Your Business, Your Rules

A few weeks ago, I talked to you about not relying on friends and family to be your long term clientele. The fact is, they’re going to be your clients – at least in the beginning. What happens when you have friends and family who genuinely want to order from you over an extended period of time…but you still just don’t feel right charging your bestie real money for a cake? What if the same bestie insists on paying you real money for your effort (congrats, you’ve got a good bestie. Hang onto her!)? What if the same bestie wants to order from you all the time, but constantly expects a really good deal? (Oh, that sucks, what a bad choice of bestie. Dump and run I say.)

This is one business conundrum which has a very simple solution.

Very early on in the establishment of the business, work out what your official Mates Rates Policy (or in the US, what your “Friends and Family Plan” 🙂 ) is going to be.

First, work out who are the ONLY people you will work for free for (because there might just be some.) Make sure that is a *very* small group of people and for heaven’s sake do not let anyone know, not even them until they actually order something. There may no nobody at all on this list. Not a single soul. That’s okay. This is your business, these are your rules.

Then, think long and hard about who you are willing to call your friend or family for the purposes of this policy. Your sister, the woman you see in the playground twice a day but hardly know, your long lost cousin Antonia, your friend from mother’s group, your old work mate. You would be amazed at the people who will ask for a discount and you do not want to be caught out when they ask. Some people deserve this deal. Some don’t. Be very clear about who those people might be.

Then think about what you’re willing to offer to the people you’ve decided fall into this category.

You want to give them something truly of value (because in essence what you’re valuing is their relationship to you, more than the actual product in question) but not something so over the top that you’re losing money every time they order. A discount of some sort. A dozen free somethings if they order a big something. Free delivery. Wholesale pricing. Extra special flavours of something. Free cake stand hire. Whatever. Work out what you can do for them without causing yourself any real financial or emotional dramas.

Decide what your policy is for these people and be very specific. Write it down somewhere. Don’t advertise it to anyone. Ever. Then be open, honest, and fair about it by actually sticking to the policy. In fact, offer it to (very good or close) friends before they’ve even asked for it AND use the language of “the Official Mates Rates Policy” (or whatever you’re choosing to call it.)

Here’s how the conversation goes with someone you’ve pre-decided is eligible for the discount:

“I need a cake for Ava’s party. What do you charge for a princess cake to feed forty kids?”

“Normally I’d charge $300, but the Official Mates Rates Policy is a 50% discount, so for you it will be $150. Does she like chocolate or vanilla?”

This is a win-win on both sides. Win for you as you’re doing the right thing by offering a friend a sweet deal but not busting your chops, and a win for her because she knows she’s going to get seriously awesome cake but for a good price. Between you and me, my friends and family know I’m highly likely to exceed their expectations anyway just because I love them, but making them a concrete offer like this manages their expectations (from a cost point of view) from the very beginning.

Here’s how the conversation goes with someone who you’ve pre-decided is NOT eligible for the discount (and yeah, you might know them pretty well. Makes no difference to how you handle it.)

“I need a cake for Ava’s party. What do you charge for a princess cake to feed forty kids?”

“I charge $300 for a princess cake, with all the sparkle she can handle! Does she like chocolate or vanilla?”

“Oh, but we’re cousins! Can’t you do any better on that price?”

“No. That’s the best I can do.”

(Allow the silence to settle as they decide what to do next.) Either they will order, or they won’t. Makes no difference to you. You are not in the business of freebies or cheapies, remember?

There are a few key points to making this Mates Rates work for you:

  1. Be confident about your decision. You already know who you’re willing to offer the deal to and who you’re not. You’ve already done the hard work of thinking about the WHO and the WHY of this deal. By the time they get around to asking, you already know the answer.You’re simply educating them.
  2. Don’t be bullied. You’re in the *business* of cake (not the hobby of cake), and you are most certainly not in the business of freebies or cheapies.
  3. Don’t be rude. It’s totally legitimate for them to ask for a discount – but it’s legitimate to be nice when you turn them down.
  4. Don’t advertise that you even have this deal in the first place. Nobody needs to know. And since it’s a CLEAR and DEFINED policy, chances are the very few people you offer it to are unlikely to brag about it to their friends because they already know you’re unlikely to offer it to anyone else. It makes them feel special because they ARE special. By using the actual words “official policy” you are drawing a very clear, permanent line. They know it. You know it. 

Let’s be clear about something. You’re not making cakes all night just because it’s fun (although it is.) You’re making cakes (and reading this blog) because you are serious about making an actual living from this.  

This is YOUR JOB (or one of them at least.)  This is how you PAY YOUR BILLS (or some of them at least.) Treat it as such.

If your friends and family truly want to become your long term clients, they’ll understand this.

You are in the business of cake, NOT in the business of freebies or cheapies*

Mates Rates Policies are important to small businesses, they really are. So – go. Figure it out this week. Let me know in the comments if you’ve developed your policy, and if you’ve had the chance to try it out on anyone yet.

*if you are actually in the business of freebies or cheapies, please stop reading this blog. This blog is not for you.

