Why You Shouldn’t Start Your Cupcake Business with a Low Cupcake Price

A common issue that many new home cupcake businesses encounter very soon into their venture is that their cupcakes aren’t priced correctly.

When this occurs it’s because businesses are underpricing their cupcakes rather than overpricing.

Many think that because they’re starting a new business and want to get the first initial orders coming in, they must charge a cheaper price than they would like. This isn’t the case. You should be charging what they’re worth and what you deserve.

The big problems with underpricing your cupcakes in the beginning are:

1. You won’t be making anywhere near as much profit as you should be, making it almost pointless to carry on taking orders if you’re only just managing to cover the cost of the ingredients.

2. If you start with a low price and have lots of customers, it’s going to be very hard to increase the price considerably all of a sudden. This means that you will have to slowly increase the price over a long period of time, meaning that you won’t be making the profit you should be for a very long time.

3. A cheap price tag won’t reflect the quality of your cupcakes, confusing your potential customers as to whether you are actually selling a high quality product or not!

Customers will often pay more for cupcakes from businesses that have a shop simply for having the convenience of being able to eat them in the shop or quickly drop by and pick some cupcakes up. Just because you’re running the business from home doesn’t mean you have to be cheap, if you are offering a bespoke service then you should charge more too.

If your cupcakes are priced too high you can quickly and easily bring the price down much to the happiness of your customers.

If your cupcakes are priced too low and you have built up a good reputation it will be very hard to increase the price suddenly.

Making a Profit

Make sure that you are still making a good profit even in your early days. If you’ve planned correctly you will have factored in the cost all of the ingredients needed for making the cupcakes, the price of the decorations, cupcake boxes, ribbon and energy (gas & electric) meaning that you should know how much you need to be charging for each cupcake to cover your costs and make a profit.

If you’re using high quality ingredients for your cupcake recipes you should definitely be selling your cupcakes for as much as possible, but still stay within the threshold of what customers are willing to pay.

This will take some time to test out different prices but once you’ve found an amount where your customers are happy and you’re starting to make money then you know you’re going in the right direction! Once you get across to your customers that what you’re providing is of a very high standard they will be much more willing to pay that little bit extra.

Don’t be afraid of customers not coming to you for their cupcakes if you start with a higher price or decide to put the price up.

As long as you’re selling a superior product (cupcake) they will be more than happy to pay what you are asking. If however you do notice that orders drastically drop, then lower the price slightly making sure that you are still making money.

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