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I’ve seen this play out in other (mostly creative) fields as well. But it is not without its challenges. Namely, the people who will pay the very high prices tend to come in via reputation and referrals. You can’t generally just throw up a website and some AdWords as a brand new baker and start pulling in five-figure clients. They either want to hear from other people who trust that you’re the person to go to, or at least you need a portfolio of similar work. And of course therein lies a bit of a catch-22. You can’t get high end clients without having other high end clients. No number of $30 birthday cake clients are going to give you credibility with $6k wedding cake clients.

Cake baking is one example where you might be able to work around this somewhat by just baking high end cakes for no client, posting them on social media, and hope to pull in a few brave first customers. But for trades like tattoos where there’s really no way to do it without a client, it’s tough. I have no experience with tattoos, but I’m guessing that in that world the high end customers want to see that you have tattooed beautiful things on other beautiful people. If your current client base is average looking people who mostly get boring or trashy tattoos, you can’t just quadruple your prices and expect it to work.

Having worked in the luxury industry before, my experience is that it really comes down to personal connections and branding. The problem is that positioning yourself as a true luxury player takes years (even in local markets) and until then you're still have to pay rent for high-end locations, PR, and equipment. There is a reason why most successful founders have strong industry connections and/or excellent references.

There’s no Catch-22 if you know the potential clients socially…or your parents and grandparents do.

It’s not that that advantage means a person doesn’t have to work hard. It means that hard work is more likely to produce success.

Even more important the social connections make hard work more likely to produce success. Prior familiarity with $6000 cakes creates intuition regarding where to prioritize efforts and where efforts don’t produce returns.

For example, what is the optimum resource commitment to the cake box. About how good does it need to be? Not enough is bad. Too much is money left on the table.

I read an interview with a watchmaker once. He used to make watches in the $2000 range, before moving on to watches much more expense (I forgot the number, $50,000?). The reason was simple: someone buying a $2000 is often there for a once-in-a-lifetime purchase - graduation, marriage, etc. Someone able to spend $50,000 on a watch typically will have no issues to start collecting them and buying many more.

Interesting! I have questions.

   * Did he have to start off in the 2k range before he had the skills/brand to make the 50k watches? 
   * Did he take any steps to avoid getting trapped in the 2k market (too busy making 2k watches to make a 50k watch)
   * Were there any intermediate steps up to 50k or was it 2k->50k directly?
   * Are the inputs for a 50k watch significantly more expensive?

I imagine you won't have the answers (unless you can dig up the interview), but what a fascinating story with lessons for software. I've read plenty about avoiding the $9/month SaaS customer in favor of the $500/month or $10k/month customer, but it is interesting to see it play out in a different, consumer focused space.

Unfortunately, I don't remember the details, but from what I recall it was 'simply' a conscious decision on his part to switch his customer base, so it seemed that tooling/parts/skills/money were not the problem. I assume, as always, that luck has to be involved for someone to discover you and think you're worthy of their money. Then again, just the price tag alone may signify that you're worthy (remember that iPhone app 'I am rich', that did nothing but cost a couple thousand dollars?). Especially if your target audience really doesn't care about the price at all and can just afford to buy it as a novelty, to be the first to have watches from that new unknown brand, before it was cool.

But the story had an immediate impact on how I thought about many products and marketing.

As a previous goldsmith, I'd say it's the materials used (gold/platinum over silver) and the time one puts into a piece. Gold is easier to work with than silver as you don't have to worry about fire-scale and it's more malleable, so if you're able to produce a piece in silver, or stainless steel for that matter, then making the same piece in gold just comes down to investing more in your materials (~$1,8000 vs $30 an oz for gold vs. silver) for each piece. After that the time, embellishments are just more time invested with the piece.

If you’re interested in this topic of leveling up as a freelance creative, I recently came across Chris Do who has a lot of youtube content on this topic. There’s a lot of good stuff, and his delivery is much better than most other of the similar content youtube associates with him.

I've been thinking about that regarding tourbillons. This is the now-unnecessary but aesthetically pleasing component that has made some watches not mass produceable for 200 years. Over the last several years some enterprisers mostly in China have finally refined robotic processes to make them. The watches styles that are 5 and 6 figures in price are now around $1000. But, for now, I am still thinking I wouldn't be caught dead wearing one of those.

But because of the scam-like (or at least "rip off") nature of liking a brand that is using an inferior manufacturing process at 10x the price, I now have a quagmire where I wouldn't want to be seen owning the more expensive ones either!

But fortunately there is good news: almost nobody knows the more prestigious brands if it doesn't say "Rolex". So you get to blend in. Even thieves will go after the Rolex over the more expensive Breguet, I doubt aesthetics are a factor, only because of the name brand recognition in consumptive pop culture.

With high end goods and services It’s not enough to know the market.

Cultural fit is critical. To be in the metaphorical $6000 cake segment of the cake market, you have to hit all the social notes on cue that customers in the metaphorical $6000 cake market want their $6000 cake makers to hit.

What I mean is that the architect who designs golf course clubhouses has to be fun to play golf with to establish and maintain relationships with potential and current clients.

