Creating a Price Scheme
Friday, April 06, 2007
Coffee Business is a gamble, and like any other new businesses, it also has uncertainties as to whether is would be successful or not.
When putting up a new business, profit is always a big deal. Business owners want to make sure, that the amount of the capital they invested will double if not triple, the amount of profit they will gain.
Now how do coffee shops possibly earn double or at least gain back the amount of their capital investments? For how long before they produce profit?
First, create a menu that will be understandable by your customers, the one which the customers could easily relate to. Simple but elegant when seen by others. Don’t list all your products in one. Better to put the price lists of your coffee products in a rotation manner. That way, all your products could have their own chances to be seen by potential buyers and coffee-lovers.
Then comes second and most important is the pricing in your menu.
The two basic components that affect product pricing are costs of manufacture and competition in selling. It is unprofitable to sell a product below the manufacturer’s production costs and unfeasible to sell it at a price higher than that at which comparable merchandise is being offered. Other variables also affect pricing. Company policy may require a minimum profit on new product lines or a specified return on investments, or discounts may be offered on purchases in quantity.
In that case, you should create a pricing scheme/strategy to make customers love you.
Look Around. Know your competitors. Take a list of what they offer, and how they do their pricing. Let’s say, one cup of your competitor’s Cappuccino cost $3.50, why not set your price for the same beverage at $3.25, for a start? You have to set your prices not far from them, to attract coffee lovers. Then once you have your own set of loyal customers, then that’s the time you can set your price as much, if not higher, than your competitors.
Marketing Promotion. Give discounts once in a while. There’s nothing best but to show gratitude to your loyal customers. You can give them discount cards for some beverages, and give aways for multiple purchases like mugs, free coffee.. etc..
You need not set your pricing lower than your competitors, as most people have this mentality of, spending their money’s worth, thus, not settling for anything less.
Yes, it’s still all in the quality. An excellent coffee that’s worth every penny is the first thing consumers are after. All the other benefits like clean environment, soothing ambiance, and first class customer service come secondary.
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