Cake Deposit Policy: Should I take deposits on cake orders?

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One of the questions I get asked all the time as a cake decorator is, “Should I take deposits on cake orders?” If you’ve ever had a last-minute cancellation or a no-show client, you already know why this is such a big deal. Deposits not only protect your time and ingredients, but they also help set the tone for a professional business relationship. In this post, I’ll share the pros and cons of requiring deposits and help you figure out what Cake Deposit Policy works best for your cake business.

Cake Deposit Policy

Once upon a time I decided to do Q&A posts on Rose Bakes – answering questions that I received via email or on Facebook about cake decorating or having a cake decorating business. As with many things I’ve tried, that trend didn’t last long.

But today, through a series of random, unimportant events, I shared this post in the All Thing Cake group and not long after, I had this question waiting for me from Heshani:

My question today is about taking deposits… should I? If so, how much? Obviously, this will be something that comes up, making cakes for strangers who contact you on FB and place an order.

So let’s talk about it…

Cake Deposit vs. Retainer: What’s the Difference?

First – let me say this – I’ve changed my language over the last few years and I no longer say “deposit” – I say “retainer”. Here’s why…

When you’re running a cake business, the terms deposit and retainer often get tossed around like they mean the same thing. But in reality, they have slightly different meanings – and knowing the difference can save you a lot of confusion with your clients.

But you can use whichever you prefer as long as you understand the differences. So let’s spell it out.

What Is a Cake Retainer?

A retainer is a little different. Think of it as a fee to secure your services for a specific date. It may or may not go toward the final balance, depending on your policy, but the most important thing to know is this: retainers are always non-refundable.

Why? Because when a client pays a retainer, they’re paying you to hold their spot on your calendar. Even if they cancel, you keep the retainer because you likely turned away other business for that date.

Which Should You Use?

Many cake decorators choose to call it a deposit, because that’s the word most clients recognize. However, they treat it like a retainer by making it non-refundable and requiring it to book the order.

If you want to be clearer and more professional, you may prefer to use the word retainer since it emphasizes that the payment is for reserving your time, not just ingredients. This is why I’ve ultimately changed to only using the word retainer.

In the end, whether you call it a deposit or a retainer, the key is to have a written policy and communicate it clearly to your clients. That way, there are no surprises if someone cancels or changes their order.

Always, always collect a deposit!

So, should you take a deposit (or a retainer) on cake orders?

In short, YES. Absolutely, without a doubt, no exceptions, YES.

If you spend any time – any time at all – working on an order without a deposit, only to have it canceled later, then you’ve lost money because time is money! 

Custom cakes are a luxury, and you should be paid for any time you dedicate to creating one, from the initial consultation all the way to the pickup or delivery.

If you sketch a birthday cake design, look at a hundred pictures of wedding cakes, work up an estimate, write a contract, shop for ingredients or materials, or any number of other tasks involved in making specialty cakes., then you’ve worked. 

And if you do any of that before getting a non-refundable deposit, then you’ve given away your time with no guarantee that you’ll be paid.

You don’t have a cake customer until you’ve actually been paid. If you spend time on them before being paid, then you’re working for free.

But what if?

And I can hear you already… but why would someone pay a deposit before seeing a sketch, having an estimate, etc.? What if I lose the order?

Well, they will pay a retainer. Trust me. OR they weren’t meant to be your client anyway.

Under most circumstances, I send them to this page for information OR I give them this canned response:

 “My minimum is $5 per serving and $125 minimum order. If you’d like to place an order, I require a minimum $100 deposit to book a cake (or 50% of the total cost if the design is already determined).”

With those 2 sentences, most customers already know if they want to continue with the process to book a cake. Either they can afford me or they can’t.

If they send a picture with their inquiry (where I require information about their event date, design, number of servings, etc. – see the information I gather here), then I can easily do a quick estimate in my head for a general design. 

I can give them a ballpark number immediately (I always emphasize that the final price might change depending on size and any changes to the design) and ask for a 50% deposit to book the cake.

If they do not send a picture or ideas with the initial inquiry, I give them my canned response and they either reply with a photo and proceed with the order, or they tell me that they cannot afford a cake from me and that’s that!

What about a last minute order?

I rarely charge a rush fee or additional charges for last-minute orders, but I do still require a deposit. In fact, I take it a step further and require payment in full.

If someone only gives me a week or less notice, I get paid the full amount to take the order at all. I will not risk baking and decorating a cake to be paid for on the pickup date because they may not show up at all.

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How do I know this? It happened to me. This cake (below) was full baked, decorated, boxed up and ready to go and the client never showed up after begging me to bake a cake last-minute. Lesson learned. I fell for their sob story and promise to pay at the time of pickup. And I got burned.

Don’t give away your time for free.

Of course you’re always going to be giving away a few minutes of your time when answering the phone or emails (or however you take orders) for the initial inquiries, but do not give away hours of time on people who are not yet paying customers. 

Your time is more valuable than that. YOU are more valuable than that! If you need help with pricing, check out my ebook here for How to Price Cakes.

Consider the following scenario: if you were working at a small shop (a bakery that you don’t own), would you expect to be paid for time spent on the phone with customers? For time drawing up sketches or writing up contracts? Or would you only be expected to be paid when you were baking/decorating cakes?

Of course you’d expect to be paid for all of it! Show yourself the same respect when you’re working for YOU as you would working for someone else!

Earlier on in my cake decorating business, I’d spend time messaging customers about custom orders who never replied after my quote. Or calling people back who had asked me to put them on my schedule but never paid a deposit. I never do that anymore!

