Our question today is from Ashley, a Foodpreneur Institute follower on Facebook. Ashley sells custom cakes and has always asked for a deposit. She was wondering if this is a common practice.
Yes, it is a common practice, but that doesn’t mean it’s a good one.
Ashley, it’s 2018 and time to uberize your Custom Cake Business: Pay First, Pick-Up Later.
Have you ever taken an Uber or a Lyft? Did you pay first and ride afterward?
If you sell custom products (cakes, cookies, chocolates etc, offering automated payments makes transactions quick and seamless. This creates a more pleasant and efficient user experience and customers love that. It also offers you the opportunity to receive payment in real-time.
Lots to home-based bakers ask for a down-payment. This allows the customer to pay half the money now and the balance either before pick-up or upon delivery. This is something I have discussed with many students over the years. The only time this might be workable is when there is a non-refundable deposit.
If the customer is purchasing a cake for under $200 you should be asking for full payment. Look, when you shop at the supermarket, you aren’t allowed to leave with $250 worth of groceries until after you pay the cashier. You have already invested in the ingredients, took time to consult with the customer and perhaps design the cake. You’re not in competition with Walmart, Target or the local Bakery up the street. You specialize in custom work, the cake is for one specific customer, they are paying for exclusivity. And if they can’t afford that then, sure you’ll offer them a deposit, 50% non-refundable.
The balance of the payment is always due 7 days prior to the delivery date. You decide if after 7 days if the order is canceled. Consider creating a basic contract that you and the customer will sign.
Note: Foodpreneur Institute does not endorse the use of the contacts samples above. We recommend you seek legal advice when drafting a contract or any legal document.
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