How to STOP Undercharging and Raise Your Baking Prices
How to STOP Undercharging and Raise Your Baking Prices
Have you been thinking about raising the prices of your delicious home baked goods?
Maybe you’re here because you’ve been struggling to make a profit in your home baking business.
You’re working SUPER hard and you’re baking practically every day of the week.
You say no to 9/10 social gatherings because you always have baking that needs to get done.
You’re up early every morning and working late every other night.
While your family is barbequing outside, you’re in the kitchen baking orders for tomorrow.
Then you look at your financials at the end of the month and see that you’re STILL earning small change. Despite all that effort and sacrifice! 😒 How is this possible?!
My friend, I know exactly how you feel because I’ve been there.
If your Home Bakery has enough clients and orders to keep you this busy in your baking, that’s awesome! Congrats to you!
But for a business to succeed and be sustainable, you’re going to need more than just heaps of orders.
You’re going to need each order to be as profitable as it can be.
“Why Should I Raise My Prices When Customers Prefer Cheap Products?”
Be very careful how you think about pricing and customers. If it were true that all clients prefer cheap products, then companies with super expensive products (like Ferrari, Prada and Rolex) wouldn’t exist.
Truth is that all customers are NOT the same!
YOU are not your ideal client. Just because YOU wouldn’t spend a certain amount of money on baked goods, doesn’t mean all other people won’t.
All people don’t want the same things. All of them don’t have the same spending priorities as you.
People spend money on fascinating things!
My in-laws, for example, never ever eat out at a restaurant. BUT they’ve spent thousands on collecting drawers upon drawers full of DVD’s. Home entertainment is a priority for them, so that’s where they spend their money.
My husband and I were quite poor when we just got married. We slept on single mattresses on the floor during the first year of our marriage. BUT, we ate out at least once every 2 weeks – because eating delicious food is a priority for us!
All clients don’t prefer cheap products with cheap quality. Don’t fall for the assumption your mind is making.
There are thousands upon thousands of people out there who will gladly pay good money for superior products like yours.
RELATED: 6 Steps to Pricing Your Home Baking With Confidence
“Isn’t it Greedy to Charge Higher Prices?”
In short, not at all. Just like plants need water to survive, businesses need money to survive.
If you want to bake as a hobby, that’s fine. But if you want to turn your baking into a business that actually gets you a salary every month, you need to charge properly.
Charging your clients decent prices is not about being “obsessed with money” or “greedy” or “milking clients” for crazy profits.
It’s just a basic fact of business. Businesses need to make money or else they die. It’s just that simple.
The Hamster Wheel that Doesn’t Get Your Home Bakery More Profit
Deep down we KNOW our baking business needs to make more money so we try to fix this. But we try to fix it the wrong way!
1. We so easily assume that our businesses aren’t growing because we “need more Instagram followers” for example. But it’s 100% possible to have a huge Instagram following and still not make enough money to even bake part-time!
In fact I know bakers with a following of like twenty thousand people but they are not making enough money from their baking business to do it full-time. “Popularity doesn’t pay the bills.” – Jasmine Star
2. Another super popular misconception most home bakers have is that they just need MORE clients and MORE orders for their business to do well. And they think the way to achieve that is MORE advertising – resonate with this one?
But it’s a flawed and dangerous approach.
Even if you advertise and market your business and bring in more clients, your business will STILL struggle.
It doesn’t help if you have a heap of clients but you still undercharge ALL of them. That’s not a recipe for success, that’s just a recipe for burn-out.
The answer to your problems of burn-out and lack of profit isn’t getting more and more clients.
Here’s a metaphor to explain my point better…
Let’s say your success is this water tank on the right. When it’s full you’ve reached your profit goals. But YOU have to fill your success tank with water from this river on the left – which represents your potential clients & profit. The only tool you can use is a water bucket to carry profit from the river to the tank.
When you’re undercharging your clients it’s like your water bucket has a hole in the bottom. So no matter how hard you try, loads and loads of water won’t make it to your profit tank.
And now you’ve got 2 options:
1. Run faster and faster from the river to the tank and scoop larger and larger amounts of water that you can barely carry.
OR option 2 which is to…
2. Plug the hole in your bucket!
Which option do you think is more logical? Which option is more sustainable?
It’s to plug the hole in your bucket, right?
In the exact same way the answer to your combination of burn-out and low profit won’t be solved by working faster and scooping up more clients.
The solution to home bakery burn-out lies in charging enough for the clients that you DO have right now so that all the water you carry and all the work you do goes into your success tank and contributes to your profit & success.
Does this make sense?
How to Charge Higher Prices: Step-by-Step
1. Spell out for yourself what makes you valuable as a human being.
It’s not your work (because babies are valuable even though they do zero work). It’s not people’s praise (because people are biased, flawed and lie regularly). It took me a long time to see it, but eventually God helped me realize that I’m valuable because HE loves me. Not because a client loves me.
Really take time to think about what it is that makes you valuable as a person. Once you establish this, you’ll feel way more liberty to charge the prices you’re supposed to.