Delivering a $6000 cake cake experience to the sort of event that pays for a $6000 cake runs on the razor edge of servant and served without questioning the absurdities around $6000 cakes.

And if a person likes making cakes, bringing the joy of cake to 200 clients may be more satisfying than catering to people who suppose themselves intrinsically entitled to being catered to.

Obviously I know where I fall on that equation. From personal experience for whatever that’s worth.

> on the razor edge of servant and served

An incisive comment for the times. It brings ‘farm to table’ to mind.

>You’re better off being very expensive ($10k tattoo artist) than broadly appealing.

This is like saying you’re better off playing in the NBA than shooting hoops in the park. Yes, anyone can shoot hoops in the park and make $0 but wouldn’t it be so much better to play in the NBA and get paid millions?

It sounds great in theory but you better hope you have the talent, drive, and luck to make it happen.

Baking a $30 cake and baking a $6,000 cake are totally different ballgames and the actual baking is quite different and the business part of it requires totally different skills/network/etc.

You are right, but I think it applies in smaller increments.

To get back to bread, selling fancy cakes for 10$ and not 4$ might not seem a big deal, but it can be enough to upgrade all the ingredients while staying in your comfort zone skill wise.

The competition gets smaller, and while you’re now priced the same as some superstar shops, you clients will still be happy if it’s clearly better than the 4$ cakes next door.

In a way NBA is a regulated market, most markets don’t behave that way.

Baking a $30 cake and baking a $6,000 cake are totally different ballgames and the actual baking is quite different and the business part of it requires totally different skills/network/etc.

I don't think that's true. The difference between two cakes is down to who baked them, not the price. There are amazing bakers making fantastic $30 cakes, and great bakers making brilliant $6000 cakes, and there are terrible bakers making awful $30 cakes and others making awful $6000 cakes. You can't tell whether a baker's cake is any good by what they charge.

No doubt the technique for baking a $30 cake and a $6000 cake is different (the sizes are probably different for a start) but any good baker could work at either end of the scale. It is absolutely not like basketball where things like genetics (height, lung capacity, heart size, etc) enter into it. No one is a naturally good baker.

This isn’t true at all! You can’t have ordered many cakes for weddings and large parties. There are plenty doing a good job who would not be able to move on to richer clients. There is significant variation in design skill, baking skill and equipment out there among professionals. Visual taste, food taste, steady hands, and stamina are three natural traits I’ve noticed and there are probably others in great bakers and chefs.

> No one is a naturally good baker.

While baking/cooking may not relate to physical genetics, it is definitely linked to creativity and such. Not everyone can be a Masterchef.

> I don't think that's true. The difference between two cakes is down to who baked them, not the price.

It is true? Everything you listed are things that are influenced by both the baker and the price. Not everyone can handle the stress of managing multiple high-end event deliveries while fulfilling the nuanced needs and quality expected of a 10k cake vs a 100$ cake, and so on.

No one is making awful $6000 cakes (or at least they're not selling them). You can absolutely tell how good a baker's cake is by how much they charge, assuming they're actually making sales. Someone who is consistently selling cakes for thousands of dollars is a very good baker.

Beyond that, you have to bear in mind that $30 cakes and $6000 cakes are basically different products. The former is a dessert and the latter is closer to art. A very successful baker making $30 cakes is more like the head chef at a restaurant than a home baker - they're running an operation that's making those cakes at scale (because there's a limit on how successful you can be selling $30 cakes that you make yourself - only so many hours in the day).

A baker making $6000 cakes is making hands-on, labor-intensive creations, and while that person may have some staff, they're involved in each cake. Their work doesn't scale the way the large-scale $30 cake operation does, but they can make lots of money in the same way a high-paid lawyer does - basically a very high hourly rate for their work.

Closing a $6,000 deal with a decision maker at a big company is different than closing a $30 deal with my grandpa. Getting on the radar of the decision maker at a big company is a different skill than getting my grandpa’s attention.

The difference has very little to do with the cake.

A fair number of high-priced wedding cake makers just use boxed cake mix. It’s the decorating and the security that they’re not going to fuck up the wedding day.

I don't know about the NBA but if you look at the stunning difference between Mike Trout's salary (35 million/year) and an AAA minor league player's (700/week) you might be even more stunned by the difference between their batting averages (ie, around .100).

Point is, once someone gets "in the game" and isn't just playing for fun, valuations get really strange. As another example, I am impressed by the salaries at Facebook when it is still just a particularly herky-jerky Myspace clone, or at Youtube, which is the same website it always was 10+ years ago ("But now with TWO types of annotations no one asked for.") What are all those geniuses doing? They aren't even batting above average as far as I can tell.

...

As for baking, I knew a professional baker when I worked in a restaurant. Man, that guy was miserable and weird. He made nice-looking stuff third shift for the next day, but knowing him, I wasn't about to eat any of it.

> you might be even more stunned by the difference between their batting averages (ie, around .100).

You have to account for both sides of that equation, though, and consider the skill of the pitchers being faced by the minor leaguer.