Many owners just go with the flow. That’s a BIG mistake.
So often as I visit various café or coffee shops, I find menu items similarly priced. Sure, in some circumstances identical prices are warranted but the amount of times owners put no serious thought into a price other than to match what others charge is to be honest, just staggering!
In fact, this mentality can often be the death knell for a café or coffee shop. But let’s clarify some aspects. All menu items must be carefully costed. Sounds simple enough but unfortunately so many owners by and large will price according to what they think a customer will be prepared to pay. Sure, this may have merit in some circumstances, but simply matching competitor’s prices can be fatal if the costs reveal unsatisfactory margins. One must continually put efforts into increasing profitability where possible.
Take for example a regular flat white coffee, depending on one’s location in the world a common price would be around $4. Now if an owner was to charge for that exact same coffee $5 then there could possibly be a customer backlash. So how can one owner take advantage of sticking to the excepted norm in the $4 scenario and yet financially be in a better position than competitors.
Obviously, a greater turn over of coffees throughout the day could help yet in reach of most establishments could be the search for a more competitive wholesale price for the coffee itself. There is so much more that can and should be considered in setting prices but knowing the actual or true cost of everything sold within the business is pivotal.Unfortunately, those that don’t consider this aspect will often suffer financially.
One must always work on producing perfection in all areas of the café or coffee shop: on food, drinks, service, ambience and so on. Combine these facets with menu items that provide a point of difference compared with what competitors may offer, then the ability to charge higher prices for those items can be a distinct possibility. Again, I stress that never be hap hazard in setting prices. They must always be carefully considered and without question costs must be always factored in.
Owners can even take advantage of the subconscious minds of customers when considering pricing. Anchor pricing and Charm pricing are two such areas which if one has the vision to study and understand can do wonders for the businesses bottom line. For example, …………………….