As a person who LOVES to help and bless others I must say at times I overrided the business mind because of the "on the spot pressure" to support great causes! But then suffered because I didnt meet my monthly goals! Its always great to take the moment after monthly profit and loss reports are done to reconfigure, rework, rebrand and restructure! So I'm sharing my hindsight thoughts on the very topic that many cakers (and small business owners) struggle with...discounts!
Discounting greatly affects your bottom line in your cake business PERIOD! I used to give discounts out quite frequently. But then would feel a horrific resentment at the fact that my business that everyone loved so much was edging near trouble's door! Not to mention I hadn't received a paycheck even after the 1st year from it which is quite normal but nevertheless I had goals to grow! So when I looked back over and saw that it seemed like the amount of discounts I gave per month were in the HUNDREDS I was floored!
As I took a deeper look on where I gave those discounts...many of them weren't due to customer dissatisfaction...it was just me being plain ole generous! Even when the customer didnt ask! And also saying yes to giving away desserts in lieu of financial support to organizations. Now do I believe in blessing people ABSOLUTELY!! BUT my error of building my business to be stabilized when I had more overhead then ever before should have taken precedence so that I could have been an even BIGGER blessing more than the strain to just continue on!
Now that I have had the chance to increase my business and relocate...there are some tips I'm giving even myself!
To give discounts...yes/no? I could give you a yes/no answer but this is completely up to you and what feels good for your business. But if you feel off/wrong/annoyed/taken advantage of, you end up resenting the entire order. You should NEVER feel annoyed at blessing someone! So!!! I decided not to discount UNLESS it was part of a special event I was offering and even those are strategized around times where you would expect an increase in business and giving a discount wouldn't hurt your profit margin. Because let's face it....small businesses cannot afford to discount heavily every week as if we are Walmart!
When to discount your product?
If you own any type of specialty made to order product business or sell items that guarantee freshness then there's always an opportunity to discount! Especially when you have extras but even then even the "extras" could be used as great marketing tools to increase business! Strategize your discount... give a percentage off to NEW customers on the said extra product on hand so they get it fresh and may decide to try other items you have!!
I stopped offering discount "days" because some...most...EVEN ME... LIVE for the days when my favorite store does discounts. I really dont shop at some places otherwise! And here lies the problem for us! And while a discount may seem like that’s your only option, it’s not. You don’t want to set the precedent that every time your customer buys from you, it’s at a discounted price. That’s just bad business.
As far as charity...friends and family...the word itself- charity means love! So if I do something out of love I am reminded that I dont do it with expectation for anything in return or resent what I'm doing as I mentioned above! If you just cant do it just say no....in love! You dont have to go on and on about how people always want a discount or do something halfway because you've committed to discounting yourself! If you can then do it WITH LOVE! As for friends and family...if I do a cake/cupcakes...its their present from me! Lol Hey!! It's either the time or the money but it cant be both! If you ever want to grow in your busines you have to value both your time and money as it affects your business, your personal life, family and those who depend on you!
Understand that when you value yourself, respect that you need to make money in your business, and value your necessity to make income, other people will respect that. When you don’t, that’s when you get yourself into a lot of tough situations and not step into your business’ fullest potential by consistently undercharging.
I hope this has given you other business owners and cakers some insight!!! Either way cheers to growing through the greatest profitable season coming ahead!!
Be sweet!
- Asha, your friendly neighborhood Baker 💛