How To Increase Your Prices and When You Should Do So
When I first started my home bakery, I had priced my baked goods too low. I had been giving away my baked goods for years and making the transition to charging for them was a bit difficult. To be honest, I was lacking in confidence and I felt that by offering lower prices, the pressure on myself would be a bit less. After some time, I realized that I would not be able to bake at the quantity I desired without burning myself out and possibly losing my passion for baking. I was burning the candle at both ends and not seeing the pay-off. In addition, it really wasn’t fair to the fellow bakers in my area who were charging appropriately and I definitely did not want to be undercutting anyone. I knew that I needed to increase my prices, I just didn’t quite know how.
Maybe you can relate to all of this, or maybe you are just facing the rising cost of ingredients that are cutting into your profits, or maybe you have some other factor that is leading you to feel the push to increase your prices…whatever the reason, I’ll share the steps I took to finally increase my prices in hopes that they may help you or another baker who may not be sure how to navigate these tricky waters.
Tip One: I Used Open Communication
One of the first steps I took was to communicate my price increase. I sent an email to my customers and I used my Instagram stories to announce to customers that I had adjusted my prices and to look for an email that had been sent to them. I encouraged them to reach out to me via DM on social media in the event they did not receive the information and some of them did just that.
Tip Two: I Was Honest
In my email communication, I used honesty to share that my business had grown and that I was so grateful for their support during my beginning stages. By sharing that my business had grown, I inadvertently increased confidence in my brand, in me, in my value, and in my business. I also shared that there had been an increase in the cost of ingredients required to make my baked goods. Overall, I found that my customers were quite supportive of my price increases and shared in the excitement of my business growth as well as the understanding that my overhead costs had increased too.
Tip Three: I Emphasized the Quality of My Products
In addition, I also emphasized that the growth of my business and the increase in orders had led to a secondary benefit of an increase in my skill set. I shared new techniques, flavor combinations, and more that they could now look forward to and I stressed my use of high quality ingredients as well as the time I put into each cake, loaf of bread, etc., to ensure it brought joy to each of my customers.
Tip Four: I Brought Light to Lower Priced Options
Another component I included was a price point for everyone, making sure to shed light on lower priced items that would be available such as my cake slices that could be purchased instead of a full-sized cake, a 6 pack of cupcakes rather than a dozen, bread bowls instead of a full loaf of sourdough bread….anything really that I had on my menu that provided a options for everyone.
Tip Five: I Offered a Coupon Code for Existing Customers
Finally, I included a coupon code in my email to existing customers. I made sure to announce this as well in my Instagram stories and I thanked everyone for supporting me. This allowed me to help current customers offset the increased cost of my baked goods while valuing them as a loyal customer at the same time.
In hindsight, if I could offer any advice, it would be to be confident…don’t apologize for the increase and don’t overexplain. I, for one, am someone who wants to offer the most affordable prices, however, I’ve found that this strategy will only prevent me from operating a sustainable and profitable business and potentially lead me to significant burn-out. So be confident in your announcement and your messaging… I can assure you that it will be a great step toward helping current and potential customers see you as a serious and reputable business.
I’ve included a sample Instagram/Social Media announcement below. Happy baking, my friends.
Sample Instagram Announcement: Hello Friends, Please note that effective XXXX, I will be increasing my prices to more appropriately reflect the current cost of ingredients, my updated menu items, as well as specialty techniques I am now offering. An email has been sent to everyone on my email list with further information as well as a coupon code for current customers that can be used on future orders. Please feel free to reach out to me if you did not receive the email. Finally, thank you all for supporting me as well as helping me spread the word about my cottage bakery. It is because of YOU that my business has grown so quickly and you are greatly appreciated.