my brides as they come in for their free cake sampling/consultation for their wedding cake. The biggest lesson they are learning is that the cheapest price doesn’t always mean it’s the cheapest cake.

Let’s share what my brides are discovering and sharing with me.

Many bakers have a “starts at ……“ base price. Then they add all the nickels and dimes for what my brides are referring to as “every little thing!” Now, some of the extra charges are justifiable because there are extra expenses involved …. Fondant is more costly than buttercream, any hand-molded figures are labor intensive, gumpaste flowers are very labor intensive (some gumpaste flowers take an hour to make just ONE).

Ask good questions during your consultation appointment. Keep a calculator handy and keep track. For example:

One bride was quoted $65 to wrap a ribbon around the base of a cake (a very popular design right now). And the bride has to provide the ribbon. For a wedding for 100, this adds $0.65 to the per-serving “base price”.

As a decorator, it takes me way less time to wrap a ribbon around a cake than it does to pipe an icing border around a cake. So this charge is very confusing to me.

Another bride was told to add the icing dots on a cake (another popular design being used with wrapped ribbon), would be an extra charge “….because the decorator has to put those dots on there one at a time.”

My reaction? “Duh! We put ALL decorations on one at a time!” I suggested she ask for the decoration that they put on all at once. The additional charge? $0.50/serving. For a wedding for 100, that’s an extra $50.

Many bakeries charge extra for more than one cake flavor in a wedding cake. Additional charge is ranging from $0.25 to $0.50/serving. Many charge extra for a filling other than buttercream icing (for example, if a bride wants red raspberry filling or chocolate fudge icing as a filling). Most common charge is $0.25/serving.

Ask about the delivery fee, then break that down by the number of servings to determine the real cost of your cake. For example, a $50 delivery fee breaks down to $0.50/person for a 100-guest wedding.

So let’s compare my cake price to a bakery who charges all of the above nickels-and-dimes. For the record, Cater It Simple does not charge an extra fee for any of the items listed above, with the exception of a delivery fee *IF* the delivery is way outside the Indianapolis Metro area.

Assuming a cake for 100, 3 tier, 3 different cake flavors with red raspberry filling in two of them and lemon filling in the 3rd tier, ribbon on the base with dots and scrolls as the design, delivered 15 minutes from the bakery location.

Cater It Simple’s price:
Base price of $3.50 x 100 = $350. Simple.


Other Bakery:
Base price of $2.25 x 100 = $225 (wow! Big cost savings! But wait ……)
Add: $0.65 for ribbon = $65
Add: $0.50 for design = $50
Add: $0.25 for cake flavor x 2 additional flavors = $0.50 = $50
Add: $0.25 for filling x 2 flavors = $0.50 = $50

ACTUAL per-serving price = $4.40 = $440

At first, the bride thought she was saving $125 with the other bakery, but she was actually going to spend $90 more.

Ask questions. Use a calculator. Don’t assume the lower price is the best bargain.

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Sunday, August 30, 2009

Less is More ....

I was watching a cake challenge show on the Food Network tonight and heard a phrase that is SO appropriate in the food world: "Less is more ... but in this case, less is more WORK!"

In the cake side of my business, brides will tell me they want a simple cake "...just something easy. No borders or anything." I'll smile and tell them, "Oh you want me to work harder on your cake, huh?" I then explain that the border covers the seam where the top and side of the icing meets and when they request no border, then I have to work harder to make a smooth transition from top to side. Less (decoration) is more (work).

Please don't misunderstand. I do borderless cakes all the time. But it's such a great example of how something "simple" is perceived to be "easier". Less ... is more.

In the catering side of my business, I get a number of brides who come into the shop with the idea of "we're just having appetizers because we have a tight budget." While appetizers can be much cheaper than having a plated, served dinner, sometimes a buffet can be cheaper or about the same price as just appetizers.

Why? Because smaller food is more work. Less ..... is more.

Picture it. If you need one single hot vegetable, such as buttered corn for 25 people, a caterer opens a big can of corn or opens a couple of bags of frozen corn, throws it on top of the stove for a few minutes, and bingo-bango, you got corn for 25 people. One can ... one pan .... you're done.

But ..... if you want one enough of one single appetizer to feed 25 people, there are multiple steps that have to be done 25 times. It takes much longer to prepare each individual smaller food. And with smaller foods, a hostess needs to plan on more pieces per person. Less (food per bite) is more (bites needed).

As you work on a tight budget, don't assume "little foods have a little price tag", which is the most common misconception I see. Talk to your caterer. See what they can work up for you. It may work out that appetizers are your best bet for your budget. But you might find you can get a simple buffet for the same or cheaper price than a lot of appetizer items.

Wednesday, August 12, 2009

Cost of Cakes .... some perspective

My friend Stacey had a great entry on her cake blog about cake pricing, and she graciously gave the ok for me to share the link. So check this out: http://staceyssweetshop.blogspot.com/2009/07/ace-of-cakes-and-cake-boss-article-from.html

Many of us grew up on grocery store birthday cakes. We're used to spending only twenty bucks on a birthday cake. As mentioned in Stacey's blog, shows like Ace of Cakes and Cake Boss have given the public a new view of cakes.

Unfortunately, these shows never share with the public what these cakes cost. (Did you know Duff, of Ace of Cakes, has a $1,000 minimum for one of his cakes?)

So check out Stacey's blog and the next time you go to order that super special cake with the bells and whistles, you'll be armed with some good information to make your shopping easier!
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