If a potential client asks about a cake, I tell them it will not be booked until they’ve paid a deposit. If they never pay, I never think about it again. Once I’ve stated my policy, it’s the responsibility of the customer to lock in their order.

I don’t add it to my spreadsheet until the deposit is paid. I cannot spend my valuable time chasing down people who may or may not want to book a cake. If they want to order, they will.

How much should a cake deposit be?

I’ve already mentioned it, but here’s my policy:

For celebration cakes (that are not wedding cake designs), if I have the details (from this form), I require a 50% deposit of the total at the time of ordering. If I don’t have a design yet, I require a minimum $50 deposit.

For wedding cake orders, I require a $200-$250 Save the Date Deposit (or retainer). This holds their date on my calendar (because weddings are often booked months in advance vs weeks) and that amount does apply to their order. This also covers my time and investment in writing the contract, as well as any additional tasks such as doing a tasting and creating sketches. 

I also go a step further with wedding cakes and write a full contract that must be signed and returned to me. Wedding cakes are big, BIG deals, and I want to be sure I have all of the order details accounted for – including the cake flavor(s), number of tiers, design, photo inspiration, handling of sugar or fresh flowers, the contact information for all involved parties, etc. 

The contract lists the full payment amount. I require that they pay the retainer within 7 days of my sending the contract, then pay 50% of the balance 6-8 weeks prior to the wedding date, and the final payment must be paid 3-4 weeks prior to the wedding.

I have my due dates this early because I want all payments to clear long before the day of the event, and nobody wants to be chasing down a client on their wedding day for the balance of payment.

You may adjust your retainer amount depending on the total for the cake, but I would never have a deposit less than $50.

What about cancellations? Or a refund policy?

In addition to all of that, I make it clear that deposits are non-refundable. I’ve heard the argument that that’s “not fair” and “you haven’t done any work yet” but they don’t hold water. 

The truth is, I have done work (even if I haven’t baked or decorated a cake yet) and there are other reasons to keep a deposit if a cake is canceled.

First, if a deposit is paid and a cake is booked on my calendar, I could potentially turn down other orders and lose other business because I was saving that time/date for that client.

Second, that deposit also covers my time. Time spent replying to emails, shopping for ingredients, doing online research for the design, drawing sketches, etc.

Some examples…

Why? I once had a bride cancel after I’d spent two hours online looking for the best place to order edible gold leaf for her cake. That’s time I couldn’t get back when she canceled. Time that was covered by the non-refundable retainer she’d already paid.

But let me give you another example that didn’t have a happy ending because I had not collected a retainer.

Very early on in my business, I took an order for a wedding and groom’s cake. I was super-duper excited about the order, but in my excitement, I failed to collect a deposit.

A few days into our communications back and forth, she said she was going to mail me a 50% down-payment. The order was over $1000. I was thrilled.

So thrilled that I hopped online and immediately ordered some edible images that were needed for the groom’s cake.

Well the check came – and promptly bounced. When I called the bank, they told me she had put a “stop payment” on the check. I assume she changed her mind, but I never found out exactly what happened because she ghosted me. 

I was never paid a dime for the time invested or the custom edible images that I coudn’t return.

Lesson learned. Collect a retainer.

Wait for it to clear the bank before you start spending it on the cake. Since that happened, I only make exceptions in very special circumstances with very well-known and/or reliable clients.

And I reserve the right to always keep the full retainer. I do make exceptions and give a full refund (or partial refund) in certain unforeseen circumstances (a death in the family, a medical emergency, for really good friends, etc.).

I haven’t had a ton of cancellations over the years, but for the few I’ve had since implementing my cake deposit policy, I’ve been covered.

How do I collect a cake order deposit?

This was not one of the questions asked, but I thought I’d cover it anyway. I take deposits four ways.

Cash.

Because I live just outside of a very tiny town where lots of people know me personally, often they’ll bring me a cash deposit or ask me to pick it up when I’m in town.

Square (Credit Card)

This is my favorite way to collect deposits and, by and far, the way I’m paid most often. I either send them an invoice through email (where I can write out specific details) or text them a link. This is my preferred method because customers can pay with debit or credit cards (without having to have a Paypal account) and I’m paid instantly. Also, I can transfer money directly into my bank account without having to drive to the bank. Yes, there are fees taken out, but I figure those into my prices so I’m not losing money there. 

Paypal

Paypal is popular for some people because it’s familiar. I’ll send them a custom text link (it looks like this: http://paypal.me/rosebakes. You can click on that to see how it looks, but I can also add a specific dollar amount to the end… like this one (http://paypal.me/rosebakes/50) requesting a $50 deposit. You can click on that to look… you won’t have to send me $50 unless you just want to 😉

Check

This is probably my least favorite payment method, but I live in a small town in rural Mississippi and some people prefer checks. So I still accept checks in person or through the mail. I say it’s my least favorite because I’ve been burned more than once with checks that have bounced.

I’m always a little on edge when I deposit a check from someone I don’t know or have never worked with before for this reason. And if a customer pays the deposit by check but wants to pay the balance the week of pickup (for celebration cakes), I do ask that they pay the balance via Paypal or cash so that I’m not left hanging with a bounced check after the delivery date.

Because you can’t take a cake back. Ha!

Okay fellow cake makers … I think I’ve covered all the bases on collecting cake deposits. Do you collect deposits? What’s your policy? I’d love to hear!! Also, if you have any questions, please leave me a comment! 

e any questions, please leave me a comment!

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