20 comments on “Your Business, Your Rules

  1. I love how you explain it straight up this is the price for that cake, your discount would make it this price! it shows them they are getting value.
    As you say if they don’t wish to pay that much they can say no. I am currently a homebaker and only make for friends and family as I am not currently licenced I had a ex-workmate of hubbies contact me about a trolls cake and I explained I hand make everything (fondant etc) make sculpted cakes. She asked for me to make it for $40 I explained I couldn’t as that would cover ingredients and probably not even the power I would use. I think she wanted a round cake with a topper and I may have been able to do this however my aim this year is to improve my skills and something like that wouldn’t do that as my niche is sculpted cakes.

    1. Hi Michelle – I love that you are choosing orders based on what you want to do, that’s awesome and it’s the ONLY way to drive your hobby or business in the direction you want it to go! 🙂 Bravo!

  2. I usually keep my discounts to friends and family when the event is for a friend or family member. I have had friends order desserts for events they are throwing for someone I don’t know. i.e. a co-workers baby shower. Some have asked for a discount on those cakes. I’m always torn and have gone both ways. What is your thought on this? thanks!

    1. That’s a really hard one – I think for me it would depend on who is paying for it. If it’s my friend/family paying for it, I’d probably apply my friends and family discount. If they are doing the ordering but someone else is paying then it’s full price.

  3. I don’t give any freebies. I offer a discount to a few business contacts, but that is for their personal cakes and only because they have done favours for me, ie recommendations to their clients, free photo shoots etc

  4. Very well written – and yes, I decided from the outset what my policy would be, as follows:
    My immediate very close family are always totally free.
    My best friend (who is Godmother to my kids) and her children (one of whom I am Godmother to) all get totally freebies.
    The above have never ever asked for cake – I am always the one to offer them and the kids love designing what they will have and challenging ‘Auntie Jan’ so actually good for me, too!
    I love all the freebies I make, even the Minecraft (!).
    I also make freebies for certain registered charities – some national and some local – I cant support everyone who asks me, but I select the ones I feel the most affinity with.
    Everyone else pays and pays full price – no-one has ever asked me for mates rates, or suggested a discount. If their budget is an issue I will design to meet their finances; the biggest discount will be perhaps I will choose not to charge for a bit of modelling if they are pushing the max, but they are very few and far between.
    I have been taught never to mix business with pleasure, hence I keep my cakes for friends on the business basis and not get drawn into ‘mates rates’ – anyhow, I’d never remember who was going to get what discount, so easier that no-one gets discount, or they get it totally free.

  5. Isn't it crazy how it's our FRIENDS which can make us feel like we're ripping them off? It's such an odd thing – and especially where weddings get involved, things can get especially emotional. Stick to your guns! -M

  6. Close Family – Free. My 'friends' that i decide to do a good price for – I learnt the hard way after doing one of my closest friend's wedding cake. She really made me feel like I was ripping her off, when she paid $400 for a $1200 cake! I vowed that 'friends' (only certain ones – not everyone I know!) would get a 20% discount, end of story. You're right – you HAVE to stick to it.

  7. Hello and thanks for your comments! 🙂 I totally understand the frustrating process of working out what to charge. Cake pricing is a fascinating topic and it's the one people most often ask about – wanting to know the same sorts of things you mention, which essentially boils down to, "What am I worth?" I will cover this topic, but it's a BIG topic, so it might end up a series of posts or a webinar. 🙂 Cake pricing is right at the top of the list, I promise! – M

  8. It's a bit like I imagine winning the lottery is – suddenly everyone who ever knew you comes out of the woodwork! 🙂 I love your use of "threaten" because that's exactly what it is if they go and advertise that you give discounts. It's just not the word that you want getting out there, is it? Thanks for commenting and keep me posted on how it goes. 🙂 – Michelle

  9. Really appreciate you sharing your experience and tips! Thank you, thank you! I'm now getting orders from outside my close circle of friends and family. It's so hard to charge them the "real" price. But also, I don't know how to price my cakes too. Am I charging too much for my time? Too little? Should i really charge the 6 hours i took to decorate the cake? Maybe i took too long to decorate the cake? wouldn't be fair, right? Argh… *pulls hair*

    Can you please share how to price our cakes in one of your next articles? Pretty please? 🙂

  10. Thanks much for sharing!
    experienced customers who knew my family members ages ago but didn't contact for years… asking for buddy discount! and kind of threaten me that they will recommend my cakes for their friends in the parties.
    really hate that! now i know how to react! ^^

  11. You're most welcome – and after many, many years in business,I'm STILL shocked at the people who ask me for a discount! Keep me updated on how you do with this,not only the creation of it but implementing it.I won't lie, it takes a bit of courage – just remember who is in charge (you!) and therefore it's you who GETS TO CHARGE! 🙂 – Michelle

  12. Excellent, excellent, excellent! Bless your flour-y little heart . . .

    I've thought about a lot, but not this. Within the next day or two, my partner and I will sit down and put together our OMRP. And providing those wee little examples of conversations was all the money. Thank you!

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