2. Download the Pricing Calculator that calculates your recommended selling prices FOR you!
No need to do complicated math!
🌟 You can download the Pricing Calculator in the Free Resource Library >> click here to join the Library. If you’ve already joined the library, then open the last email I sent you and click the blue link to the Library right at the bottom of my email.
3. Read the instructions for how to use the Pricing Calculator. Then calculate the selling prices of your baked goods.
4. Update your prices! Simple as that! If the price increase is quite drastic, then you can increase your prices halfway now and the rest of the way 3 months from now. You never need to apologize or explain to customers when you raise your home bakery’s prices. Does any store you know do this? Probably not. Just raise your prices and move on with your life.
5. How OFTEN to raise your prices: You should re-calculate and consequently raise your prices at least once a year. Ingredient costs are constantly going up, so you need to keep raising your prices every year.
“What if I Feel the Recommended Selling Price is too High?”
The most important thing you need to know about home bakery pricing is that it’s not about your feelings! I know this sounds harsh, but let me explain.
Pricing is a mathematical, LOGICAL thing. If you build a business according to your feelings, you won’t make sound business decisions.
Logically, you need to charge the prices the Pricing Calculator recommends if you have any hope of CARRYING ON with your Home Bakery. I know it’s hard! But I’ve come to understand that a successful business is built on logical decisions, not emotional ones.
If you keep undercharging and giving discounts because of your feelings, you’ll burn out OR your business will.
I HAVE SOME DEEPER QUESTIONS FOR YOU:
>> Be honest: are you pretty much working all the time? Weekends? After hours?
>> Does you take in every order you get because you feel you NEED this money for your business to survive?
>> Are you undercharging because you’re so scared that if you raise your prices, your customers will get upset and leave?
>> Are you close to burning out? Are your relationships suffering because you’re maxed out and can’t keep up with everything?
All these are symptoms of not pricing correctly.
If you raised your hand to any of these symptoms, then the “Confident Pricing & Profit Kit” is the perfect fit for you! The Confident Pricing & Profit Kit is an online course for home bakers that takes the stress out of Home Bakery Pricing & Bookkeeping with done-for-you templates and systems.
👉 Click here to check out the Confident Pricing & Profit Kit
What if a Client Complains About Your Prices?
If a client complains about your prices, then they are simply NOT your ideal client.
Truth is there will absolutely be clients who aren’t a good fit for your home bakery – and that’s ok! You don’t need everyone to like your business in order to be successful!
Handmade, homemade baked goods are luxury items and extremely valuable. Clients get something that’s made FRESH, just for them with top quality ingredients. It’s not a week old and with cheap ingredients like in the grocery store!
Even though there’s a huge market for this HIGH QUALITY type of home baking, it’s not for everyone – especially not “budget clients”. I’m sure you’ve encountered budget clients before!
If someone complains about your prices, you can politely refer them to the cheap, semi-stale stuff you find in the grocery store’s baking section.
How you determine your prices is none of your client’s business.
Do these clients do the same thing when they go to restaurants?… “Excuse me KFC cashier, but that cook of yours back there has a trainee badge and is new to the cooking scene. So, I’m only going to pay half for my order.”
No! It’s not even an option at ANY restaurant.
YOUR PRICES ARE YOUR PRICES. It’s not your job to “convince” clients that your prices are fair. Don’t take the bait! If they doubt your prices or complain, politely refer them to the grocery store’s baking section.
You can use this script:
“Hi NAME 🙂 I would have loved to bake for you, but unfortunately my prices are my prices. Every item is handmade with high quality ingredients and care. These things are very important in my business and cost a lot to keep going. If you’d like something more affordable, I highly recommend [local commercial bakery/grocery store]. I hope your event is wonderful! Best regards.”
A Bonus Tip on “Budget-Clients”
On this note, be careful not to market your baking as “for everyone and every occasion” because then you WILL attract budget clients who complain and ask for discounts!
Instead, focus on the fact that your bakes are a full on luxury, HIGH QUALITY, gourmet experience.
RELATED: 4 Essential Tips for Marketing Your Home Bakery Business
Closing Thoughts on Raising Your Home Bakery Prices
I know first-hand how scary it is to raise your prices! I get it.
But your business NEEDS you to raise your prices. Because if you don’t, it won’t survive.
Clients that aren’t willing to pay more for your high-quality, homemade baked goods, probably weren’t your ideal clients in the first place!
But take heart because there are PLENTY more clients for you out there!
If you’re feeling overwhelmed or anxious about your pricing & business finances, why don’t you get my financial templates so you can easily do your finances in just 10 minutes a week?
I’ve put together an online course with everything you need to confidently price your bakes and handle your finances.
👉 Click here to check out the Confident Pricing & Profit Kit
I trust that this post has FINALLY given you everything you needed to settle the issues of raising your prices in your home bakery!
If you have any further questions, share them with me in the comments below and I’ll get back to you as soon as I can! 😉