To tell my friend her business is failing because her artisan products are too expensive

[startrekk]

My friend is a great baker. Her products are lovely and consist mainly of homemade muffins and savoury muffins.

She makes her products and sells them at local events and has a weekly stall at the farmers market.

The problem is she is failing miserably and ended up not selling a single item at her last local market.

The products she sells are lovely but they are just muffins and while people will pay quite a bit for a warm homemade waffle covered in Nutella and strawberries, they just aren't going to pay that much for a muffin. Also you have to take into account that while people will pay a lot for a cake and hot drink in a coffee shop. You are paying for the atmosphere as well. You can sit in, have a chat, use their WiFi. It's different when you're selling a muffin and drink to take away. The value decreases to most people.

My friend charges £3.50 for a muffin, no deals for multiple purchases and £3.00 for a smallish coffee.

She has competition from stalls charging £1.50 for a coffee and a lot of places sell cakes for around £1-£1.50 each and they are just as nice as my friends. The demographic of the area is not wealthy. There are pockets of affluent areas but also a lot of poorer areas and a large student population. It's not like she is selling in Central London.

I have tried to explain that she could try selling the muffins for £1.50 or do a deal of 4 for £5 and increase the size of the hot drinks but for some reason she is very keen to keep the prices very high despite it already proving a bad move.

AIBU to think that high prices don't mean higher profits and she could make far more money charging a reasonable price? The muffins cost about 20p each to make.

Well I would agree with you based on what you've said. If she's not selling she needs to either drop the prices or try selling somewhere else.

Why do you feel the need to tell her? Has she asked you for your opinion as to why she is making no sales?

I doubt they cost 20p to make and she must have other costs to cover as well

If you've already suggested that she reduce her prices, there's not much more you can do

(Do you get to eat the unsold cakes?)

When muffins are expensive it makes sense for coffee to be cheap. £3 for a muffin isn’t that bad if it’s quality ingrediants if the coffee is £1.

3 quid for a coffee is bonkers, the muffins seem fair priced (along London lines) for an artisan product in a market imo

Are they nice?

Maybe suggest she drops it to £2.50 for a muffin? Then try that- if not go to £2. If they're lovely looking I'd definitely pay that.

How big are they and are they made using good ingredients?

£3 for a coffee is a bit much!

It's not like she is selling in Central London.

I had a coffee in central London lovely 4* hotel bar last Saturday night...£2.75. She's having a laugh.

Bars sell cheap coffee. Coffee in central London is usually £3 plus.

Do you need to tell her she's broke after all - doesn't need a dragon to do this

Well it's not your place, unless she's asking for.your input?

I price by-

3 local similar products and their average price

Cost of time and materials and small profit.

Do the two add up? If I try it for 6 months is it still viable?

There are local business courses for free run by local initiatives she could try there. Mine was v useful!

£6.50 for a coffee and a muffin? I wouldn't pay that.

I don't think the muffin priced is that bad - farmers markets are always full of overpriced artisan stuff - that's the whole point.

The coffee is way too expensive though assuming it's just a plain coffee with milk.

The ingredients for the muffins may cost 20p but what about the cost of gas/electric used in baking, the most of any packaging, fee for stalls, insurance fees, hygiene certification, marketing etc? Then on top of those running costs she would need to pay herself a living wage and then a profit to reinvest back into her small business. Maybe she has done a business plan which shows her what she needs to sell at to meet her costs and make a profit?

If she asks for your input you can of course talk about it, but otherwise, I wouldn't go there as it wouldn't be welcomed.

I would recommend she sell at places where her goods would be welcomed rather than compete at places where there are cheaper products. Some people would feel happy paying that premium amount if they feel they are getting a premium product.

You've offered some advice already. I think I'd leave it there.

Also sizing change may be a goer, I would prefer half a dozen smaller two bites muffins pre bagged rather than things that are the size of a child’s head.

Well let her find out the hard way, when after a few Farmers markets, she discovers for herself that she needs to reduce prices. If they are not fancy, or you can see a lot of effort has been made, than people won't pay nearly £4 for a homemade muffin, when you can buy one on the other staff for £1.50. It is about being competative.

In my catering experience we used to work out the cost per plate ( or single item like a muffin) and times by five. This was the LOWEST cost we could sell for. The 500% increase covered wages, electric, rent, insurance etc.
If your friend sold the muffins for £2 she would be making a decent profit as she won’t have the associated costs of retail premesis.
She is pricing herself out of the local market.
It’s better to sell 100 muffins @ £2 rather than none or few @ £3.50.

Your friends business will fail.
It’s best to keep your opinions to yourself unless she asks for advice as to why she is not selling.
She’s being greedy and it’s going to backfire on her sadly.

Coffee and cake would be about £5 in a shop.

Don't understand why anyone buys muffins anyway misses point of thread

I make basic cakes for my family just to give away as I like baking (think red velvet cake, coffee cake, Victoria sponge) and they are very cheap and easy to make, probably about £6 for a whole cake, with ingredients. Her prices are way off, for just a plain muffin that costs very little to make.

Tbh if she’s not worked that out for herself yet then I don’t think there’s much your advice is going to do to help her.

Someone’s already said it - much better to sell a fair amount at a lower price point than price yourself out completely...

You've tried. She needs a pricing formula rather than plucking figures out of the air. She will learn the hard way unfortunately.

In a whole cake 20" double sponge cake like a Victoria Sponge cake, you can get at least 12 decent slices. It is a cake like a muffin that is simple and cheap to make, if I charged £3.50p per slice, I would be taking the piss, I really would, as somebody has said, people realise that.

The posh bakery near me sells a lovely, large muffin for $2.50 (about 2 quid). There's no seating, so these are to take away as well.

You're right, they're overpriced.