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Is your price point representing value for your product and service levels?

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Is your price point representing value for your product and service levels?

I’ve covered this subject before but it’s so important I’ve written another piece.

Back in the day the price of a pint was ‘what you could get away with’ but in today’s vastly different environment you need to think long and hard about what you charge for both food and drinks offering.

There are many considerations;

1. Target audience. Does it or could it differ throughout the day and week? If so do you need to target offers to boost turnover at quieter times.

2. The return on capital you need to achieve and over what period.

3. What do local competitors charge?

4. Are the customers buying into an experience? If so a premium price is certainly justified. For example Dacantus on Grey Street Newcastle serve their Gin in large balloon glasses with large spherical ice cubes and there is theatre in how the drinks are served and presented. This commands a premium over Gordon’s, draught tonic and slice of lemon.

What any customer wants is choice and value for money and I guess that’s where Wetherspoons  and others score. They have a wide range of products at ok prices and you know what to expect, which is ok service at best. On the flip side others will pay a premium for consistently high standards.

We have to accept we can’t make the margins we used to make. If a product goes up 4p at cost then you have to apply a 16p increase inc. vat and that can’t be done.

So the question is, can you be truthful with yourself and say that your price point represents value for the product and service levels?

If the answer is yes then surely that’s the recipe for a long-term sustainable business.

We have templates and ready recconers to assist you in setting prices, please ask and we’ll email them.

 

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About the Author:

Richard is the owner of RCM Stocktaking Solutions Ltd which provide Stock Auditing services to the licensed / restaurant / hospitality sector.