Responding to People Who Want to Negotiate Price

I haven't seen your cookies, but your prices are too low.  When people balk at the cost I point out the time, ingredients and materials required to make the cookies.   I had one person try to negotiate.  I told her I was actually quite busy and was doing the work as a favor.  I never heard from her again, but she isn't the kind of customer I want.

Thank you for the advice!  I wasn't sure if I should go in depth about it with people who try to negotiate or those who make negative comments about cost.  But you are right, I do not want customers like that.  I've edited my post and added two pictures of cookies I recently made

I charge $2 for each cookie but they are not decorated. I make classic Lemon cookies, Chocolate chip, Sugar cookies. I get people all of the time saying that it is too much for a cookie and I get some who can't get enough of them. I calculated my price and I need to get $2 a cookie. I just have to wait till they taste it and realize it is worth so much more.

I have friend in the Bay Area that charges $7 a cookie.  She is a talented decorator and is very busy.  

Let those customers go elsewhere. You are vastly undercharging for your work.

If someone asks if there is a discount for larger orders I just say that it doesn't make the process any quicker the more I make. It just takes that amount of time and that's the price.

I think some people just automatically ask for a discount, but most customers who have asked me (the Danes love a bargain and I get asked all the time) and I have said sorry, no -  are fine with it - they asked, I said no and then we get on with the order or leave it there. I think you are undercharging too - your cookies look wonderful

I agree with all posts above - especially about your pricing. You are too cheap  It's very easy to do the pricing, really. Start with what you want as hourly net income. Count how many cookies you make an hour. Add the prices of ingredients, packing, power, insurances, business taxes, etc. for this amount of cookies on top of your hourly income. Add consumer taxes last. Divide sum by amount of cookies per hour et voila, you have what you need to charge. Is that number even close to $2? No?

If you are doing this for a living, you will be in serious trouble soon. Based on your pictures I guess that at the moment you are paying yourself about 2-3$ max. an hour (for something as complicated as the mentioned character cookie set, no more than 1$ ) . I personally couldn't live off that... or not work enough hours as I still need to sleep.

With all this in the back of your head, I keep my fingers crossed that you will find the courage to stand up to people like that in the future. Be nice and friendly (they probably don't have the slightest idea how long it takes to make these kind of cookies!), but stay firm. You deserve a lot more than 2$ per cookie

Agree with most of this pricing formula. Though you should also be marking up your total costs, so that you make a profit as well, and don't just break even. If you grow big enough to pay others to make the cookies, then with this formula, there will be nothing left for you, the business owner, for your time and/or to invest back in the business.

lol  yes  I am a-roar at your last sentence  lol

Ariana, your cookies are great!   

Not that I am a whiz but I have conjured up a questionnaire form for my daughter to give to co-workers that asked about cakes.  It didn't have prices on it but if someone wanted an order then I would have done a separate sheet showing costs etc. and then wait to see if they'd order.

(I have to tell you though - I've sent cookies cakes pies  other items  and no one asked to purchase    lol      all say     wow    tasty   delicious     she should open a shop          no order    free always gets them   no order   lol          and then think   they haven't the foggiest...   blah blah blah         

anyway     agreeing with Julia   yep   that markup must be included

trying to remember if I ever saw anyone  with a notification    non-negotiable

oh   don't let anyone barter your hourly rate

forgot to add   that I agree with all comments     hoping to see more comments

Your cookies are great! But I agree with the others--you are underpricing yourself by a lot!

A different way to handle "negotiating a better price" for your customer would be to build in extra wiggle room on your normal advertised price so that if you do get a client who wants to bargain, you can come down to a price that is still profitable for you. (Especially helpful if you are seeing a lot of people who want to negotiate.)

Edited to add:

If I am going to negotiate, however, I won't just lower my price because the client asked (or else she will expect that treatment on all future orders.) I'll be sure that I get (or appear to get) something out of the negotiation, as well. For instance, I might suggest that I can reduce the price by 50 cents per cookie, or ten percent (or whatever) if the client orders a specific amount that makes the order worth my while.

Your cookies are beautiful. At the very least, double your prices--even if you only get half the orders you currently get, you'll still be making the same amount of money. People who appreciate them will pay.  The rest can go to Walmart. 

I heard something interesting the other day. One cookier mentioned that her first dozen is a little higher and then after that she drops the price a little. So the first dozen is $40.  Each additional dozen is $36. She said customers order more and don't negotiate because they already feel like they're getting a deal.

Yeah, but this is tantamount to giving a volume discount, and I agree with Marie. The big driver of cost and price is the time it takes to make and decorate the cookies, and this time does not get much (or possibly any) shorter with a larger order. There are few economies of scale here, as in some other businesses. You might be able to make a larger batch of dough and save some time there, but the decorating time is about the same per cookie.

I agree as well.  I guess the idea with this approach is that her actual price for a dozen would normally be $36, but she increases the cost of the first dozen above what she would normally quote, and the rest are her actual price, so she's making more than she would at what she would consider her "actual" price.

Hopefully, that's what she's doing, but $3 per cookie could still be too low to make much money, depending on the cookie complexity.

Pricing is the hardest thing.  I did a little calculating too and for a plain iced sugar cookie, I should be charging $2.93/cookie.  That's probably not doubling cost of ingredients but ingredients are cheapest part!  One person in my community said, "Well when you bake, you can't charge for your time."  Another person in a business education position chuckled when I told her the cost.  Funny thing is, most people have eaten at restaurants and pretty sure they are paying for someone's time!!  Sometimes I feel like I'm throwing money down the drain but then there are people who understand the cost and others who say they don't have a creative bone in their body and are glad to pay someone!!

Thank you for this post. Very informative. I've just recently had someone try to negotiate price for cookies. I quoted her $4.25 a cookie, ( which I think is a very competitive price in my area as she wanted hot airballoons ) and she replied that it was above her budget and could I do them for $3.00 Each. 

I took a day to reply,but when I did, I explained that I offer a very competitive price and that I use top quality products in my baking and that it takes just as much time to decorate one cookie as it does The 40. 

I didn't hear back from her, but I was very satisfied that I had answered her professionally without offending.

all these comments have reinforced my answer.

now.... As we are on the subject of pricing, what Do you all charge for a pretty, decorated cookie, not Character ?

I still struggle with pricing after almost 10 years! I gave friend discounts and large order discounts for years.  No more.  Thanks to Callye at Sweet Sugarbelle, I finally came up with a base price I felt was fair and in line with the demographics in my area.  I'm in rural SC so I charge a standard $30/dozen for average size/detail cookies. If the order is difficult such as specific characters or something very time consuming, I charge more. I also offer platters and other options for different pricing. I learned not to discount large orders because they are actually tons more work! And I do not give discounts to friends.  If people don't want to pay my nominal price, I don't want to make cookies for them. Here's the link to Sugarbelle's post about pricing... http://www.sweetsugarbelle.com...ookie-pricing-chart/

Good for you!