How many times do we fill up with gas in a month, watching the gas prices rise and fall? Milk might be one price one day, and a little higher the next. We get the menu at a restaurant and notice that the entree costs a bit more this time. In each instance, someone made the choice to change a price. In my pricing blog, I talked about the computations required to accurately price a cake. Let’s face it. Most of us, including me, are unwilling to be that precise. We know that we are not going to change our cake prices weekly or even monthly. So how do you know when to raise your prices and how frequently should that happen?
If you are constantly booked and are turning away orders, you can raise your prices. Demand exceeds supply and those that want your cakes will pay a little more to be one of the winners who get to have your cake that week. Even if orders go down for a week or two…hold on. The customers who love your cake will find that inferior cake simply will not do. They will return like the swallows to Capistrano.
Maybe you are just noticing that costs are going up in general on all of your supplies and you need to make an adjustment. These price increases may come whenever warranted. Honor any bookings at the lower price, but begin charging the new price for all new bookings.
In my retail shop, we knew that we would be doing our best business in October to December. My cookie business was ridiculous. The last few years, I would raise the prices of everything as of October first. This way, I received an extra $1 per dozen on all decorated cookies during my busiest times. We could never make cookies fast enough and I am sure I could have charged even more for them. Since people open up their budgets more at the holidays, no one would flinch at the price increase.
The second advantage to this was that most of my summer brides would come in to reserve dates during the end of the year. I would be able to book them in at a slightly higher rate, which was perfect for me. With weddings, they book so far out, that you almost have to anticipate what that cake will cost you 9 months from now. Since you are probably not psychic (else why would you still be reading?!!), you need to take your wedding price increases ahead of when you book the majority of your wedding season cakes.
When I first opened my bakery, I had initially set a lot of my prices the same as the grocery store bakery I managed. One day, a man came in and asked how much my coffee cake in the case was. I told him. He said “for the whole cake?”. You KNOW that I raised that price the next day! I knew then that I was not in the grocery store anymore -and I had to leave that bargain basement mentality behind. I had amazing gourmet brownies that would not sell. I doubled the price and suddenly could not keep them in the case. Sometimes you really need to know who is shopping in your store!
The biggest key I can tell you on this subject is to not apologize for raising the price. You are entitled to try to make a profit. If you are not earning a living doing this, you will not be doing this for long. Other businesses don’t apologize and we should not either. Now that you have read this, is anyone going up?