I'm excited to announce that a couple of days ago, marks one year since I walked out of the corporate machine and entered the cake decorating world at full speed.
A couple of months ago I posted about my 10 month mark and I thought I had learned lots. But in the last 2 months, there have been many more eye opening moments. One of them in particular, especially due to reaching the end of our financial year, was the 'real' cost of everything.
I know I have current and future clients reading this post as well as other cake decorators, inspiring bakers and bloggers of all sorts. This post isn't about me having a whinge about how 'expensive' things are but it's more a question for my fellow decorators and anyone else who is in the similar business to consider.
A cute little picture of my cousin's dog Flynn to ease the seriousness of this post - Woof! :)
What is your 'real' cost? I'm not just talking about how much it costs to bake a cake but also how much did it cost you in electricity, rent, admin time, labour, training, cake boards...etc? It may sound petty to consider things like electricity, rent, training and admin time, but if you don't consider these costs upfront, they will still exist later, and will only end up coming out of your profits.
Working out how/what to charge is always a hot topic with cake decorators and this is my take on it based on my experience. Yes, look at what the competition is charging and what they are doing (and what your clients expect to pay), but don't base everything off that. Cutting your competitors prices by 10% every time is not a very solid strategy. You need to know what YOU have to charge to cover costs and what additional margin/profit you want on top of that. Once you work out the numbers, they speak for themselves. You will also quickly realise that just because a customer wishes to pay a certain value for your work, you might actually be losing money taking in that order or not even making any money at all.
Your competitor may be skimping on quality ingredients, decorating as a hobby or may not have even worked out their true costs and may in actual fact be working for less than $5 an hour. Do you want that for yourself? By just copying what is out there and not knowing for sure if they are correct, it is not a sustainable strategy. We all want to be proud of our work and be respected for what we do but by undervaluing yourself, you're just digging a big hole for yourself to jump in to. So just think about it ...
I'll now leave you with an interesting article I stumbled upon recently from Melissa Capyk of Wild Cakes in Canada - Why Does a Cake Cost so Much?